1. CHDAP 2 nd Trust Deeds 6/30/2016

2. FHA 1 st TD at 96.5% Combine with a CHDAP 3% 2 nd TD This program can only be done with an FHA or VA 1 st Trust Deed – 30 year fixed. After 2 nd, it leaves only a.50% down payment – and this can be a gift. Can be used with a FLIP loan. No payments on the 2 nd; deferred for the life of the 1 st loan. The 2 nd is due and payable when certain events occur…… CLTV cannot exceed 103% Term on 2 nd needs to match term of 1 st, not to exceed 30 years. The CHDAP 2 nd Trust Deed 6/30/2016

3. What is a first time homebuyer? A first time homebuyer is defined as someone who has not had any ownership in a primary residence within the last three years (timeshares okay and n/o/o okay if currently renting – and not from a family member). Federal income tax returns required for the previous 3 years. Borrowers not legally obligated to file must complete Tax Return Affidavit. 6/30/2016

4. CHDAP 2 nds Must be a first time home buyer FHA 1 st Trust Deed 96.5% financing CHDAP 3% 2 nd; deferred payments The 2 nd can be used for down payment or closing costs.50% can be a gift 640 FICO requirement 45% max ratio 1 st Time Homebuyer – no primary ownership in 3 yrs. Borrower’s income can not exceed the CalHFA published income limits. Only calculate the purchasing borrower’s income to qualify for the loan. Non-0ccupant co-signers okay (see next slide); No non-occupant co-borrower; You can use an MCC with this product, but it can not be used to reduce the ratios. Homebuyer Education is required – MGIC can be a source. SFR’s, condos, and PUDS (no 2-4 units) Five acres maximum; no income producing; hobby okay. If garage has been converted, no stove allowed – gas needs to be capped; no 2 nd kitchen. Home Warranty not required. DU or LP approvals. 6/30/2016

5. CHDAP Co-signers Helps with the ratios of 43% maximum. 6/30/2016

6. Additional Co-Signer Requirements Cosigners may not have a financial interest in the transaction (seller, builder, real estate agent, MLO, etc., are ineligible). Co signers must be closely related to the occupying borrowers. Allowable relatives are parents, children, siblings, stepchildren, aunts/uncles, nieces/nephews ONLY. Lexis-Nexis to show family relationship and/or additional documentation may be required by underwriting. Cosigners must have a principal residence in the US exempted due to military service or as US citizens living abroad. Occupant borrower’s debt to ratios cannot exceed 46.99/56.99%. Total DTI including co-signer’s income is 45%. Full credit packages will be required for Cosigners (credit reports, full income documentation and asset documentation, full disclosures in accordance with FHA and total scorecard requirements). 6/30/2016

7. Lender vs. CALHFA Review of Income 6/30/2016

8. Notes of Interest on how CalHFA calculates maximum income for family or anyone who is living in the house – not just borrowers. Schedule C or E Income – do not add back in depreciation. Negative is a wash, not deducted. Do not back out 2106 expenses. 2013 and YTD income (no 2012 income is reviewed since we are in 2014). P&L’s are okay for 2014. In question, CalHFA will always take the higher income. 6/30/2016

9. CHDAP Program “Loan Amount” Limits: For a complete list of sale prices, go to: http://www.calhfa.ca.gov/homeownership/limits/index.htm#income For a complete list of sale prices, go to: http://www.calhfa.ca.gov/homeownership/limits/index.htm#income 6/30/2016

10. CHDAP INCOME LIMITS 6/30/2016

11. CHDAP INCOME LIMITS 6/30/2016

12. CHDAP Income Limits 6/30/2016

13. CalHFA CHDAP Submission Check List All these Forms can be found at essexwholesale.com under Forms and Documents ___We will require 2 packages to be uploaded; the 1 st and the 2 nd; with 2 separate loan numbers. ___The 1 st mortgage – submit by using your FHA Required Submission Forms list; exception CalHFA requires 3 years tax returns on all borrowers. ___ GFE & TiL on the 2 nd : $250.00 origination fee in Box 1 which will go to Essex Mortgage. No other fees can be charged on the 2 nd. Additional Forms: ___Borrower(s) Certificate of Completion of Homebuyers Education Counseling – for all borrowers and from acceptable source. ___Military Service Questionnaire – Borrower(s) to complete, sign and date. ___CalHFA Tax Return Affidavit – Only for borrowers not required to file 1040’s. ___Borrower Affidavit of Household Size ___Borrower(s) Certification and & Authorization OTHER THINGS TO KNOW: Once a complete package is approved by Essex Mortgage, your file will be submitted to Agency for approval; turn times vary. Please check with your AE. Prior Agency approval is required to locking your loan. 6/30/2016

14. When you add an CalHFA MCC to the CHDAP When multiple CalHFA loan programs are used in combination, the most restrictive income limits apply (such as combining with an CalHFA MCC Tax Credit – the tax credit can not be used for credit qualifying). 6/30/2016