Home Ownership Today (HOT) www.gsfahome.org | (855) 740-8422 Home Ownership Today (HOT) June 13, 2019 06/03/2019 Training for Mortgage Professionals

GSFA as a Public Entity & Agency Supporting Affordable Homeownership for 26+ Years Mission to Provide a Source of Financing for California Homebuyers Standard mortgage products Provide down payment assistance (DPA) or other enhancements Approve and utilize vast network of Lenders to originate programs Standard Underwriting Ensure responsible lending + Borrower ability to pay Any overlays are more restrictive, not less Standard Mortgage Products DPA, MCC, Other Incentives Increased Affordability 75,500 homebuyers helped $542.3 million in down payment assistance provided www.gsfahome.org | (855) 740-8422

Common Down Payment Assistance MYTHS Only in certain areas Only for first-time homebuyers Only for low-income borrowers Only for those with zero savings Only for exceptional credit Accrues interest Only works with FHA Harder to qualify Takes longer to close Limited funding www.gsfahome.org | (855) 740-8422 * According to findings from the second annual America at Home survey commissioned by NeighborWorks America."

GSFA HOT - What is it? First Mortgage Loan combined with Down Payment Assistance Options Introductory notes. www.gsfahome.org | (855) 740-8422

Accessible and Flexible GSFA HOT Accessible and Flexible Up to 7.0% in for Down Payment and/or Closing Costs FICOs as Low as 640 NO First-time Homebuyer Requirement NO Federal Recapture (NOT a Bond Loan) NO Pre-close Compliance Review Program Available throughout California Funding for Assistance Provided by GSFA On-going Funding Source www.gsfahome.org | (855) 740-8422

DPA – Structure and Terms GSFA HOT DPA – Structure and Terms DPA Amount and Options 3.5% Deferred Second Mortgage 7 Additional Gift/Grant Options: 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% GSFA Affordable Subsidy (AIS): $1,500 < 80% AMI $2,500 for < 50% AMI DPA Based on First Loan Amount 3.5% Deferred Second: 30 Year Term Note Rate of 0% No interest accrual Non-amortizing; no monthly payments Due and payable upon sale, refinance or maturity of the First Mortgage No subordination allowed Use of DPA Funds Down Payment and/or Closing Costs www.gsfahome.org | (855) 740-8422

Interest Rates & Lock Process GSFA HOT Interest Rates & Lock Process Lock Period = 30 days Locks are available for up to 30 days. There is no cost reduction for shorter lock periods. Lock Process: MWF will accept lock requests for HOT programs from 8:30 AM to 4:30 PM PT. Affordable subsidy: Locks will verify income eligibility and add a condition if it appears the borrower(s) qualify for the additional GSFA Affordable Subsidy. See Retail Capital Markets Policy for complete Locks requirements. www.gsfahome.org | (855) 740-8422

GSFA HOT Conventional Options EXAMPLE 30-year fixed-rate GSFA HOT mortgages. Purchase Price $300,000. Various DPA Options. 1 For example purposes only; Interest Rate published 06/11/19, subject to change. 2 MI based on FICO of 720 with Charter level coverage on 2 borrowers through MGIC. (0.48%) Category GSFA HOT Freddie Mac HFA Advantage 97% LTV (3.5% DPA)1 97% LTV (5.0% DPA)1 97% LTV (7.0% DPA)1   First Loan Interest Rate 4.500% 5.000% 5.875% Purchase Price $300,000 Down Payment Required 3.00% ($9,000) Total First Loan $291,000 Second Mortgage DPA $10,185 Gift DPA $0 $4,365 Total HOT DPA $14,550 $20,370 Monthly P & I (First Loan) $1,474 $1,562 $1,721 Monthly MI2 $116 Monthly P & I (DPA) Total Monthly Payment $1,591 $1,679 $1,838 Borrower Out-of-Pocket for Down Payment Remaining DPA for Closing Costs $1,185 $5,550 $11,370 www.gsfahome.org | (855) 740-8422

Property Types Eligible Properties Properties NOT Allowed GSFA HOT Property Types Eligible Properties Owner occupied, Single-Family Residences only 1-unit only Agency approved condominiums Planned Unit Developments (PUDs) Properties NOT Allowed No Manufactured homes NO co-ops NO investment properties NO recreational, vacation, nor second homes www.gsfahome.org | (855) 740-8422

FICO / DTI / Underwriting GSFA HOT FICO / DTI / Underwriting Freddie Mac HFA Advantage Conventional Loan: Minimum FICO = 640 Each borrower must have a credit score Maximum DTI = 45% LPA Approval DU not allowed No manual underwriting Follow Freddie Mac Guidelines for Standard Underwriting www.gsfahome.org | (855) 740-8422

Program Limits and Homebuyer Education GSFA HOT Program Limits and Homebuyer Education Loan Limit: $484,350 Income Limit Based on: Credit qualifying income County of property Follow GSFA Income Limits shown on the MWF Matrix/Overview Homebuyer Education/ Counseling Required for one borrower if all borrowers are first time homebuyers. HBE course must be completed prior to closing. See CreditSmart Homebuyer Education. Income Limits for Top Counties Los Angeles $79,695 Orange $79,695 Riverside $75,670 Sacramento $92,115 San Bernardino $75,670 San Diego $94,070 Santa Cruz $93,610 A schedule design for optional periods of time/objectives. www.gsfahome.org | (855) 740-8422

Income Limits by County   Alameda $120,060 Marin San Mateo Alpine $89,470 Mariposa $73,830 Santa Barbara $91,540 Amador $84,640 Mendocino $69,690 Santa Clara $143,980 Butte $69,575 Merced $55,430 Santa Cruz $93,610 Calaveras $83,145 Modoc $68,655 Shasta $70,610 Colusa Mono $89,125 Sierra $75,670 Contra Costa Monterey $79,465 Siskiyou Del Norte Napa $78,775 Solano $96,255 El Dorado $92,115 Nevada $80,500 Sonoma $96,715 Fresno $63,825 Orange $79,695 Stanislaus $69,805 Glenn Placer Sutter $69,000 Humboldt Plumas $72,795 Tehama Imperial Riverside Trinity Inyo $81,765 Sacramento Tulare $56,580 Kern $67,505 San Benito Tuolumne $72,680 Kings $63,710 San Bernardino Ventura $110,400 Lake San Diego $94,070 Yolo Lassen $78,200 San Francisco Los Angeles San Joaquin $73,255 Madera $63,480 San Luis Obispo $92,690 www.gsfahome.org | (855) 740-8422

Mortgage Insurance Advantages GSFA HOT Mortgage Insurance Advantages Freddie Mac HFA Advantage Charter Level Coverage No Upfront MIP Monthly BPMI is Cancelable No Loan Level Price Adjustments (LLPAs) LTV Standard Coverage Charter Coverage 95.01 – 97.00% 35% 18% 90.01 – 95.00% 30% 16% 85.01 – 90.00% 25% 12% 80.01 – 85.00% 6% A list of procedures and steps, or a lecture slide with media. www.gsfahome.org | (855) 740-8422

Origination Guidelines GSFA HOT Origination Guidelines Origination Fee: Up to 2.0% Borrower Paid Origination Retail: 1.50% to Branch and 0.50% to Corporate Wholesale: 1.50% paid to broker and 0.50% paid to Mountain West Financial, Inc. Discount Points NOT Allowed Closing Costs (customary/reasonable) Allowed: Including appraisal, credit reporting, survey, title insurance Must be charged in accordance with loan agency policies www.gsfahome.org | (855) 740-8422

GSFA Affordable Subsidy Additional Assistance for Low Income Borrowers GSFA Affordable Subsidy Subsidy Size: Income ≤ 50% AMI = $2,500 Income ≤ 80% AMI = $1,500 For Down Payment and/or Closing Costs Gift / No Repayment Required Income Limits Specific to the Subsidy Published in Term Sheet Relative vocabulary list. www.gsfahome.org | (855) 740-8422

Underwrite, Approve, Close and Fund Transaction GSFA HOT Loan Process Lender processes/closes Loan as usual NO Additional Compliance Review from GSFA DPA designation on CD: “GSFA Second Mortgage” or “GSFA Gift” (as applicable) MWF upfronts DPA at closing on behalf of GSFA Underwrite, Approve, Close and Fund Transaction www.gsfahome.org | (855) 740-8422

Review of Program Advantages GSFA HOT Review of Program Advantages HOMEBUYERS Financial Assistance: DPA up to 7.0% Flexibility: Don’t have to be a first-time homebuyer FICO scores as low as 640 Variety of assistance options www.gsfahome.org | (855) 740-8422

Remember these Common MYTHS regarding DPA? GSFA HOT Remember these Common MYTHS regarding DPA? Do these apply to GSFA HOT? No Only in certain areas Only for first-time homebuyers Only for low income borrowers Only for those with zero savings Only for exceptional credit Accrues interest Only works with FHA Harder to qualify Takes longer to close Limited funding www.gsfahome.org | (855) 740-8422

This concludes today’s training event. Thank you all for attending. TOGETHER WE CAN MAKE A DIFFERENCE Copyright© 2019 Golden State Finance Authority (GSFA). All rights reserved. Presentation contains program highlights only. All guidelines are subject to change without notice. Visit www.gsfahome.org for complete program guidelines. GSFA HOT is sponsored by GSFA, a duly constituted public entity and agency, and managed by National Homebuyers Fund, Inc., a non-profit public benefit corporation and Instrumentality of Government under Internal Revenue Service code section 115. GSFA Administration Office 1215 K Street, Suite 1650 Sacramento, CA 95814 06/03/2019 www.gsfahome.org | (855) 740-8422