QuaintOak.com UNDERWRITING FIRST TIME HOMEBUYERS Member FDIC Equal Housing Lender ©2012 Quaint Oak Mortgage, LLC | NMLS

QuaintOak.com UNDERWRITERS CONCERNS  Payment shock  Affordability  Inadequate reserves  History of savings  Job stability Member FDIC Equal Housing Lender ©2012 Quaint Oak Mortgage, LLC | NMLS

QuaintOak.com LACK OF KNOWLEDGE OF HOME OWNERSHIP  Property taxes  Insurance  Property maintenance  Lack of equity  Lack of principal paid in the first seven years Member FDIC Equal Housing Lender ©2012 Quaint Oak Mortgage, LLC | NMLS

QuaintOak.com Compensating Factors  Income not used in the transaction  Other income producing household members Member FDIC Equal Housing Lender ©2012 Quaint Oak Mortgage, LLC | NMLS

QuaintOak.com How We Mitigate Risk  AUS (Automated Underwriting Systems)  Appraisals Member FDIC Equal Housing Lender ©2012 Quaint Oak Mortgage, LLC | NMLS

QuaintOak.com What Borrowers Should Know  The sheer amount of documentation required  Don’t use cash  Credit is re-pulled before closing Member FDIC Equal Housing Lender ©2012 Quaint Oak Mortgage, LLC | NMLS

QuaintOak.com What Borrowers Should Know  Federal debts must be paid or have a payment plan  No discrepancies  Documents can’t be handled by interested parties to the transaction Member FDIC Equal Housing Lender ©2012 Quaint Oak Mortgage, LLC | NMLS

QuaintOak.com UNDERWRITING RULES  THE 4 C’S  Credit  Capacity (Income)  Capital (Assets)  Collateral (Property) Member FDIC Equal Housing Lender ©2012 Quaint Oak Mortgage, LLC | NMLS

QuaintOak.com  90%+ of our First Time Homebuyers obtain FHA financing. The rules that follow are geared towards that. Conventional, USDA, and VA have their own requirements. Member FDIC Equal Housing Lender ©2012 Quaint Oak Mortgage, LLC | NMLS

QuaintOak.com Credit Documentation  Valid social security number  Photo ID and legally allowed to work in the USA  Credit report  Letters of explanation Member FDIC Equal Housing Lender ©2012 Quaint Oak Mortgage, LLC | NMLS

QuaintOak.com Credit Rules  Two year residency  Bankruptcy  Foreclosure  Deferred student loans  Medical collections Member FDIC Equal Housing Lender ©2012 Quaint Oak Mortgage, LLC | NMLS

QuaintOak.com Credit Rules  Judgments  Charge offs  Non-medical collections and disputed derogatory credit accounts  What’s included in the debt to income ratio  PITI, liabilities from credit report, federal debt, borrowed funds, wage garnishments, child support/alimony. Member FDIC Equal Housing Lender ©2012 Quaint Oak Mortgage, LLC | NMLS

QuaintOak.com Income Documentation  Paystubs  W2’s  Tax returns  Tax transcripts (lender obtains)  Employer verifications (lender obtains) Member FDIC Equal Housing Lender ©2012 Quaint Oak Mortgage, LLC | NMLS

QuaintOak.com Income Rules  Two year history of verifiable income  Unreimbursed job expenses  Overtime, bonus, and commission income  Self-Employment income  Other sources of income Member FDIC Equal Housing Lender ©2012 Quaint Oak Mortgage, LLC | NMLS

QuaintOak.com Asset Documentation  Bank statements  Cancelled earnest money deposit check  Gifts Member FDIC Equal Housing Lender ©2012 Quaint Oak Mortgage, LLC | NMLS

QuaintOak.com Asset Rules  Funds for closing  Reserves  Cash on hand  Bank statements Member FDIC Equal Housing Lender ©2012 Quaint Oak Mortgage, LLC | NMLS

QuaintOak.com Asset Rules  Gifts  Loans can be obtained from family members.  No unsecured borrowed funds  Downpayment Assistance Programs Member FDIC Equal Housing Lender ©2012 Quaint Oak Mortgage, LLC | NMLS

QuaintOak.com Collateral Documentation  Full appraisal  Final inspection  Property inspections Member FDIC Equal Housing Lender ©2012 Quaint Oak Mortgage, LLC | NMLS

QuaintOak.com Collateral Requirements  Property must be safe, sound, and secure  Appraiser concerns must be addressed/rectified  No chipped/peeling paint  Must have safe and potable water, hot water, heat, and electricity.  Roof  Appliances Member FDIC Equal Housing Lender ©2012 Quaint Oak Mortgage, LLC | NMLS

Consumer Hurdles to Home Buying & How Industry Partners Can Help You Help Your Clients

Consumer Risk Factors Clarifi Clients (912) – 80% are low-to-moderate income – 55% have dependents – 74% are not married – 49% have some post-secondary education

Consumer Risk Factors

Services to Address Risk Factors – Homeownership Education – Homeownership Steps – Pre-Purchase Counseling – FEC Counseling

Ways to Engage Industry Partners Education Workshops should always include an industry partner Invite industry partners to your employee meetings to discuss their products and their role in the home-buying process

Ways to Engage Industry Partners Work with affordable housing developers Work with affordable lending programs and CDFI programs – Foreclosure Rescue – Home Rehabilitation

Right Step A Positive Change Version 4.0

Internal Community Reinvestment Act (CRA) The Community Reinvestment Act is intended to encourage Banks to help meet the credit needs of the communities in which they operate, including low to moderate income people and neighborhoods. Low to moderate income is Annual income that is less than 80% of the Area Median Income for each metropolitan statistical area (“MSA”) or rural non-metropolitan area (County) as published by the Department of Housing and Urban Development. The CRA requires that each Bank’s record in helping meet the credit needs of its entire community be evaluated periodically by its prudential regulator. That record is taken into account in considering an institution's application for mergers and acquisitions, or the expansion of its branches or proprietary, deposit-taking ATM network. 28 Not for External Distribution

Internal Product Description Fully Amortizing 30 Year Fixed Rate Mortgage Low to Moderate Income Customers or Customers Residing in an Low to Moderate Income Census Tract Eligible TransactionsPrimary Residence (Purchase & Rate and Term Refinances) Loan AmountUp to $417,000 Loan to Value97% LTV and 100% CLTV with a FICO Score of 660 –Single Family, Condo, and PUDs to 97% LTV / 100% CLTV –Multi Unit 90% LTV / 100% CLTV –Manufactured to 80% LTV / 100% CLTV Ratios33% Housing and 41% Total Debt to Income Customer Contribution Required to Contribute 3% into the Transaction Subordinate FinancingGrant with No Repayment Requirement is Permitted, Provider must be Approved by TD Bank Mortgage InsuranceNot Required 29 Not for External Distribution

Internal Product Description Homeowner Buyer Education/ Landlord All Customers will be Required to Attend a HUD approved Homeowner Education Class and if the Subject Property is a 2-4 Unit a HUD Approved Landlord Education Course Limitations on Real Estate The Customer may not own any other Residential Real Estate at the Time of Closing EscrowsRequired on all loans Co-SignorsNot Allowed Geographic LocationsEntire TD Bank footprint Income LimitsCustomer Must Meet Low to Moderate Income Limit Requirements or be Located in a Low to Moderate Income Census Tract ReservesNot Required Seller CreditThe Seller can Contribute 3% toward Closing Costs and Pre- Paids at % LTV, higher seller contributions are permitted at lower LTVs 30 Not for External Distribution

Internal Income Documentation Requirements The Right Step® Mortgage requires full documentation Tax Returns may be required under certain circumstances –e.g. A Self Employed Borrower Income will be calculated using all the Customer’s income and will include rental income from the subject property, if applicable –Remember: A Customer may only own one property 31 Not for External Distribution

Internal Income Requirements Customers must meet low to moderate income limits or the Subject Property must be located in a low to moderate income census tract 32 Not for External Distribution

Internal Homeowner Buyer / Landlord Course All Customers will be required to attend a HUD approved Homeowner Education Course, and, if applicable, a HUD approved Landlord Education Course for 2-4 unit properties –The Customers must provide a certificate of completion as documentation they attended the class Customers will receive instructions on how to obtain a certificate after making application, see sample below: 33 Not for External Distribution

Internal Grants A Grant is a gift that is not required to be paid back –A Grant does not have a monthly payment and is not included in the debt ratio –A Grant is typically offered by a not-for-profit or municipality 34 Not for External Distribution

Internal Product Highlights A Customer can qualify for a Right Step loan if their property is located in a Low to Moderate Income census tract regardless of their income If the subject property is not located in the LMI census tract, the Customer must meet Low to Moderate Income guidelines 97% LTV on a purchase or rate/term refinance of a single family home with no mortgage insurance! 3% down payment (must contribute 3% into transaction) 660 minimum credit score 35 Not for External Distribution

Downpayment/Closing Costs How do I pay for these?

What’s the Problem? Creditworthy, “low wealth” buyers Tightening of mortgage underwriting criteria Costly mortgage insurance alternatives

First Front Door (FFD) provides grant assistance toward down payment and closing costs to families at or below 80 percent of the area median income. The FHLBank will match the homebuyer's contribution $3 for every $1 provided by the homebuyer, up to $5,

Who Qualifies? Qualified first-time homebuyers can use FFD grants toward down payment and closing costs. Each prospective homebuyer must: Be a first-time homebuyer (not owned a home within the past three years or owned a home only while married but not as a single person within the past three years – this includes a married couple if either has not owned a home within the past three years) Contribute personal funds as part of the down payment and closing costs Have household income at or below 80 percent of the area median income (based on HUD income limits) at the time of registration Complete at least four hours of homeownership counseling, including the topic of predatory lending, prior to the purchase of the home

How Does It Work? Participating FHLBank member –Provides first mortgage Homebuyer registration –Six month “reservation” 5 year retention –Forgivable grant For more information: