04 07 2018

Chenoa 2nd behind an FHA 1st soft or amortized 2nd Issued in conjunction with a FHA 1st TD loan CONFORMING OR HIGH BALANCE 1 or 2 Units allowed – FHA loan limits apply 3.5% Soft Second, or Amortized Second No Borrower Investment Required (with Seller or 3rd party paid Closing Costs) Borrower Paid Comp – max Broker charge is 2.25%; must meet 3% points and fees test. We will advise at submission, as this could change based on loan amount, and fees charged if your loan meets the 3% point and fee test. 04 07 2018

Advantages No borrower investment required Can use the W2 only program if salaried and 1 unit only1/10/2018 Conforming or High Balance No FTHB restriction -No Sale Price Limits- No Homebuyer Class Required FICO Scores down to 620 – see FICO hits on rate sheet. 2 units 640 fico 50% Ratio if FTHB Non-occupant co-borrowers OK on 1 unit only – income not used toward AMI % Income on 2nd unit not counted toward AMI limits; can be used to qualify at 75% Income >115% AMI OK - requires amortized 2nd Income up to or = 115% AMI – soft 2nd with no payments Only Qualifying Income used for AMI calculations DTI per AUS – required DU approval. 2 units max 50% ratio 04 07 2018

PROGRAM LOCKING & Program fees borrower paid only PROGRAM LOCKING & Program fees borrower paid only These fees affect the 3% point and fees test. Loan must be locked by 1:00 PM, PST All PTD’s must be cleared before locking. $1095 to Essex Up to 2.25% Broker fee - (unless loan does not meet 3% points and fees test. Program hits, i.e. FICO score and loan amount hits also go toward points and fees. Can have a Contract Processing Fee max $1125 if it passes 3% test. 04 07 2018

Program codes FHA 1ST: 2ND Program Codes Code 3030CH Soft 2nd : 4030CHZ Fully Amortized 30 year 5% rate: 4030CHFR Full amortized 10 year 0% rate: 403CHZR 04 07 2018

Chenoa Fund FHA Overlays Lends in CA, Nevada, Utah, Idaho, Florida, Texas and more ( see product on rate sheet to see all states that are approved to do this product) 1-2 unit property only (no 3-4 units) (FHA loan limits for the 2nd unit okay.) 2 Units 640 and max ratio 50% for FTHB SFR, PUD, Townhome, Condo, Attached, Detached No Manufactured Homes FICO Score 620 or higher – see price hits on rate sheet 04 07 2018

Chenoa Fund Soft Second Qualifying Income <=115% AMI - see calculation 0% Interest Rate and 30-year Term No Payment Forgiven after 36 consecutive on-time payments on FHA 1st Mortgage. If 1st is paid off in less than 36 payments, the 2nd will require to be repaid Section H of Declarations on 1003 must indicate down payment borrowed, show subordinate 2nd on 1003 04 07 2018

Chenoa Fund amortized Second Qualifying Income > 115% AMI (meaning no income limit ) 10-Year term 0% interest rate; or 30-Year term 5% interest rate Requires monthly payment if you chose Payment must be included in housing ratio Section H of Declarations of 1003 must indicate down payment borrowed, show subordinate 2nd on 1003 04 07 2018

Secondary Financing on 1003 04 07 2018

Declarations page of 1003 04 07 2018

Secondary Financing –DO/DU Page 2-Types, Terms, & Property Page 7-Transaction Details 04 07 2018

Secondary Financing LP 04 07 2018

Calculating Area Median Income Go to the HUD Area Median Income Site. This can be found online at: https://www.huduser.gov/portal/datasets/il.html Select the MOST RECENT fiscal year 04 07 2018

Select the state, select the county, click the button “View County Calculations” 04 07 2018

Always begin at 1-4 people living in the house,  2 people always use 4, 3 people always use 4.. you get the idea, that’s why 4 is in bold as you begin there J   LOS ANGELES COUNTY here are sample income limits, LA County at min the income limit is 103,615 for 1 to 4 people in household The 1-4 person household very low income is $45,050 x 2= $90,100 and if you multiply that number by 115% the result is $103,615 for a household of 1-4 persons. The 6 person household very low income is $52,300 x 2 = $104,600 and if you multiply that number by 115% the result is $120,290 for a household of 6 persons. The 8 person household very low income is $59,500 x 2 = $119,000 and if you multiply that number by 115% the result is $136,850 for a household of 8 persons 04 07 2018

Next Steps… Process your loan file as usual (upload 1st& 2nd – 2 loan numbers) 1st: FHA guidelines (okay to use FHA submission sheet); submit complete file. 2nd : Submit 1003 with loan amount of 2nd – and submission sheet (nothing else) Advise submission@essexmortgage.com of both loan numbers when uploaded. We approve – We fund! 04 07 2018

Underwriting… FHA Guidelines TRID compliance Industry Standards (example 4506-T (W-2 only ok) LOE for Employment Gaps 30 Days or More 04 07 2018

CD disclosing must follow TRID Closing Disclosure CD disclosing must follow TRID Initial CD must be issued 3 days prior to funding just like the first mortgage and is sent with the final CD and closing documents 04 07 2018