Bi-Weekly Product Seminar – Non-QM (February 28, 2019)

Reminders for Call Today Refrain from asking loan level specific scenarios Submit to nonagency-scenarios@myccmortgage.com Call will be recorded and emailed out by Craig These are Delegated Correspondent options Price out in Optimal Blue

Chase Delegation Capped at $2 million loan amount Over $2 million requires to be submitted as Non-Delegated $3 million is the max loan amount Allow Fixed, ARM and Interest Only Options Exceptions require CCM approval and submission to Chase directly Limited to how many we can send within Delegation

Chase Delegation Capped at $2 million loan amount Over $2 million requires to be submitted as Non-Delegated $3 million is the max loan amount Allow Fixed, ARM and Interest Only Options Exceptions require CCM approval and submission to Chase directly Limited to how many we can send within Delegation

Wells Fargo Delegation Up to $1.5 million loan amount (allow up to $3 million) One unit primary residence or second home No Co-Ops, Investment properties or 2-4 units No Cash Out refinances on second homes No Third-Party Originations (TPO) Business use of funds not allowed Delayed financing not allowed

Wells Fargo Delegation Cont’d Maximum DTI 43% for fixed rate purchase and rate/term refinance of primary residence 43% for occupant borrower’s ratio with non-occupant co- borrower 40% for all other transaction MAX 36% front end NOTE: All loans requiring exception must be submitted as non-delegated loan

Wells Fargo Delegation OB

Today’s Call Discuss following Jumbo Investors Redwood BB&T Underwriting Process (No Rushes) Where to locate guides AllRegs

Redwood Select QM Select Non-QM Select 90 QM Choice QM Choice Non-QM Delegated to $2.5M

Redwood Tips Asset Depletion – Select Non QM & Choice Non-QM Exclude Departing Residence currently listed or with intent to list – Select Non-QM & Choice Non-QM Select QM & Select Non-QM – 7 Year Seasoning Choice QM & Choice Non-QM – 4 Year Seasoning Select QM – Minimum loan amount $484,351 Up to 90% LTV/CLTV with no MI Max DTI 49.99% on Non-QM products Exceptions on case-by-case basis

Redwood Matrix

Redwood Matrix

Redwood Select QM Minimum loan amount is $484,351 for 1 unit properties Minimum loan amount is $1 above the conforming loan limits for 2-4 units Loan amounts between conforming loan limits and Agency High Balance limits are eligible, except on loans with LTV greater than 80%

Redwood Select QM Matrix – Primary Residence

Redwood Select QM Matrix – Second Home

Redwood Select QM Matrix – Investment

Redwood Select QM – LTV above 80% MI not required Secondary Financing not allowed Maximum DTI is 36% Non-permanent resident alien Is not allowed Gift funds are not allowed Agency High Balance loan amounts are in eligible Escrow/impound accounts required for LTV’s greater than 80% unless prohibited by law

Redwood Select QM Guides

Redwood Select QM – First Time Home Buyer FTHB defined as borrower who has not owned a home in last 3 years If more than one borrower, if one borrower owned in last three years, FTHB requirements do not apply Max loan amount $1 million Reserve Requirements are higher

Redwood Select QM – First Time Home Buyer Transactions in CA, NJ, NY or CT max loan amount is $1.5 million if following is met and only apply for loan amounts over $1 million in allowed states: 720 minimum FICO No gift funds allowed Primary residence only Reserves requirements met for FTHB in asset section Max LTV/CLTV/HCLTV of 80%

Redwood Select QM - Eligible Products

Redwood Select QM – Max DTI Fixed and ARM Products Max DTI is 43% for LTVs less than equal to 80% Max DTI is 36% for LTVS greater than 80%

Redwood Select QM – Tradeline Requirements

Redwood Select QM – Derog Seasoning BK Chapter 7, 11, 13 – 7 years discharge/dismissal date Foreclosure – 7 years since completion date Notice of Default – 7 years Short Sale/DIL – 7 years since completion/sale date Mortgage Accounts settled for less – 7 years settlement date Loan Modification No debt forgiveness and not due to hardship – no seasoning Due to hardship or debt forgiveness – 7 years since modification Multiple derogatory credit events not allowed

Redwood Select QM – Gift Funds Gift funds may be used once borrower has contributed 5% of own funds Gift funds not allowed for reserves Gift funds not allowed on LTVs > 80% Gift funds not allowed on investment properties

Redwood Select QM – Gift Funds Eligible Donor Donor must be a family member, future spouse or domestic partner Executed gift letter with gift amount, source, donor’s name, address, phone number and relationship Seller must verify sufficient funds to cover the gift are either in the donor’s account or have been transferred to borrower’s account Acceptable documentation includes: Copy of donor’s check and borrower’s deposit slip Copy of donor’s withdrawal slip and borrowers deposit slip Copy of donor’s check to the closing agent A settlement statement/CD showing receipt of donor’s gift check

Redwood Select QM – Reserve Requirement

Redwood Select QM – Departing Residence

Redwood Select QM – Restricted Stock

Redwood Select QM – Multiple Financed Property

Questions

Redwood Select Non-QM Non-QM loan with any of following attributes Interest Only Product Debt-to-income ratio > 43% Qualifying income stream using asset depletion Projected income without a guaranteed non-revocable contract Gaps of employment outside of QM requirements (exception basis only) Investment purchase transaction with no lease provided Departure residence excluded from DTI when property is not listed for sale or leased to rent

Redwood Select Non-QM Minimum loan amount is $484,351 for 1 unit properties Minimum loan amount is $1 above the conforming loan limits for 2-4 units Residual income calculation must be provided and must meet the residual income requirements indicated in the Income/Employment section of guides

Redwood Select Non-QM Matrix – Primary Residence

Redwood Select Non-QM Matrix – Second Home

Redwood Select Non-QM Matrix – Investment

Redwood Select Non-QM Guides

Redwood Select Non-QM – First Time Home Buyer FTHB defined as borrower who has not owned a home in last 3 years If more than one borrower, if one borrower owned in last three years, FTHB requirements do not apply Max loan amount $1 million Reserve Requirements are higher

Redwood Select Non-QM – First Time Home Buyer Transactions in CA, NJ, NY or CT max loan amount is $1.5 million if following is met and only apply for loan amounts over $1 million in allowed states: 720 minimum FICO No gift funds allowed Primary residence only Reserves requirements met for FTHB in asset section

Redwood Select Non-QM - Eligible Products

Redwood Select Non-QM – Max DTI Fixed Rate: 49.99%

Redwood Select Non-QM – Tradeline Requirements

Redwood Select Non-QM – Derog Seasoning BK Chapter 7, 11, 13 – 7 years discharge/dismissal date Foreclosure – 7 years since completion date Notice of Default – 7 years Short Sale/DIL – 7 years since completion/sale date Mortgage Accounts settled for less – 7 years settlement date Loan Modification No debt forgiveness and not due to hardship – no seasoning Due to hardship or debt forgiveness – 7 years since modification Multiple derogatory credit events not allowed

Redwood Select Non-QM – Gift Funds Gift funds may be used once borrower has contributed 5% of own funds Gift funds not allowed for reserves Gift funds not allowed on LTVs > 80% Gift funds not allowed on investment properties

Redwood Select Non-QM – Gift Funds Eligible Donor Donor must be a family member, future spouse or domestic partner Executed gift letter with gift amount, source, donor’s name, address, phone number and relationship Seller must verify sufficient funds to cover the gift are either in the donor’s account or have been transferred to borrower’s account Acceptable documentation includes: Copy of donor’s check and borrower’s deposit slip Copy of donor’s withdrawal slip and borrowers deposit slip Copy of donor’s check to the closing agent A settlement statement/CD showing receipt of donor’s gift check

Redwood Select Non-QM – Reserve Requirement

Redwood Select Non-QM – Departing Residence

Redwood Select Non-QM – Departing Residence

Redwood Select Non-QM – Restricted Stock

Redwood Select Non-QM – Asset Depletion

Redwood Select Non-QM – Projected Income

Redwood Select Non-QM – Multiple Financed Property

Questions

Redwood Select 90 QM Guides

Redwood Select 90 QM

Redwood Select 90 QM Tradelines Minimum three (3) tradelines are required. The following requirements apply: One (1) tradeline must be open for twenty-four (24) months and active within the most recent six (6) months. Two (2) remaining tradelines must be rated for twelve (12) months and may be opened or closed. OR Minimum two (2) tradelines are acceptable if the borrower has a satisfactory mortgage rating for at least twelve (12) months (opened or closed) within the last twenty-four (24) months and one (1) additional open tradeline. Each borrower contributing income for qualifying must meet the minimum tradeline requirements; however, borrowers not contributing income for qualifying purposes are not subject to minimum tradeline requirements. Authorized user accounts are not allowed as an acceptable tradeline. Non-traditional credit is not allowed as an acceptable tradeline.

Redwood Select 90 QM Derog Credit Seasoning Derogatory Credit: Bankruptcy, Chapter 7, 11, 13 - Not Allowed. Foreclosure/Notice of Default - Not Allowed. Short Sale/Deed-in-Lieu - Not Allowed. Mortgage accounts that were settled for less, negotiated or short payoffs - Not Allowed. Loan Modification - Not allowed unless the modification is unrelated to hardship and there is no debt forgiveness as evidenced by supporting documentation. Medical collections - allowed to remain outstanding if the balance is less than $10,000 in aggregate.

Redwood Select 90 QM Assets/Reserves

Redwood Select 90 QM Departing Residence

Redwood Select 90 QM – Restricted Stock

Questions

Redwood Choice QM Minimum loan amount is $1 over current conforming/high balance limits Higher Priced Mortgage Loans (HPML) are allowed:

Redwood Choice QM Matrix – Primary Residence

Redwood Choice QM Matrix – Second Home

Redwood Choice QM Matrix – Investment

Redwood Choice QM Guides

Redwood Choice QM – LTV above 80% MI not required Secondary Financing is allowed Maximum DTI is 38% Non-permanent resident alien is not allowed Gift funds are not allowed Escrow/impound accounts required for LTV’s greater than 80% unless prohibited by law

Redwood Choice QM – First Time Home Buyer FTHB defined as borrower who has not owned a home in last 3 years If more than one borrower, if one borrower owned in last three years, FTHB requirements do not apply Max loan amount $1 million Reserve Requirements are higher

Redwood Choice QM – First Time Home Buyer Transactions in CA, NJ, NY or CT max loan amount is $1.5 million if following is met and only apply for loan amounts over $1 million in allowed states: 680 minimum FICO No gift funds allowed Primary residence only Reserves requirements met for FTHB in asset section Max LTV/CLTV/HCLTV of 80%

Redwood Choice QM – Non-Occ Co-Borrower Non-Occupant Co-Borrowers are allowed with following: Primary Residence – One (1) Unit Property Purchase and rate/term refinance transactions only Max loan amount $1 million; $1.5 million in CA, CT, NY and NJ Max LTV/CLTV 80% No minimum down payment required from occupant borrower Down payment and reserves may be from the occupant borrower or non-occupant co-borrower

Redwood Choice QM – Non-Occ Co-Borrower Non-Occupant Co-Borrowers are allowed with following: Additional 6 months reserves required Non-Occupant Co-borrower must be family member Mother/Father, Brother/Sister, Daughter/Son or Grandparents Blended ratios allowed with maximum 43% DTI Transaction must be an arm’s length transaction

Redwood Choice QM - Eligible Products

Redwood Choice QM – Max DTI Fixed and ARM Products: 43% Non-Occupant Co-Borrower with Blended Ratio: 43% LTV/CLTVs over 80%: 38%

Redwood Choice QM – Tradeline Requirements

Redwood Choice QM – Derog Seasoning BK Chapter 7, 11, 13 – 4 years discharge/dismissal date Foreclosure – 4 years since completion date Notice of Default – 2 years Short Sale/DIL – 4 years since completion/sale date Mortgage Accounts settled for less – 4 years settlement date Loan Modification – 2 years since modification date with no mortgage lates on any mortgage last 24 months Multiple derogatory credit events not allowed

Redwood Choice QM – Derog Seasoning Borrowers with credit events listed above between 4 and 7 years must meet following requirements: Tradeline requirements must be met Satisfactory housing history for 24 months required No mortgage lates since credit event No public records since credit event Primary residence – purchase or rate/term refinance with maximum 80% LTV/CLTV/HLCTV or program maximum if lower

Redwood Choice QM – Gift Funds Gift funds may be used once borrower has contributed 5% of own funds Gift funds not allowed for reserves Gift funds not allowed on LTVs > 80% Gift funds not allowed on investment properties

Redwood Choice QM – Gift Funds Eligible Donor Donor must be a family member, future spouse or domestic partner Executed gift letter with gift amount, source, donor’s name, address, phone number and relationship Seller must verify sufficient funds to cover the gift are either in the donor’s account or have been transferred to borrower’s account Acceptable documentation includes: Copy of donor’s check and borrower’s deposit slip Copy of donor’s withdrawal slip and borrowers deposit slip Copy of donor’s check to the closing agent A settlement statement/CD showing receipt of donor’s gift check

Redwood Choice QM – Reserve Requirement

Redwood Choice QM – Departing Residence

Redwood Choice QM – Restricted Stock

Redwood Choice QM – Multiple Financed Property

Questions

Redwood Choice Non-QM Minimum loan amount is $1 over current conforming/high balance limits Higher Priced Mortgage Loans (HPML) are allowed:

Redwood Choice Non-QM Non-QM loan with any of following attributes Interest Only Product Debt-to-income ratio > 43% Qualifying income stream using asset depletion Projected income without a guaranteed non-revocable contract Gaps of employment outside of QM requirements (exception basis only) Investment purchase transaction with no lease provided Departure residence excluded from DTI when property is not listed for sale or leased to rent

Redwood Choice Non-QM Matrix – Primary Residence

Redwood Choice Non-QM Matrix – Second Home

Redwood Choice Non-QM Matrix – Investment

Redwood Choice Non-QM Guides

Redwood Choice Non-QM - Eligible Products

Redwood Choice Non-QM – First Time Home Buyer FTHB defined as borrower who has not owned a home in last 3 years If more than one borrower, if one borrower owned in last three years, FTHB requirements do not apply Max loan amount $1 million Reserve Requirements are higher

Redwood Choice Non-QM- First Time Home Buyer Transactions in CA, NJ, NY or CT max loan amount is $1.5 million if following is met and only apply for loan amounts over $1 million in allowed states: 680 minimum FICO No gift funds allowed Primary residence only Reserves requirements met for FTHB in asset section Max LTV/CLTV/HCLTV of 80%

Redwood Choice Non-QM – Non-Occ Co-Borrower Non-Occupant Co-Borrowers are allowed with following: Primary Residence – One (1) Unit Property Purchase and rate/term refinance transactions only Max loan amount $1 million; $1.5 million in CA, CT, NY and NJ Max LTV/CLTV 80% No minimum down payment required from occupant borrower Down payment and reserves may be from the occupant borrower or non-occupant co-borrower

Redwood Choice Non-QM – Non-Occ Co-Borrower Non-Occupant Co-Borrowers are allowed with following: Additional 6 months reserves required Non-Occupant Co-borrower must be family member Mother/Father, Brother/Sister, Daughter/Son or Grandparents Blended ratios allowed with maximum 43% DTI Transaction must be an arm’s length transaction

Redwood Choice Non-QM – Max DTI Fixed Rate: 49.99% ARM: 47% LTV/CLTV over 80%: 38% Non-Occupant Co-Borrower: 43%

Redwood Choice Non-QM – Tradeline Requirements

Redwood Choice Non-QM – Derog Seasoning BK Chapter 7, 11, 13 – 4 years discharge/dismissal date Foreclosure – 4 years since completion date Notice of Default – 2 years Short Sale/DIL – 4 years since completion/sale date Mortgage Accounts settled for less – 4 years settlement date Loan Modification – 2 years since modification date with no mortgage lates on any mortgage last 24 months Multiple derogatory credit events not allowed

Redwood Choice QM – Derog Seasoning Borrowers with credit events listed above between 4 and 7 years must meet following requirements: Tradeline requirements must be met Satisfactory housing history for 24 months required No mortgage lates since credit event No public records since credit event Primary residence – purchase or rate/term refinance with maximum 80% LTV/CLTV/HLCTV or program maximum if lower

Redwood Choice Non-QM – Gift Funds Gift funds may be used once borrower has contributed 5% of own funds Gift funds not allowed for reserves Gift funds not allowed on LTVs > 80% Gift funds not allowed on investment properties

Redwood Choice Non-QM – Gift Funds Eligible Donor Donor must be a family member, future spouse or domestic partner Executed gift letter with gift amount, source, donor’s name, address, phone number and relationship Seller must verify sufficient funds to cover the gift are either in the donor’s account or have been transferred to borrower’s account Acceptable documentation includes: Copy of donor’s check and borrower’s deposit slip Copy of donor’s withdrawal slip and borrowers deposit slip Copy of donor’s check to the closing agent A settlement statement/CD showing receipt of donor’s gift check

Redwood Choice Non-QM – Reserve Requirement

Redwood Choice Non-QM – Departing Residence

Redwood Choice Non-QM – Departing Residence

Redwood Choice Non-QM – Restricted Stock

Redwood Choice Non-QM – Asset Depletion

Redwood Choice Non-QM – Projected Income

Redwood Select Non-QM – Multiple Financed Property

Questions

BB&T Delegation Max $1M loan amount Over $1M loan amount is non-delegated and BB&T has to review and approve loan Primary and 2nd Homes Minimum FICO 720 Max LTV 90 (does have MI) Max DTI is 43%

BB&T Guidelines AllRegs What are the restrictions?

BB&T Guidelines LTV/Reserves What are the restrictions?

BB&T Tradeline Requirements Credit report must show a minimum of 2 years established credit history Each borrower must have 3 tradelines with 12 months satisfactory history Tradelines may be open, closed and/or paid in full by applicant Prior mortgage or rental history which evidences no late payments in past 24 months is required

BB&T Derogatory Seasoning What are the restrictions?

BB&T Derogatory Seasoning What are the restrictions?

BB&T Re-establishing Credit After significant derogatory event, borrower’s credit will be considered reestablished if all of the following are met: The waiting period and the related additional requirements are met: and All credit reviewed must be reestablished credit. Nontraditional credit files are not acceptable

BB&T Self-Employed Borrower K1 Rely on Ordinary Income and/or Net Rental Income or Guaranteed Income to qualify Do not use Distribution income to qualify Do not perform a liquidity test Only performed if trying to use business funds for assets to ensure withdrawal of funds without negative impact

BB&T Things to Look Out For Requires full 24 month housing history (other investors are 12 months) Requires tax returns to be wet signed LTV over 80% requires MI

Questions

QC First Look Process Required on Jumbo & Non-QM Loans Review Income & Assets in file Either passes and submitted to UW or Missing items and required for submission to UW They cannot change the loan as view only mode

QC First Look - Reminders Document all assets required for funds to close and reserves Provide all required income for loan Process is provide clean files to Underwriting and reduce Suspense by UW

Where to Locate Jumbo Matrix

Where to Locate Jumbo Matrix Cont’d

Where to Locate Jumbo Matrix Cont’d

Questions

Future Questions/Scenarios Next Call is March 14, 2019 Scenario Questions for Non-Agency/Non-QM you can email: nonagency-scenarios@myccmortgage.com What are the restrictions?