2 Table of Contents  Asset Verification Documents  Income Verification Documents  Residency History Documentation and Explanations  Purchase Contracts and other closing related documentation  Refinance / Subordination Documentation  Borrower Information

3 Updating / Verifying Initial Document Checklist Initial documentation checklist which is sent to the borrower. Basis on which the borrower send the documents required for the approval to the lender.

4 Updating / Verifying Initial Document Checklist Thank you for your application with xxxxxxx. To ensure timely processing of your loan, we have compiled a list of documents needed to process your loan. If a document is checked as required, it is specified as needed from the "Applicant," the "Co-Applicant” or from both applicants. The first name listed at the top of this document is the "Applicant". The second name listed is the "Co-Applicant". Please review the list of checked documents below; then collect and send them to us via secure fax (x-xxx-xxx-xxxx) or by mail. If you choose to fax documents, please take advantage of the pre-printed fax cover page in the Welcome Package, or if you choose to mail, please use the return envelope provided with the Welcome Package.

5 Updating / Verifying Initial Document Checklist Assets must be verified to ensure the borrower has sufficient funds to complete the mortgage transaction and if required, adequate reserves after closing assets may be verified with copies of bank statements or investment portfolio statements that cover activity in the borrower’s account(s). Asset Verification Documents

6 Updating / Verifying Initial Document Checklist If process/program requires more than one month’s bank statement the most recent statement date should be used to determine the documentation expiration date

7 Updating / Verifying Initial Document Checklist The HUD-1, also known as the settlement statement, is a prescribed form from the U.S. Department of Housing and Urban Development (HUD). This form itemizes all charges imposed on the borrower and all charges imposed on the seller in connection with the settlement of your real estate transaction.

8 Updating / Verifying Initial Document Checklist One business day before the settlement, borrower has the right to inspect your HUD-1 Settlement Statement.

9 Updating / Verifying Initial Document Checklist The proceeds from the sale of a currently owned home are a common and acceptable source for the down payment and closing costs on a new house. The lien amount deducting from the present vale of the property is the “net proceed from sale” which can be used for remaining down payment.

10 Updating / Verifying Initial Document Checklist And if it is used then The HUD-1 from the sale of the home should be obtained before, or simultaneously with, the closing on the new home.

11 Updating / Verifying Initial Document Checklist A paycheck is traditionally a paper document (a cheque) issued by an employer to pay an employee for services rendered. In recent times, the physical paycheck has been increasingly replaced by electronic direct deposit to bank accounts. Income Verification Documents

12 Updating / Verifying Initial Document Checklist A pay stub, paystub, pay slip, pay advice, or sometimes paycheck stub, is a document an employee receives either as a notice that the direct deposit transaction has gone through, or is attached to their paycheck.

13 Updating / Verifying Initial Document Checklist If the borrower or co-borrower is employed he/she must have a 2-year history of receipt to use as qualifying income and it must be likely to continue for the next three years. Earnings must be level or increasing; compensating factors must exist if decreases in the last year.

14 Updating / Verifying Initial Document Checklist **Required Documentation: Based on the process type, condition would populate as:- “Paystub must be dated no earlier than 30 days prior to the application date, and must include all year to-date income.”

15 Updating / Verifying Initial Document Checklist The Form W-2, Wage and Tax Statement, is used to report wages paid to employees and the taxes withheld from them. Employers must complete a Form W- 2 for each employee to whom they pay a salary, wage, or other compensation as part of the employment relationship.

16 Updating / Verifying Initial Document Checklist The form is also used to report FICA taxes to the Social Security Administration. The Form W-2, along with Form W- 3, generally must be filed by the employer with the Social Security Administration. Relevant amounts on Form W-2 are reported by the Social Security Administration to the Internal Revenue Service.

17 Updating / Verifying Initial Document Checklist A W-2 form is a summary of earnings statement that the employer prepares and sends to its employees at the end of the year. A photocopy of all W-2s is required to verify annual income and employment.

18 Updating / Verifying Initial Document Checklist Condition populates as on the transaction report : “Copies of the most recent two years W-2's for XYZ are required to support the income information as stated on your application and used to qualify.”

19 Updating / Verifying Initial Document Checklist The tax form or forms used to file income taxes with the Internal Revenue Service (IRS). Tax returns often are set up in a worksheet format, where the income figures used to calculate the tax liability are written into the documents themselves. Tax returns must be filed every year for an individual or business that received income during the year, whether through regular income (wages), interest, dividends, capital gains, or other profits.

20 Updating / Verifying Initial Document Checklist Condition populates as on the transaction report : “Copies of complete tax returns for the most recent two years including all W-2's and schedules along with two years business returns including all schedules, if applicable, for XYZ are required to support the income information as stated on your application and used to qualify.”

21 Updating / Verifying Initial Document Checklist When the borrower receives rental income or dividend interest & is using the same to qualify for the loan, Tax return is necessary to determine the exact receivables.

22 Updating / Verifying Initial Document Checklist Condition populates as on the transaction report : “Tax returns for the previous two years including pages 1 and 2 and Schedule B/Schedule E showing dividend and/or interest/Rental income for xxxx and two asset statements to verify account balance are required to support the income information as stated on your application and used to qualify.”

23 Updating / Verifying Initial Document Checklist Retirement/pension income may be considered as long as the amount makes sense based on the information provided and time limits of its receipt seem reasonable. Condition populates as on the transaction report : Retirement Income for XYZ must be verified. The following documentation is required to support the information as stated on your application and used to qualify:

24 Updating / Verifying Initial Document Checklist 1) A copy of the award letter or 2) A copy of the most recent 1099 covering the most recent year and continuation for the next 3 years. 3) A copy of the most recent 2 months cancelled check or 4) A copy of the most recent 2 months bank statement reflecting evidence of deposit. or 5) A copy of the most recent 2 months deposit slips.

25 Updating / Verifying Initial Document Checklist Payments of child support and alimony are counted as recurring income. Acceptable sources of documentation include a copy of - Applicable page(s) and signature page of the divorce decree, or Property settlement, or Separation agreement.

26 Updating / Verifying Initial Document Checklist Condition populates as on the transaction report : “Alimony or child support must be verified with one of the following documents: divorce decree, separation agreement, court decree, any other legal agreement that describes the payment terms, or any applicable state law that requires such payments and specifies the conditions under which the payments must be made. The borrower must have a minimum 6-month documented history of regular and timely receipt of the full payment. Verify the income will continue for at least three years. “

27 Updating / Verifying Initial Document Checklist Rental lease agreement - If the subject property is currently being rented, the rental agreement/lease must be reviewed to ensure that it does not contain any provisions that could affect lender’s position as mortgage

28 Updating / Verifying Initial Document Checklist Employment borrower - If the borrower on the application is self employed, a copy of current business license or letter from CPA indicating business is operational is required from borrower.

29 Updating / Verifying Initial Document Checklist On-Us employee must verbally confirm with the relocation coordinator the amount due to the borrower, or the appraised value to be used to calculate the amount due to the borrower. We may also accept this information via a written statement from the relocation coordinator.

30 Updating / Verifying Initial Document Checklist The general corporate buyout agreement must be on file in the Corporate Relocation channel. Condition populates as on the transaction report - A copy of the offer letter and the corporate relocation package for the relocating borrower is required.

31 Updating / Verifying Initial Document Checklist Interruptions in employment may need to be explained depending on documentation process selected. If the Gap between two employment is more than 30 Days and we need to verify the findings report. Condition populates as on the transaction report - Please review 1003 for gaps in employment for each borrower. If gap(s) is/are over 30 days, an explanation from the borrower is required.

32 Updating / Verifying Initial Document Checklist The unpaid charge-off and/or collection/liens/Bankruptcy should be satisfied prior to loan closing. An explanation from the borrower is usually required. Credit and Liability Documentation and Explanations

33 Updating / Verifying Initial Document Checklist Proceeds from a cash-out refinance transaction may be used to satisfy the unpaid charge-off and/or collection at closing.

34 Updating / Verifying Initial Document Checklist At a minimum, credit reports must list all credit inquiries within the previous 90 days. However, if the credit report used by DU reflects inquiries greater than 90 days, lender’s requires that all inquiries within 120 days be addressed. If any inquiry found within 120 days, an explanation of the same is required.

35 Updating / Verifying Initial Document Checklist Generally a bankruptcy should be fully discharged as specified in the applicable Documentation Process. As per Credit Report Analysis section, Borrower’s who have had a bankruptcy within the past 7 years must provide the following –

36 Updating / Verifying Initial Document Checklist - Copies of the bankruptcy petition, schedule of debts and discharge or dismissal. - Evidence to indicate that all debts not satisfied by the bankruptcy have been paid or are being paid. - Any other evidence necessary to support the determination that the borrower has reestablished and maintained an acceptable credit.

37 Updating / Verifying Initial Document Checklist The underwriter must determine that each borrower individually and collectively have acceptable credit reputations. An acceptable credit reputation is established by a history that, when viewed as a whole, evidences the borrower’s willingness to make ongoing payments and ability to manage obligations as agreed.

38 Updating / Verifying Initial Document Checklist To Evaluate borrower’s Credit Worthiness, We have to determine 30, 60 & 90 days late payments in Credit Report. Need an explanation for the number of late reflecting on Credit Report if there is condition populates. Condition reads as “Late payment(s) were noted on credit for XYZ. A written explanation for late payment(s) is/are required.”

39 Updating / Verifying Initial Document Checklist Payments of child support and alimony are counted as recurring debts. Acceptable sources of documentation include a copy of – Applicable page(s) and signature page of the divorce decree, or Property settlement, or Separation agreement

40 Updating / Verifying Initial Document Checklist Condition populates as on the transaction report – Alimony or child support must be verified with one of the following documents: divorce decree, separation agreement, court decree, any other legal agreement that describes the payment terms, or any applicable state law that requires such payments and specifies the conditions under which the payments must be made.

41 Updating / Verifying Initial Document Checklist The borrower must have a minimum 6-month documented history of regular and timely receipt of the full payment. Verify the income will continue for at least three years.

42 Updating / Verifying Initial Document Checklist Review Applicant Address Information section of credit report. Need to determine through REO & basic address comparing with Credit report & if any address listed in credit report does not belong to the borrower currently, need an explanation of the unmatched address. Residency History Documentation and Explanations

43 Updating / Verifying Initial Document Checklist How the borrower has handled present and prior mortgage/ rent payments provides useful insight as to how the new mortgage will be managed. In addition to the new mortgage payment, the underwriter should also examine the payment history and the amount/ percentage the monthly payment will increase. bureau.”

44 Updating / Verifying Initial Document Checklist Condition reads as “An acceptable 12-month mortgage/rental payment history, if it exists, is required and must be disclosed and verified. A VOM or cancelled checks are required if the history is not on any bureau.”

45 Updating / Verifying Initial Document Checklist A signed document stating the purchaser's agreement to buy and the seller's agreement to sell a specified property under stated terms and conditions. Whenever Borrower is Purchasing a New Property, above mention agreement is Required. Purchase Contracts and other closing related documentation

46 Updating / Verifying Initial Document Checklist A trustee of a living trust is the only trust entity that is eligible for consideration as an applicant for a mortgage loan.

47 Updating / Verifying Initial Document Checklist Generally, accepted inter vivos revocable trusts as eligible borrowers for conventional first mortgages secured by 1-4 unit owner- occupied principal residences, 1-unit second homes, and 1-4 unit investment properties— which include condominiums, PUDs and coops—as long as the eligibility and documentation requirements are satisfied.

48 Updating / Verifying Initial Document Checklist Corporate Relocation loans: A corporate sponsored relocating employee is defined as a borrower who is a corporate transferred employee who is seeking financing for the purchase of their primary residence at the location of their new job. This item can be requested in lieu of HUD 1 requirement.

49 Updating / Verifying Initial Document Checklist If there is any mortgages that has been subordinated, Lenders must disclose the existence of subordinate financing and the subordinate financing repayment terms to the appraiser, the mortgage insurer and the Investor. Refinance / Subordination Documentation

50 Updating / Verifying Initial Document Checklist Subordination can be : FRHEL - A Fixed Rate Home Equity Loan (FRHEL) is secured by real estate with a first or second mortgage on the applicant’s primary or secondary residence. The lender advances proceeds of the second mortgage as a single distribution at closing. All the products are secured by real estate with a first or second mortgage on the applicant’s primary or secondary residence.

51 Updating / Verifying Initial Document Checklist HELOC :- A variable rate product that allows the borrower to obtain multiple advances against a line of credit determined by the equity in the property. At the end of the draw period, the outstanding balance is repaid over the remaining term

52 Updating / Verifying Initial Document Checklist If the mortgage refinance is with another lender, then the new lender requires copy of most recent mortgage statement to verify monthly principal and interest payment and the interest rate.

53 Updating / Verifying Initial Document Checklist Non-U.S. applicants must provide proof of residency status (i.e., visa classification). Lender’s should always ask for and make a copy of a picture identification to verify a borrower’s residency status. Borrower Information

54 Updating / Verifying Initial Document Checklist - Name as shown on ID; - Form/Type/Card Number of ID reviewed; - INS/Registration Number; - Visa Classification; - Expiration Date (if applicable);

55 Updating / Verifying Initial Document Checklist - Borrower’s Signature & Date; - Lender Representative Signature, Title & Date; and - Title/Escrow Officer Signature, Title & Date.

56 Thank You!!!