Delegated underwriting training Heather Carrico 04.02.18

Purchase Process Summary Deephaven’s seamless integration with your process maximizes loan purchase eligibility. Lender Process Flow Quality Control Funding Loan Sale Application Underwriting Deephaven Process Flow Scenario Reviews available for guideline inquiries and exception review File Reviews available for purchase eligibility Final Purchase Eligibility Review Collateral File Review Servicing transfer 48-72 Hours 24 Hours 3 – 7 Days

Deephaven Difference Personal & Business Bank Statements Loan Amounts Up to $2.5M DTI Up To 55% Use Cash Out Proceeds as Reserves 1-year tax return and W-2 doc options Investors with greater than 10 properties Non-Warrantable Condos Prior Foreclosure or Bankruptcy No-Income doc Investor loans Up to 95% LTV Limited by past consumer credit problems More investor loan options Qualify with alternative income documentation Borrowers who were negatively impacted by housing crisis Outside of agency investor guidelines

DEEPHAVEN PRODUCTS Expanded-Prime Start here for all owner-occupied and 2nd home borrowers at least 5 years from a housing event. This is a near-miss product with our most competitive pricing. Near-Prime Start here for all owner-occupied and 2nd home borrowers at least 3 years from a housing event. Non-Prime Start here for all owner-occupied and 2nd home borrowers within 2 years or less from a housing event. Investment Property Start here for all investment properties and foreign nationals.

Expanded-Prime

Near-Prime

Non-Prime

Investment

Credit Summary Qualifying FICO Score Tradeline Requirements Primary wage-earner's middle score used for the Representative Loan Score Co-borrower must have at least 1 score of 500 or higher Tradeline Requirements Tradelines used to qualify may not exceed 0x60 in the most recent 12 months Standard Trade lines: 3 trade lines reporting for 12+ mos or 2 trade lines reporting for 24+ mos, all with activity in the last 12 mos Limited Trade lines allowed on the Non-Prime product only (not Near Prime or Investment) 6 months reserves required, 10% minimum borrower contribution (see guidelines for all requirements) Unacceptable Trade lines: Loans in a deferment period, collection or charged-off accounts, accounts discharged through bankruptcy, and authorized user accounts

Credit Summary - continued Collections and Charge-offs that may remain open All medical collections < 24 months old with a maximum cumulative balance of $2,000 ≥ 24 months old with a maximum of $2,500 per occurrence Collections and charge-offs that have passed beyond the statute of limitation for that state (supporting documentation required) Collection and charge-off accounts outside of the parameters listed above may remain open on the Non Prime Program or Investment A & A- if either of the following is met Borrower has sufficient reserves to cover all unpaid collections and charge-offs in addition to the published reserve requirement; or Payment of 5% of collection balance is included in final DTI. DTI cannot exceed 50%.

Residual Income and payment shock $2,500 is required for Expanded-Prime product 150% max payment shock on primary residence transactions $2,500 is required for Near-Prime product Up to 250% allowed with compensating factor $1,500 is required for Non-Prime product Additional $150 per dependent is also required

Ratio Grid

Bank Statement Documentation Self-employed borrowers are eligible for either Personal Bank Statement Documentation or Business Bank Statement Documentation. The following restrictions apply to both documentation types: Borrowers must be self-employed for at least 2 years and business must be in existence for at least 2 years. Standard Tradelines and a 12-month housing history are required. Non-Permanent Resident Aliens and Foreign Nationals are ineligible. All parties listed on each bank account must be included as borrowers on the loan. Statements must be consecutive and reflect the most recent months available and Statements must support stable and generally predictable deposits. Unusual deposits must be documented. Evidence of a decline in earnings may result in disqualification. Up to 3 NSF checks and overdraft protection transfers in the most recent 12-month period are allowed with explanation from the borrower. W-2 Wages: Additional income deposited into the bank statements but derived from a source other than the self-employed business may not be included in the bank statement average. W-2 earnings must be documented as per the requirements in 8.1.1 Wage-Earners along with a processed 4506-T verifying the W- 2 earnings only. Rental Income: Income derived solely from the ownership of rental properties as declared on Schedule E must be calculated per the requirements in 8.4.22 Rental Income. Borrowers who receive rental income as a secondary income source may utilize Bank Statement Documentation on a case-by-case basis. Please consult the Deephaven Scenario Desk prior to submission.

Personal Bank Statement Program General Requirements 24 months or 12 months complete bank statements (Transaction history printouts are not acceptable) Initial signed 1003 with monthly income disclosed Personal Bank Statements 100% of deposits, averaged over 24 months or 12 months Transfers between personal accounts should be excluded Transfers from a business account into a personal account are acceptable Unusual deposits must be documented Borrowers will qualify off the lower of the following - Income figure listed on Signed 1003 Personal Bank Statement Average (total deposits [minus any disallowed deposits] 24 months or 12 months)

Business Bank Statement Program 24 months complete Business bank statements (Transaction history printouts are not acceptable) Borrower Prepared P&L covering same time period as the bank statements Bank Statement deposits need to be within 10% of the gross revenue on the P&L. Will use lower of the net income or the initial signed 1003 income to qualify (see guidelines for additional options). B. Initial signed 1003 with monthly income disclosed General Requirements Business bank accounts, personal bank accounts addressed to a DBA, or personal accounts with evidence of business expenses can be used for qualification Wire transfers and transfers from other accounts must be documented or excluded Statements should show a trend of ending balances that are stable or increasing over time Business expenses must be reasonable for the type of business (examples of business with higher expense ratios may include construction companies, builders, restaurants and retail firms) Must own 100% of business Business Bank Statements

Asset Depletion Allowed under Near-Prime ONLY - Rate/Term Refi or Purchases Net of down payment, loan costs and reserves: borrowers must have a minimum of the lesser of 1.5 times the loan balance OR $1mm in qualified assets Qualified assets include: 100% of checking/savings/money market accounts 70% of remaining value of stocks/bonds 60% of retirement assets Monthly Income = Net Qualified Assets / 120 Months

Asset Depletion CALCULATION

Foreign Nationals Documentation Copies of the borrower’s passport and unexpired visa must be obtained The following visa types are allowed as foreign nationals: B-1and B-2, H-2 and H-3, I, J-1 and J-2, O-2, P-1 and P-2 Credit For borrowers with a valid SSN – A U.S. credit report should be obtained providing merged credit information from the 3 major national credit repositories Must meet standard tradeline requirements Qualifying Foreign Credit – 3 open accounts with a 2-year history 2-year housing history can be used as a tradeline U.S. credit accounts can be combined with letters of reference to establish the 3 open accounts

Foreign Nationals Income Salaried foreign national borrowers: Letter from employer providing current monthly salary and YTD earnings or 2 months’ pay stubs with YTD earnings Verification of earnings for the last 2 years Employer to be independently verified Self-Employed foreign national borrowers for at least 2 years are allowed: Letter from a CPA providing income for the last 2 years and YTD earnings Self-employed business and CPA are to be independently verified (via LexisNexis, D&B International Business Search, Google, or other means of verification) **All documents must be translated by a certified translator Assets 12 months PITIA reserves required for the subject property All funds for the transaction must be seasoned for 60 days Assets used for down payment and closing costs must also be seasoned in a U.S. depository institution for 30 days prior to closing Assets held in foreign accounts are eligible for reserves. A 30 day statement is required. Funds to be converted to U.S. dollars using the current exchange rate Property Eligible for 2nd Home and Investment Property – must verify any mortgage history for current residence.

Miscellaneous transaction information Co-Borrowers / Co-signers Non-occupant co-borrowers and co-signers are not allowed Vesting in Limited Liability Company (LLC) Allowed on Investment Property Program only. Refer to guidelines for more details Purpose of the LLC is for ownership and management of real estate All owners of the LLC (no more than two) are borrowers on the transaction Personal Guaranty form is required. Secondary Financing Institutional 2nd’s only, maximum CLTV is 90% The max CLTV available under the Expanded Prime Program is the same as the maximum LTV for the transaction

Down payment and Assets PITIA Reserves All transactions require a minimum of 3 months reserves 6 - 12 month reserves are required (see matrix for additional reserve requirements Retirement Accounts Vested funds from retirement accounts (IRA/Keogh and 401(k) accounts) are acceptable sources of funds for down payment, closing costs, and reserves (terms of withdraw are required) 100% of the vested amount may be used Retirement accounts that do not allow any type of withdrawal may not be considered Funds do not have to be withdrawn to use for reserves

Down payment and Assets - continued Minimum Borrower Contribution Gift funds are allowed after the borrower has made the minimum required borrower contribution towards the down payment Gift Funds Borrowers must contribute up to a minimum of 5% of their own funds toward the down payment on purchase transactions 10% contribution required for the following: no housing history, loans amount > $453,100, 2nd Homes, and limited trade lines Gift of Equity/Family Transaction Primary residence only Gifts of equity must come from an immediate family member Transaction is subject to the maximum LTVs available for cash-out transactions 6 months reserves required. No minimum borrower contribution is required Non-arm’s length criteria is met (see Non-Arm’s Length Transactions Section 3.10) Signed gift letter is provided

Collateral Eligible Properties – See Matrix for LTV Limitations Single-Family Residence (attached or detached) Planned Unit Development - PUD (attached or detached) Townhomes Multi-family properties (2-4 units) Condominiums Log Homes Modular Homes Non Warrantable Condominiums Eligible Properties – See Matrix for LTV Limitations Co-operative Units Condotels or Condo Hotel Mixed-Use Properties Manufactured Homes Earth Homes, Berm Homes, and Dome Homes Farms or Hobby Farms Ineligible Properties

Collateral - continued Minimum Loan Amount and Sq Ft $100,000 600 Sq Ft Determining Value All transactions: current appraised value used when owned > 1 year (Cashout limits on Investment Properties may apply if owned 13-36 months) *See guidelines for Investor Advantage Product* All transactions with < 1 year ownership seasoning: use lesser of current appraised value or purchase price *See guidelines for Investor Advantage Product* Rural Property Primary Residence only No agricultural use allowed Max acreage is 10 acres (exceptions exceeding 10 acres on a case-by-case basis) Maximum LTV is 80%

Non - Warrantable Condos Commercial Space Fannie – No more then 25% of a condo project can be commercial space. Deephaven – Up to 30% of the condo project can be commercial space. HOA Dues Fannie – No more than 15% of total units in project may be 60 days or more past due. Deephaven – No more than 20% of units may be 60 days or more past due. Litigation Fannie – If the lender determines that pending litigation involves minor matters with no impact on the safety, structural soundness, habitability, or functional use of the project, the project is eligible provided the litigation is limited to one of the following categories: non-monetary litigation involving neighbor disputes or rights of quiet enjoyment litigation for which the claimed amount is known, the insurance carrier has agreed to provide the defense, and the amount is covered by the HOA's or co-op corporation's insurance; or the HOA or co-op is named as the plaintiff in a foreclosure action, or as a plaintiff in an action for past due HOA assessments Deephaven – Acceptable as long as the pending lawsuit(s) are not structural in nature, do not affect the marketability of the units and: Potential damages do not exceed 25% of the HOA reserves, OR The association’s insurance policy is sufficient to cover the litigation

Non - Warrantable Condos Single Entity Ownership Fannie – Projects in which a single entity owns more than 10% of the project are ineligible (2 – 4 unit project = 1 unit max; 5 – 20 unit project = 2 units max) Deephaven – Allows up to 20% Investor Concentration Fannie – At least 50% of the total units in the project must be conveyed to principal residence or second home purchasers (investor occupancy only – does not apply to primary or 2nd home occupancy) Deephaven - Up to 60%. Guidelines specify that higher percentages may be considered under the Investment Property Program, but does not explicitly say ‘does not apply to primary or 2nd home occupancy’

Investor advantage Credit scores as low as 640 with a maximum $2,000,000 loan amount Investor Advantage designed for experienced investors with no income and no employment verification. Invertor Advantage Interest Only ARM’s only – 3/1 with 5 year I/O and 25 year Amortization, 7/1 I/O with 20 year Amortization LTV’s for PURCHASE and Rate/Term up to 75% LTV’s for CASH OUT up to 70%

Investor Advantage Road Map Additional forms Required Business Purpose Affidavit 2 copies required – 1 signed at application and another signed AND notarized at closing Fannie Mae form 3170, 1-4 Family Rider

Investor Advantage Road Map We will accept a 1003 and ask that the following sections not be completed: Section IV – Employment Information Section V – Monthly Income and Combined Housing Expense Information

FAQ - Investor Advantage Qualifications Credit Score Credit Reports should be supplied for all borrowers and/or guarantors If two borrowers, the lower of the two middle credit scores will be used for Representative Loan Score Tradelines 3 tradelines reporting for 12+ months, OR 2 tradelines reporting for 24+ months All with activity in the last 12 months Late Payments Rolling late payments are not permitted Employment / Income There is no employment verification or income analysis required There is no Debt-to-Income (DTI) or Debt Service Coverage Ratio (DSCR) requirement

FAQ - Investor Advantage Qualifications Documentation Full asset documentation is required for purchase transactions to evidence sufficient funds to close Assets must be sourced or seasoned for 60 days Gift Funds Not permitted Reserves There is no reserve requirement Appraisal Two (2) appraisals are required for loans > $1,500,000 A Clear Capital Collateral Desk Analysis (CDA) is required for all transactions Note The borrower MUST own their primary residence.

Scenario Desk The Deephaven Mortgage Scenario Desk is designed to help you quickly determine which borrowers are likely to qualify for our programs. Whether it is a general guideline question, a complex income calculation, or an exception request. Deephaven’s experienced mortgage professionals are here to help at any step along the way!

Diligence Review – Best Practices The following must be included in the credit file: Underwriting Approval Credit Report Paystubs and W2’s (Full Doc only) Sales Contract Exception request form (if applicable *Please add the Scenario Desk email string) Underwriter 1003 Fraud Report P&L, Bank Statements, and Initial signed 1003 (on Business Bank Statement program) Initial 1003 and Bank Statements (for Personal Bank Statement program) Income Calculation worksheet Diligence Review A full credit, income, asset and collateral review should be completed by your underwriter. Allow 48-72 hours for the pre-close review Upload the file in the Deephaven stacking order for faster turn times **Escrows are required on ALL loans**

We look forward to working with you! QUESTIONS?