Purchase and Rate Term Refinance Mortgages

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SIERRA DIRECT- Conventional Loan Products Featured Topics
Standard Fixed Rate Products: T300FD-30 yr, T301FD-15yr, T304FD-20yr and T305FD- 10yr
Standard ARM products: A341FD- 5/1 and A342FD- 7/1 Adjustable Rate
Jumbo products: T300JFD-30 yr Fixed, T301JFD-15 yr Fixed, A341JFD-5/1 ARM and A342JFD-7/1ARM
Property Type
2
1-Unit
2 Unit
3-4 Unit
1-Unit
1 Unit
2- 4 Unit
1 Unit OR 2-4 Unit
DU 9.0 STANDARD FIXED 1
PRIMARY HOME PURCHASE & RATE/TERM REFI
Max LTV/
Min.
FICO
CLTV /HCLTV 3,5
974/97
DU/620
854/85
Max DTI
DU
75/75
SECOND HOME PURCHASE & RATE/TERM REFI 6
DU/620
904/90
INVESTMENT PURCHASE
DU/620
854/85
75/75
DU/620
INVESTMENT RATE/TERM REFI6
75/75
DU/620
DU
DU
DU
DU
CASH OUT REFI 6,7
1 Unit Primary
854/855
DU/620
2- 4 Units Primary
75/75
DU/620
2nd
1- Unit
Home
1 Units Investment
75/75
75/75
DU/620
DU/620
2-4 Units Investment
70/70
DU/620
DU
1. This matrix is applicable to all standard conventional Fixed Rate loans decisioned in DU version 9.0 release the weekend of Oct.20, 2012.
Please refer to applicable matrix for DU version 8.3, Jumbo or ARM products.
2. Condo/Attached PUD restrictions apply to Florida condominiums and Attached PUD’s refer to FL location topic for specifics
3. Maximum LTV/CLTV/HCLTV are the same. If Second is HELOC, loan amt + line amt cannot exceed the CLTV/HCLTV
4. Loans >80% LTV are subject to additional M.I. company requirements in addition to LTV/CLTV parameters and other criteria stated in this
product guide, SPM P&P requirements must also be met and could potentially supersede applicable M.I. company’s guidelines for loans
requiring M.I. Nevada condo’s >80% LTV are not permitted (either attached or detached)
5. Community or Affordable/Subsidy Secondary programs sponsored by govt. entities or affordable housing entities are allowed: E.G. Down
payment Assistance (DAPS), Up-Front Cost Assistance (UCAP) and Housing Assistance Programs. Please refer to Resale Deed Restriction
topic
6. Applicable COO requirements apply as stated in Continuity of Obligation section
7. Special restrictions apply for Delayed Financing scenarios as stated in Delayed Financing topic.
Note: Investor and Second home transactions with 5 to 10 financed properties – Refer to Fannie Mae guides B-2-2-03 for additional
requirements and restrictions.
The information provided is intended for use by mortgage professionals and financial institutions only. Rates and programs subject to change without notice
Sierra Direct Product guide.
Last revision: 05/21/2013
1
SIERRA DIRECT- Conventional Loan Products Featured Topics
Standard Fixed Rate Products: T300FD-30 yr, T301FD-15yr, T304FD-20yr and T305FD- 10yr
Standard ARM products: A341FD- 5/1 and A342FD- 7/1 Adjustable Rate
Jumbo products: T300JFD-30 yr Fixed, T301JFD-15 yr Fixed, A341JFD-5/1 ARM and A342JFD-7/1ARM
Please refer to applicable matrices for DU version 8.3, Jumbo or Fixed Rate products
DU 9.0 STANDARD ARM 1
Property Type 2
PRIMARY HOME PURCHASE & RATE/TERM REFINANCE 4
Max LTV
Min.
(same as CLTV
FICO
Max DTI
/HCLTV ) 3
1-Unit
2 Unit
3-4 Unit
1-Unit
1 Unit
2- 4 Unit
1 Unit OR 2-4 Unit
905/90
75/75
65/65
DU/620
SECOND HOME PURCHASE & RATE/TERM REFINANCE 4
80/80
DU/620
INVESTMENT PURCHASE
75/75
DU/620
65/65
DU/620
INVESTMENT RATE/TERM REFINANCE 4
65/65
DU/620
DU
DU
DU
DU
CASH OUT REFINANCE 4,5
1 Unit Primary
75/75
DU/620
DU
2- 4 Units Primary
65/65
DU/620
DU
2nd
1- Unit
Home
1 Units Investment
65/65
65/65
DU/620
DU/620
DU
DU
2-4 Units Investment
60/60
DU/620
DU
1.
2.
This matrix applies to all standard conventional ARM loans decisioned in DU version 9.0 released the weekend of Oct.20, 2012.
Eligibility matrix does NOT apply to condo and attached PUD projects located in Florida. Please refer to specific condo/attached PUD
projects- Florida location topic for applicable LTV/CLTV/FICO and eligibility criteria.
3. HCLTV = CLTV: If Second is HELOC, loan amt + line amt cannot exceed the CLTV/HCLTV
4. Continuity of Obligation requirements apply as stated in COO topic
5. Transactions >80% LTV where M.I. is required may have additional criteria regarding Condo/PUD properties, declining markets, Min. FICO, Max DTI, cash
reserves, etc. Please refer to individual M.I. company requirements. Condo’s in the state of Nevada >80% LTV are not permitted (either attached or
detached)
6. Six months’ ownership seasoning is required unless Delayed Financing requirements are met.
Note: Investor and Second home transactions with 5 to 10 financed properties – Refer to Fannie Mae guides B-2-2-03 for additional requirements and
restrictions.
Please refer to applicable matrices for DU version 8.3, Jumbo or Fixed Rate products.
The information provided is intended for use by mortgage professionals and financial institutions only. Rates and programs subject to change without notice
Sierra Direct Product guide.
Last revision: 05/21/2013
2
SIERRA DIRECT- Conventional Loan Products Featured Topics
Standard Fixed Rate Products: T300FD-30 yr, T301FD-15yr, T304FD-20yr and T305FD- 10yr
Standard ARM products: A341FD- 5/1 and A342FD- 7/1 Adjustable Rate
Jumbo products: T300JFD-30 yr Fixed, T301JFD-15 yr Fixed, A341JFD-5/1 ARM and A342JFD-7/1ARM
Property Type 2
DU 9.0 JUMBO/HIGH BAL FIXED 1
PRIMARY HOME PURCHASE & RATE/TERM REFINANCE
Max LTV
Min.
FICO
(CLTV /HCLTV) 3
904/90
75/75
1-Unit
2-4 Unit
1-Unit
Max DTI
660
660
SECOND HOME PURCHASE & RATE/TERM REFINANCE5
65/65
660
DU
DU
INVESTMENT PURCHASE& RATE/TERM REFINANCE 5
1 Unit OR 2- 4 Unit
65/65
660
DU
60/60
660
DU
N/A
N/A
N/A
CASH OUT REFINANCE 5, 6
1 Unit Primary
2- 4 Units Primary OR
1- Unit 2nd Home OR
1 Units Investment OR
2-4 Units Investment
1. This matrix is applicable to all Jumbo/High Bal conventional Fixed Rate loans decisioned in DU version 9.0 released the weekend of Oct. 20,
2012 with loan amounts >$417,000. (E. G. The minimum loan amount is $417,001). Maximum loan limits are subject to FannieMae High
Balance County limits.
2. Condo/Attached PUD restrictions apply to Florida condominiums and Attached PUD’s refer to FL location topic for specifics
3. Maximum LTV/CLTV/HCLTV are the same. If Second is HELOC, loan amt + line amt cannot exceed the CLTV/HCLTV
4. Loans >80% LTV are subject to additional M.I. company requirements in addition to LTV/CLTV parameters and other criteria stated in this
product guide, SPM P&P requirements must also be met and could potentially supersede applicable M.I. company’s guidelines for loans
requiring M.I. Nevada condo’s >80% LTV are not permitted (either attached or detached)
5. Applicable COO requirements apply as stated in Continuity of Obligation section.
6. Special restrictions apply for Delayed Financing scenarios as stated in Delayed Financing topic. Maximum cash in hand refi proceeds to
Borrower is $250,000 max for transactions not qualifying under Delayed Financing.
Note: Investor and Second home transactions with 5 to 10 financed properties – Refer to Fannie Mae guides B-2-2-03 for additional
requirements and restrictions.
Please refer to applicable matrices for DU version 8.3, standard loan amounts, or ARM products
The information provided is intended for use by mortgage professionals and financial institutions only. Rates and programs subject to change without notice
Sierra Direct Product guide.
Last revision: 05/21/2013
3
SIERRA DIRECT- Conventional Loan Products Featured Topics
Standard Fixed Rate Products: T300FD-30 yr, T301FD-15yr, T304FD-20yr and T305FD- 10yr
Standard ARM products: A341FD- 5/1 and A342FD- 7/1 Adjustable Rate
Jumbo products: T300JFD-30 yr Fixed, T301JFD-15 yr Fixed, A341JFD-5/1 ARM and A342JFD-7/1ARM
DU 9.0 JUMBO/HIGH BAL ARM 1
PRIMARY HOME PURCHASE & RATE/TERM REFINANCE
Property Type 2
1-Unit
Max LTV
Min.
FICO
Max DTI
75/75
65/65
660
DU
(CLTV /HCLTV)3
1-Unit
2-4 Unit
4
SECOND HOME PURCHASE & RATE/TERM REFINANCE4
65/65
660
DU
INVESTMENT PURCHASE& RATE/TERM REFINANCE4
65/65
660
DU
1 Unit OR 2- 4 Unit
CASH OUT REFINANCE 4,5
1 Unit Primary
2- 4 Units Primary OR
1- Unit 2nd Home OR
1 Units Investment OR
2-4 Units Investment
60/60
660
DU
N/A
N/A
N/A
1. This matrix is applicable to all Jumbo/High Bal conventional ARM loans decisioned in DU version 9.0 scheduled for release the weekend of Oct.
20,2012 with loan amounts >$417,000. (E. G. The minimum loan amount is $417,001). Maximum loan limits are subject to FannieMae High
Balance County limits.
2. Condo/Attached PUD restrictions apply to Florida condominiums and Attached PUD’s refer to FL location topic for specifics
3. Maximum LTV/CLTV/HCLTV are the same. If Second is HELOC, loan amt + line amt cannot exceed the CLTV/HCLTV
4. Applicable COO requirements apply as stated in Continuity of Obligation section.
5. Special restrictions apply for Delayed Financing scenarios as stated in Delayed Financing topic. Maximum cash in hand refi proceeds to
Borrower is $250,000 max for transactions not qualifying under Delayed Financing.
Note: Investor and Second home transactions with 5 to 10 financed properties – Refer to Fannie Mae guides B-2-2-03 for additional
requirements and restrictions.
Please refer to applicable matrices for DU version 8.3, standard loan amounts, or FRM products.
The information provided is intended for use by mortgage professionals and financial institutions only. Rates and programs subject to change without notice
Sierra Direct Product guide.
Last revision: 05/21/2013
4
SIERRA DIRECT- Conventional Loan Products Featured Topics
Standard Fixed Rate Products: T300FD-30 yr, T301FD-15yr, T304FD-20yr and T305FD- 10yr
Standard ARM products: A341FD- 5/1 and A342FD- 7/1 Adjustable Rate
Jumbo products: T300JFD-30 yr Fixed, T301JFD-15 yr Fixed, A341JFD-5/1 ARM and A342JFD-7/1ARM
THIS Matrix is only applicable to loan transactions with DU 8.3 case files. Loans created in DU Version 8.3 and resubmitted after the weekend of
Oct. 20, will continue to be underwritten through DU version 8.3
DU Version 8.3 STANDARD FIXED & ARM 1
PRIMARY AND SECOND HOME PURCHASE & RATE/TERM REFINANCE
Property Type
Max LTV
Min. FICO
Max DTI
(same as CLTV
/HCLTV 4)
3
1-Unit Primary
2 Unit Primary
3-4 Unit Primary
1-Unit 2nd Home
80.00%-95.00% 5
DU/620
80%
DU/620
75%
DU/620
90% 5
DU/620
INVESTMENT PURCHASE
1 Unit Investment
80%
DU/620
2- 4 Unit Investment
75%
DU/620
INVESTMENT RATE/TERM REFINANCE
1 Unit Investment
75%
DU/620
2-4 Unit Investment
75%
DU/620
CASH OUT REFINANCE 6
1 Unit Primary
85%
2- 4 Units Primary
2nd
50.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
DU/620
50.00
75%
DU/620
50.00
1- Unit
Home
1 Units Investment
75%
75%
DU/620
DU/620
50.00
50.00
2-4 Units Investment
70%
DU/620
50.00
5
2
1.
Eligibility matrix does NOT apply to condo/attached PUD projects located in Florida. Please refer to specific condo/attached PUD projectsFlorida location topic for applicable LTV/CLTV/FICO and eligibility criteria.
2.
Continuity of Obligation requirements apply as stated in COO topic
3.
Community or Affordable/Subsidy Secondary programs sponsored by govt. entities or affordable housing entities are allowed: E.G. Down payment Assistance
(DAPS), Up-Front Cost Assistance (UCAP) and Housing Assistance Programs. Please refer to Resale Deed Restriction topic
4.
HCLTV = CLTV: If Second is HELOC, loan amt + line amt cannot exceed the CLTV/HCLTV
5.
Loans > 80.00 % LTV are subject to individual M.I. company’s guidelines. In addition to LTV/CLTV parameters and other criteria stated in this product guide,
SPM P&P requirements must also be met and could potentially supersede applicable M.I. company’s guidelines for loans requiring M.I. LTV parameters for
financed M.I. are capped at 97%. Refer to Financed MI topic for specifics. Nevada condo’s >80% LTV are not permitted (either attached or detached)
6.
A six month ownership seasoning in addition to Continuity of Obligation requirements must be met for all Cash-Out Refinance transactions. Loan transactions
that meet Delayed Financing transactions are exempt. Refer to Delayed Financing topic for complete details. Note: DU will not issue Accept/Eligible finding if
Fico is <620.
Note: Investor and Second home transactions with 5 to 10 financed properties – Refer to Fannie Mae guides B-2-2-03 for additional requirements and restrictions.
The information provided is intended for use by mortgage professionals and financial institutions only. Rates and programs subject to change without notice
Sierra Direct Product guide.
Last revision: 05/21/2013
5
SIERRA DIRECT- Conventional Loan Products Featured Topics
Standard Fixed Rate Products: T300FD-30 yr, T301FD-15yr, T304FD-20yr and T305FD- 10yr
Standard ARM products: A341FD- 5/1 and A342FD- 7/1 Adjustable Rate
Jumbo products: T300JFD-30 yr Fixed, T301JFD-15 yr Fixed, A341JFD-5/1 ARM and A342JFD-7/1ARM
THIS Matrix is only applicable to loan transactions with DU 8.3 case files. Loans created in DU Version 8.3 and resubmitted after the weekend of
Oct. 20, will continue to be underwritten through DU version 8.3
DU version 8.3 JUMBO - Fixed Rate Loan
Principal Residence
Loan
Property
Max. LTV
Amount 1
Type 1
(Same as
CLTV/HCLTV 2)
Transaction
Purchase
1-Unit
All
2-Unit
Rate/Term
3
≤ $625,500
1-Unit
> $625,500
1-Unit
All
Cash-Out Refi
5
Purchase or
Rate/Term Refi 3
Cash-Out Refi 5
All
All
2-Unit
1-Unit
2-Unit
Second Homes
1-Unit
All
Min.
FICO
Max.
DITI
4
700
50%
75%
75%
90% 4
75%
80%
75%
75%
60%
660
740
700
660
700
660
740
740
Not Permitted
50%
50%
50%
50%
50%
50%
50%
50%
740
50%
740
50%
90%
65%
Not Permitted
Investment Property
Purchase or
Rate/Term Refi 3
Cash-Out Refi 5
All
All
1-2 Unit
65%
Not Permitted
1. The minimum loan amount is $417,001. Reminder: Maximum loan limits are subject to FannieMae High Balance County limits. Eligibility
matrix does NOT apply to condo/attached PUD projects located in Florida. Please refer to specific condo/attached PUD
projects- Florida location topic for applicable LTV/CLTV/FICO and eligibility criteria.
2. HCLTV = CLTV: If Second is HELOC, loan amt + line amt cannot exceed the CLTV/HCLTV
3. Continuity of Obligation requirements apply as stated in COO topic
4. Transactions >80% LTV where M.I. is required may have additional criteria regarding Condo/PUD properties, declining markets, Min.
FICO, Max DTI, cash
reserves, etc. Please refer to individual M.I. company requirements. Condo’s in the state of Nevada >80% LTV
are not permitted (either attached or detached)
5. Six months’ ownership seasoning is required unless Delayed Financing requirements are met. The maximum “Cash in Hand” proceeds to
Borrower are $250,000 for all Cash Out refinance transactions that do not qualify under the Delayed Financing policy.
Note: Investor and Second home transactions with 5 to 10 financed properties – Refer to Fannie Mae guides B-2-2-03 for additional
requirements and restrictions.
The information provided is intended for use by mortgage professionals and financial institutions only. Rates and programs subject to change without notice
Sierra Direct Product guide.
Last revision: 05/21/2013
6
SIERRA DIRECT- Conventional Loan Products Featured Topics
Standard Fixed Rate Products: T300FD-30 yr, T301FD-15yr, T304FD-20yr and T305FD- 10yr
Standard ARM products: A341FD- 5/1 and A342FD- 7/1 Adjustable Rate
Jumbo products: T300JFD-30 yr Fixed, T301JFD-15 yr Fixed, A341JFD-5/1 ARM and A342JFD-7/1ARM
THIS Matrix is only applicable to loan transactions with DU 8.3 case files. Loans created in DU Version 8.3 and resubmitted after the weekend
of Oct. 20, will continue to be underwritten through DU version 8.3
Transaction
Purchase & Rate/Term
Loan
Amount
3
All
Cash Out Refi
All
4
Purchase or Rate/Term Refi
Cash-Out Refi 4
3
Purchase or Rate/Term Refi
3
1
DU Version 8.3 JUMBO 5/1 and 7/1 ARM
Principal Residence
Property
Max. LTV
Min. FICO
Type 1
(Same as CLTV/HCLTV 2)
1-Unit
75%
680
Max. DTI
50%
2-Unit
75%
740
50%
1-Unit
2-Unit
60%
740
Not Permitted
50%
All
All
1-Unit
All
1-2 Unit
Second Home
65%
740
50%
Not Permitted
Investment Property
Cash-Out Refi
4
All
65%
740
50%
Not Permitted
1. The minimum loan amount is $417,001. Eligibility matrix does NOT apply to condo/attached PUD projects located in
Florida. Please refer to specific condo/attached PUD projects- Florida location topic for applicable LTV/CLTV/FICO and
eligibility criteria.
2. HCLTV = CLTV: If Second is HELOC, loan amt + line amt cannot exceed the CLTV/HCLTV
3. Continuity of Obligation requirements apply as stated in COO topic
4. Six months’ ownership seasoning is required unless Delayed Financing requirements are met. The maximum “Cash in Hand” proceeds
to Borrower are $250,000 for all Cash Out refinance transactions that do not qualify under the Delayed Financing policy.
Note: Investor and Second home transactions with 5 to 10 financed properties – Refer to Fannie Mae guides B-2-2-03 for additional
requirements and restrictions.
The information provided is intended for use by mortgage professionals and financial institutions only. Rates and programs subject to change without notice
Sierra Direct Product guide.
Last revision: 05/21/2013
7
SIERRA DIRECT- Conventional Loan Products Featured Topics
Standard Fixed Rate Products: T300FD-30 yr, T301FD-15yr, T304FD-20yr and T305FD- 10yr
Standard ARM products: A341FD- 5/1 and A342FD- 7/1 Adjustable Rate
Jumbo products: T300JFD-30 yr Fixed, T301JFD-15 yr Fixed, A341JFD-5/1 ARM and A342JFD-7/1ARM
FEATURED TOPIC
AIT
APPRAISAL
CRITERIA
AIT (At interest Transactions) are permitted unless otherwise states such as Flipping policy requirements.
See Non-Arms length transactions topic for complete NAL definitions relative to this product guide.
 Assigned appraisal reports are not acceptable.
 Appraisal report documentation requirements follow standard FannieMae policies including but not limited to the
appraisal age, recertification of value, etc.
 DU findings permitting reduced appraisal reports including Property Inspection Waiver (PIW) will be allowed providing
that the specific loan scenario or property does not otherwise require a full appraisal report. The following
requirements apply:
o Specific transactions requiring full appraisals such as those subject to Hobby Farm properties, condos in litigation,
Geographic Restriction, Disaster policies are not eligible for reduced appraisal reports.
 Also ineligible: Tax Returns (or other file information) indicates subject property is a Mixed Use property
o DU Accept/Eligible finding must reflect PIW, #2055 or #2075 eligibility on FINAL DU report
o A fee of $75.00 is due when exercising the DU option of a PIW (Property Inspection Waiver)
o When Desktop Underwriter recommends an exterior-only inspection (2055), an upgrade to interior and exterior
inspection is required when:
 The appraiser cannot adequately view the property from the street
 The property does not conform to the neighborhood
 There are apparent adverse physical deficiencies or environmental conditions
 Data sources do not provide sufficient information about the property to perform the appraisal
 Purchase transactions when the transaction is the result of the sale of an REO property
 The last transaction on the property being purchased was a foreclosure
 The condition rating is C5 or C6 based on the UAD and the data sources used to develop the appraisal or the
appraiser's observations during the exterior-only property inspection
 The quality rating is Q6 based on the UAD and the data sources used to develop the appraisal or the appraiser's
observations during the exterior-only inspection
o When DU recommends a 2075 Property Inspection, an upgrade to interior & exterior inspection is required when:
 The appraiser cannot adequately view the property from the street
 The property does not conform to the neighborhood
 Apparent adverse physical deficiencies or environmental conditions are observed
 The appraiser needs additional information about the physical conditions of the property
 Purchase transactions when the transaction is the result of the sale of an REO property
 The last transaction on the property being purchased was a foreclosure
o When Desktop Underwriter recommends a Property Inspection Waiver, an upgrade to interior and exterior inspection
is required when:
 The subject property does not conform to the neighborhood
 There are apparent adverse physical deficiencies or environmental conditions
 The property consists of new or proposed construction. Escrows for postponed improvements are not permitted.
 Home inspection report or other information in the file indicates the presence of adverse condition and/or
marketability factors
 Purchase transactions when the transaction is the result of the sale of an REO property
The information provided is intended for use by mortgage professionals and financial institutions only. Rates and programs subject to change without notice
Sierra Direct Product guide.
Last revision: 05/21/2013
8
SIERRA DIRECT- Conventional Loan Products Featured Topics
Standard Fixed Rate Products: T300FD-30 yr, T301FD-15yr, T304FD-20yr and T305FD- 10yr
Standard ARM products: A341FD- 5/1 and A342FD- 7/1 Adjustable Rate
Jumbo products: T300JFD-30 yr Fixed, T301JFD-15 yr Fixed, A341JFD-5/1 ARM and A342JFD-7/1ARM
 The last transaction on the property being purchased was a foreclosure
The information provided is intended for use by mortgage professionals and financial institutions only. Rates and programs subject to change without notice
Sierra Direct Product guide.
Last revision: 05/21/2013
9
SIERRA DIRECT- Conventional Loan Products Featured Topics
Standard Fixed Rate Products: T300FD-30 yr, T301FD-15yr, T304FD-20yr and T305FD- 10yr
Standard ARM products: A341FD- 5/1 and A342FD- 7/1 Adjustable Rate
Jumbo products: T300JFD-30 yr Fixed, T301JFD-15 yr Fixed, A341JFD-5/1 ARM and A342JFD-7/1ARM
FEATURED TOPIC
CRITERIA
AUTOMATED
UNDERWRITING
 DU Accept/Eligible findings only. Final DU certificates indicating anything less than Accept/Eligible will not be permitted
 Manual Underwriting is not permitted under any circumstance.
 All funds used for down payment, funds to close and reserves must be an acceptable liquid asset, sourced and
documented as per standard FannieMae guidelines and/or DU findings. (E.G. VOD’s are acceptable sources of asset
documentation providing FannieMae requirements are met).
 Uniform Trust for Minor accounts: Funds held in a custodial account for the benefit of a minor (E.G. UTMA, UGMA, etc)
may be considered a liquid asset providing the following criteria is met:
o Tax consequences must be taken into consideration.
o Ownership of funds:
 Borrower must be listed as the custodian on the account
 Applicable state laws will apply: Some state laws dictate that these funds automatically become the child's funds at
the age of 18, others at age of 21. Copy of birth certificate is required.
o Funds must be liquidated and file documentation must include applicable paper trail for liquidation of funds, etc.
 Gift funds: are NOT acceptable for Second Home or Investment property transactions Gift funds may not be used to
meet reserve requirements.
o For Primary residences, minimum 5% borrower own funds for LTV>80% required
 Business funds: may be utilized for down payment. closing costs or reserves subject to the following requirements:
o Borrower must own 100% of business or receive written authorization from other owners that funds will be
accessible to Borrower
o Underwriter must complete business cash flow analysis to determine there is no negative impact to the business
operation resulting from the withdrawal of funds.
ASSETS
BORROWER
MINIMUM
CONTRIBUTION
 For LTV > 97% - minimum 3% from borrower own funds required
 For LTV > 80% <97%, minimum 5% from borrower own funds required
 For LTV < 80% Follow FNMA requirements
The information provided is intended for use by mortgage professionals and financial institutions only. Rates and programs subject to change without notice
Sierra Direct Product guide.
Last revision: 05/21/2013
10
SIERRA DIRECT- Conventional Loan Products Featured Topics
Standard Fixed Rate Products: T300FD-30 yr, T301FD-15yr, T304FD-20yr and T305FD- 10yr
Standard ARM products: A341FD- 5/1 and A342FD- 7/1 Adjustable Rate
Jumbo products: T300JFD-30 yr Fixed, T301JFD-15 yr Fixed, A341JFD-5/1 ARM and A342JFD-7/1ARM
FEATURED TOPIC
BORROWER
ELIGIBILITY
Oh
Borrower
Residency
Documentation
CRITERIA
 Standard SPM Borrower vesting and Social Security Number policies apply.
 Citizenship/Residency requirements: U.S. citizens, Permanent Resident Aliens and Non-Permanent Resident Aliens.
 Permanent Resident Aliens and Non-Permanent Resident Aliens financing terms are same as U.S. Citizens/ E.G. they
may purchase Primary, Second Home or Investment properties
 Individuals classified under Diplomatic Immunity, Temporary Protected Status, Deferred Enforced Departure or
Humanitarian Parole are not eligible
 Eligible Expanded Residency Documentation Policy options: UW may approve Permanent or Non-Permanent Resident
Aliens unable to meet standard SPM citizenship/ residency policy if the following documentation requirements are met:
Type
Pass
port
I-751
or
I829
Visa
E-2
E-3
H-4
L-2
P-1
R-1
EAD
I-94
I797A
Expanded Permanent Resident Documentation
Documentation requirements
Documentation evidencing the Borrower is currently applying for the green card and has unexpired
passport stamped “processed for I-551, Temporary evidence of lawful admission for permanent residence.
Valid until_______. Employment authorized”
I-155 Conditional Permanent Resident Card with at least 6 months remaining may be considered eligible if
accompanied by a copy of an USCIS form I-751 (Petition to Remove the Conditions on Residence) or
USCIS form I-829 (Petition by Entrepreneur to Remove Conditions) filing receipt.
Expanded Non Permanent Visa types
Visa document with Visa classification as follows:
Treaty investor: A national of the country that under an investor treaty with the U.S. develops or directs
the operation of an enterprise in which he/she has a substantial investment
Australian Specialists entering the U.S. to perform services in specialty occupation
Spouse may not work or accept any type of employment in the U.S. Therefore, the primary H1-B
applicant must qualify on the loan including all debts. H-4 Visa is only permitted in conjunction with H1-B
applicant.
Only permitted if L-1 Borrower is on the loan
Internationally recognized athlete, entertainment Group or essential support personnel
Religious Worker
Other acceptable Non-Permanent documentation (if VISA is not available)
The EAD can be documented by form I-766 or I688A containing the applicant’s photograph
Borrower authorized for a specific employer: A valid, unexpired passport and I-94 Form (ArrivalDeparture Record, Form I-94 Card) stating “Work Authorized”
Copy of the I797A with I-94 attached indicating H-1A, H-1B, E-2,L-1, P-1, R-1 or TN status
The information provided is intended for use by mortgage professionals and financial institutions only. Rates and programs subject to change without notice
Sierra Direct Product guide.
Last revision: 05/21/2013
11
SIERRA DIRECT- Conventional Loan Products Featured Topics
Standard Fixed Rate Products: T300FD-30 yr, T301FD-15yr, T304FD-20yr and T305FD- 10yr
Standard ARM products: A341FD- 5/1 and A342FD- 7/1 Adjustable Rate
Jumbo products: T300JFD-30 yr Fixed, T301JFD-15 yr Fixed, A341JFD-5/1 ARM and A342JFD-7/1ARM
FEATURED TOPIC
CASH OUT
REFINANCE
CONDO/
Attached PUD
PROJECTS IN
FLORIDA
CRITERIA
 Six months seasoning applies unless Delayed Finance requirements are met
 Continuity of Obligation rules apply unless Delayed Finance requirements are met. Please refer to Continuity of
Obligation and/or Delayed Financing topics for specifics.
 Additional Borrowers may not be added for loan qualification purposes
Warrantable condo projects located in Florida may be considered for financing subject to the following requirements:
 Conforming Loan Limits – max $417,000
 Project must be established or new construction - newly converted projects are not eligible.
 Owner Occupied residences and Second Homes only. Investment properties are not allowed.
 Project Review Types: PERS (Final Approval only), Lender Full Review, CPM Expedited Review, and Limited Review- see
below for Maximum LTV/CLTV
 All Branches to complete a Quality Control pre-funding review on all loans secured by attached condo units.
 All loans must be bona fide-fully arms length transactions and are subject to the following parameters:
FLORIDA – ESTABLISHED CONDO PROJECTS
Occupancy
Primary Residence
Second Home
Investor
Project Warranty
PERS
Lender Full Review
CPM
Limited Review
PERS
Lender Full Review
CPM
Limited Review
Not Eligible
LTV/CLTV
Eligible
Counties
80% / 80%
All
Low Rise, High
Rise, Mid Rise
attached/detached
All
Low Rise, High
Rise, Mid Rise
attached/detached
Not Eligible
Not Eligible
75% / 75%
75% / 75%
75% / 75%
Not Eligible
Project Types
FLORIDA – NEW CONDO PROJECTS
Occupancy
Project Warranty
LTV/CLTV
Eligible
Counties
Primary Residence
PERS
80% / 80%
All
Second Home
PERS
75% / 75%
All
Investor
Not Eligible
Not Eligible
Not Eligible
Project Type
Low Rise, High
Rise, Mid Rise
attached/detached
Low Rise, High
Rise, Mid Rise
attached/detached
Not Eligible
The information provided is intended for use by mortgage professionals and financial institutions only. Rates and programs subject to change without notice
Sierra Direct Product guide.
Last revision: 05/21/2013
12
SIERRA DIRECT- Conventional Loan Products Featured Topics
Standard Fixed Rate Products: T300FD-30 yr, T301FD-15yr, T304FD-20yr and T305FD- 10yr
Standard ARM products: A341FD- 5/1 and A342FD- 7/1 Adjustable Rate
Jumbo products: T300JFD-30 yr Fixed, T301JFD-15 yr Fixed, A341JFD-5/1 ARM and A342JFD-7/1ARM
 Attached PUD projects may also be considered for financing subject to same requirements.
Ineligible condo projects include:
 Condo projects under any type of litigation
 Non-warrantable condo projects
 Newly Converted condo Projects
 Projects consisting of Manufactured Home
 Condos with < 400 sq feet
SITE
Condos
For owner occupied Site Condo, the Maximum LTV/CLTV increased to 97% - Property must meet warranty requirements
as outlined in FNMA B4-2.2-03, Limited Review Process for Detached Condo Units, as well as all findings per DU.
The information provided is intended for use by mortgage professionals and financial institutions only. Rates and programs subject to change without notice
Sierra Direct Product guide.
Last revision: 05/21/2013
13
SIERRA DIRECT- Conventional Loan Products Featured Topics
Standard Fixed Rate Products: T300FD-30 yr, T301FD-15yr, T304FD-20yr and T305FD- 10yr
Standard ARM products: A341FD- 5/1 and A342FD- 7/1 Adjustable Rate
Jumbo products: T300JFD-30 yr Fixed, T301JFD-15 yr Fixed, A341JFD-5/1 ARM and A342JFD-7/1ARM
FEATURED TOPIC
CONDO/PUD
PROJECTS
IN LITIGATION
Condo Project
Eligibility
Waivers
CRITERIA
Condo or PUD projects involving pending litigation may be considered eligible providing all of the following requirements
are met:
 Condo project must have a formal Home Owner Association. Small 2-4 condo projects without a formal HOA with
known pending litigation are not eligible for financing.
 Project may not be located in Florida regardless if subject’s location is an eligible county
 Project must meet all other FNMA project eligibility criteria
 Full appraisal report is required.
o Reduced appraisals or PIW is not permitted regardless of DU findings.
o Appraiser may not indicate that marketability issue are present as a result of the litigation issues
 Prior to UW loan approval being issued, acceptable documentation must be provided and reviewed by UW prior to docs
to determine:
o Pending litigation is limited only to minor matters and:
o Litigation has no impact on the safety, structural soundness, habitability, or functional use of the project.
o The following are defined to be minor matters:
 non-monetary litigation involving neighbor disputes or rights of quiet enjoyment or
 litigation for which the claimed amount is known, the insurance carrier has agreed to provide the defense, and the
amount is covered by the association’s insurance; or
 The homeowners’ association is named as the plaintiff in a foreclosure action, or as a plaintiff in an action for past
due homeowners’ association dues.
 Operation’s Manager 2nd signature is required in addition to UW approval
 Not permitted
The information provided is intended for use by mortgage professionals and financial institutions only. Rates and programs subject to change without notice
Sierra Direct Product guide.
Last revision: 05/21/2013
14
SIERRA DIRECT- Conventional Loan Products Featured Topics
Standard Fixed Rate Products: T300FD-30 yr, T301FD-15yr, T304FD-20yr and T305FD- 10yr
Standard ARM products: A341FD- 5/1 and A342FD- 7/1 Adjustable Rate
Jumbo products: T300JFD-30 yr Fixed, T301JFD-15 yr Fixed, A341JFD-5/1 ARM and A342JFD-7/1ARM
FEATURED TOPIC
Continuity of
Obligation
CRITERIA
Requirements for Continuity of Obligation
For a refinance transaction (either limited cash-out or cash-out) to be eligible for sale to Fannie Mae, there must
be a continuity of obligation if there is currently an outstanding lien that will be satisfied through the refinance
transaction. (Refer to next page for loans without acceptable Continuity of Obligation or properties without
existing liens)
Continuity of obligation is met when any one of the following exist:
 At least one borrower is obligated on the new loan who was also a borrower obligated on the existing loan being
refinanced. 1
 The borrower has been on title and residing in the property for at least 12 months and
has either paid the mortgage for the last 12 months or
can demonstrate a relationship (relative, domestic partner, etc.)2 with the current obligor.
 The loan being refinanced and the title to the property are in the name of a natural person. (An Intervivos
Revocable/Family/Living Trust) is considered a natural person. 3
 The borrower has recently inherited, or was legally awarded, the property (divorce, separation, or dissolution of a domestic
partnership). 4
Footnotes:
1. Borrower’s contractual obligation must be accompanied by individual vesting properties in order to qualify for this feature. Properties
vested in business entities or Trusts are not eligible.
2. Per FannieMae definition: An immediate relative is defined as the Borrower’s spouse, child, or other dependent, or any individual related
by blood, marriage, adoption, or legal guardianship.
3.
4.
A limited liability company (LLC) or any Borrowers whom are members of the LLC at the time of or prior to loan application is not
eligible for financing. A chain of title or other property profile history information indicating the property has been deeded in and out of
an LLC or any other type of business entity is not permitted
If the property has recently been inherited or legally awarded, the documentation must include a copy of the applicable court order. Per
FannieMae clarification: Loans which have recently been inherited may be considered either Cash Out or Rate/Term. The Borrower
(Beneficiary) does not necessarily have to be on title at the time of loan application and can be vested on to the property at close of
escrow. Fannie’s rationale is that the decedent’s ownership tenure is transferred over to the Beneficiary upon passing, so that the 6
month’s ownership seasoning requirement normally required for cash out refinance are automatically met.
Loans with an acceptable continuity of obligation (as outlined above) may be underwritten, priced, and delivered
as either cash-out or limited cash-out refinance transactions based on the requirements for each type of
transaction.
Continued on following page
The information provided is intended for use by mortgage professionals and financial institutions only. Rates and programs subject to change without notice
Sierra Direct Product guide.
Last revision: 05/21/2013
15
SIERRA DIRECT- Conventional Loan Products Featured Topics
Standard Fixed Rate Products: T300FD-30 yr, T301FD-15yr, T304FD-20yr and T305FD- 10yr
Standard ARM products: A341FD- 5/1 and A342FD- 7/1 Adjustable Rate
Jumbo products: T300JFD-30 yr Fixed, T301JFD-15 yr Fixed, A341JFD-5/1 ARM and A342JFD-7/1ARM
Continuity of Obligation - Continued from previous page
No Acceptable Continuity of Obligation
If the borrower is currently on title but is unable to demonstrate an acceptable continuity of obligation, or if there
is no outstanding lien against the property, the loan is still eligible for delivery but with the additional restrictions
described in the following table. The loans must be underwritten, priced, and delivered as a cash-out refinance
transaction.
Outstanding Liens
Purchase Date
LTV Ratio Requirements
No (the property was purchased
for cash, previous mortgages
have been paid off, and so on).1
Within the 6- to 12-month
period prior to the
application date for the new
financing. 1
The LTV/CLTV/HCLTV ratios must be
based on the lesser of the original sales
price/acquisition cost (documented by
the HUD-1 Settlement Statement) or the
current appraised value. 2
More than 12 months prior
to the application date for
the new mortgage.
The LTV/CLTV/HCLTV ratios must be
based on the current appraised value.
The borrower has been on
title for at least 6 months.
The maximum LTV/CLTV/HCLTV ratios
are limited to 50% based on the current
appraised value. 3
Yes
Footnotes:
1. The property must have been purchased by the Borrower. Properties gifted to the Borrowers are not eligible for
refinancing for full 12 months since they cannot meet “lesser of” LTV/CLTV ratio calculation requirements
2. HUD-1 closing statement must be provided to document acquisition cost
3. There are no exceptions available to the max 50% LTV/CLTV/HCLTV limitation
The information provided is intended for use by mortgage professionals and financial institutions only. Rates and programs subject to change without notice
Sierra Direct Product guide.
Last revision: 05/21/2013
16
SIERRA DIRECT- Conventional Loan Products Featured Topics
Standard Fixed Rate Products: T300FD-30 yr, T301FD-15yr, T304FD-20yr and T305FD- 10yr
Standard ARM products: A341FD- 5/1 and A342FD- 7/1 Adjustable Rate
Jumbo products: T300JFD-30 yr Fixed, T301JFD-15 yr Fixed, A341JFD-5/1 ARM and A342JFD-7/1ARM
FEATURED TOPIC
Conversion
Policy
(Rental/SH)
DEED
RESTRICTIONS
(resale deed
restrictions)
Community
Seconds
CRITERIA
When the Borrower is purchasing a new residence and retaining their current residence as Second Home or Investment
property, the use of an AVM will be an acceptable source to document required equity for the property being retained.
Other than the use of an AVM, all other conversion policy requirements must be met.
Deed Restrictions (Resale Deed restrictions) can be located within the terms and conditions of the subordinate lien or the
Preliminary title report.
The Underwriter may approve properties with Resale Deed restrictions subject to the following requirements in addition to
applicable Fannie Mae’ policies: Property must be an owner occupied 1-2 unit property or a Condo’s or PUD unit.
 The following types of resale restrictions are eligible (some are likely to occur in combination with others):
o Income limits
o Principal residence requirements
o First time homebuyer requirements as designated by the subsidy provider
o Resale Price Limits
o Age Limits (Senior Communities must comply with applicable laws)
 Only state, county municipalities, local housing agencies or entities that are otherwise administering government
sponsored subsidy programs will be eligible.
 Duration of resale restrictions will be permitted as follows:
o When the restrictions terminate automatically upon foreclosure (or the expiration of any applicable redemption
period,
o Upon the recordation of a deed in lieu of foreclosure; or
o When the resale restrictions survive foreclosure
• If the resale restrictions survive foreclosure:
o The resale restrictions must not impair the servicer’s ability to foreclose on the property.
o The subsidy provider is not permitted to be entitled to obtain any proceeds from the initial sale or transfer of the
property after foreclosure, from the foreclosing mortgage holder who obtained the property at foreclosure, or
pursuant to a deed in lieu of foreclosure.
• If the resale restrictions terminate at foreclosure, the subsidy provider may not be entitled to obtain any proceeds from
the future sale or transfer of the property after foreclosure of acceptance of the deed in lieu of foreclosure.
• The subsidy provider may retain the right of first refusal or option to purchase a resale restricted property when the
borrower is in default or the property is in foreclosure. The terms of the right of first refusal or option to purchase must
be specified in the terms of the resale restrictions.
 The subsidy provider may permit borrowers to refinance their mortgage and take cash out of the transaction. However,
the resale restrictions may limit the cash out amount in order to protect the subsidy invested in the property.
Documentation that the subsidy provider has approved the refinance transaction and that the cash amount complies
with the provisions of the resale restrictions is required.
 Resale Deed Restrictions other than herein stated are not eligible.
Note: FNMA purchase contracts’ “90 day anti-flipping resale clauses” prohibiting the Borrower from re-selling the subject
property <90 days of acquisition are NOT considered a Resale Deed Restriction and are therefore acceptable for financing.
The information provided is intended for use by mortgage professionals and financial institutions only. Rates and programs subject to change without notice
Sierra Direct Product guide.
Last revision: 05/21/2013
17
SIERRA DIRECT- Conventional Loan Products Featured Topics
Standard Fixed Rate Products: T300FD-30 yr, T301FD-15yr, T304FD-20yr and T305FD- 10yr
Standard ARM products: A341FD- 5/1 and A342FD- 7/1 Adjustable Rate
Jumbo products: T300JFD-30 yr Fixed, T301JFD-15 yr Fixed, A341JFD-5/1 ARM and A342JFD-7/1ARM
FEATURED TOPIC
DELAYED
FINANCING
FOR
PRIMARY
RESIDENCES,
SECOND HOMES,
AND INVESTMENT
PROPERTIES
CRITERIA
Borrowers whom purchased the subject property < 6 months of loan application may be eligible for this financing if:
 Borrower owned the subject property <6 months AND did NOT use any mortgage financing for the acquisition.
o Once six months have passed from acquisition date (measured by recordation of trust deed to loan application date),
all applicable seasoning and/or continuity of obligation requirements apply.
o If any mortgage financing was utilized since the acquisition (regardless that it is now paid off) the transaction will not
qualify under the delayed financing policy. There are no exceptions available to this requirement.
o Source of funds must be the Borrower’s own assets. Gift funds are not considered a Borrower’s asset.
 Purchase (acquisition) transaction must have been a bona fide, fully arms-length transaction AND documented with a
copy of the fully executed final certified HUD-1, confirming that no mortgage financing was used.
 Sources of funds for the purchase transaction must be fully documented to be the Borrower’s own asset (such as, bank
statements, personal loan documents, HELOC on anther property, etc. vested in Borrower’s name).
o If the source of funds used to acquire the property was an unsecured loan or a loan secured by an asset
other than the subject property (such as a HELCO secured by another property), the HUD 1 for the
refinance transaction must reflect that ALL CASH OUT PROCEEDS BE USED TO PAY DOWN, IF
APPLICABLE, THE LOAN (UNSECURED OR SECURED BY AN ASSET OTHER THAN THE SUBJECT PROPERTY)
USED TO PURCHASE THE PROPERTY.
o Funds received as gifts & used to purchase the property may not be reimbursed with the proceeds of the new
mortgage loan.
 New loan amount cannot exceed actual documented amount of Borrower's initial investment plus the financing of
closing costs, prepaid fees, and points (subject to the maximum LTV/CLTV/HCLTV ratios for the transaction).
o Parties whose assets where utilized to acquire the property must be contractually obligated. If the party providing
the assets will not execute the Note, the assets are determined to be a “gift” and transaction will not be salable.
 All other cash-out refinance eligibility requirements are met and cash-out pricing is applied.
 The preliminary title report must not reflect any existing liens on the subject property
 Investor and Second Home Borrowers with 5-10 financed properties are eligible for Delayed
Financing/Cash-Out refinance transactions only if all of the Delayed Financing exception
requirements listed in Section B2-1.2-03 are met, AND ADDITIONAL RESTRICTIONS APPLY.
SEE B2-2-03, MULTIPLE FINANCING PROPERTIES FOR THE SAME BORROWER (11/13/2012)
DOCUMENTATION
EXCEPTIONS
FINANCED
M.I.
Standard FannieMae/DU findings documentation unless otherwise stated. This includes: appraisal, income, assets, and
credit documentation. (Also see Self-employed income and tax return topics)
Note: Verbal verification requirements reflected in DU 9.0 may be followed for this product.
Exceptions for documentation waivers and/or requirements mandated by Fannie Mae are not available.
Financed Single Premium Mortgage insurance (FSPMI) info is posted on Rate Sheet & subject to the following:
 Acceptable MI companies: Radian, MGIC and Essent
 M.I. policy endorsement: An FSPMI endorsement to the mortgage insurance policy is required. The endorsement must
provide that the insurance benefit paid pursuant to the “percentage option” in satisfaction of a claim be calculated as:
o The claim amount minus the unamortized portion of the financed mortgage insurance premium] multiplied by the
applicable coverage percentage, PLUS
o The unamortized portion of the financed mortgage insurance premium
 The LTV is calculated using the base loan amount prior to the addition of the FSPMI. E.G.: TWO different calculations
The information provided is intended for use by mortgage professionals and financial institutions only. Rates and programs subject to change without notice
Sierra Direct Product guide.
Last revision: 05/21/2013
18
SIERRA DIRECT- Conventional Loan Products Featured Topics
Standard Fixed Rate Products: T300FD-30 yr, T301FD-15yr, T304FD-20yr and T305FD- 10yr
Standard ARM products: A341FD- 5/1 and A342FD- 7/1 Adjustable Rate
Jumbo products: T300JFD-30 yr Fixed, T301JFD-15 yr Fixed, A341JFD-5/1 ARM and A342JFD-7/1ARM
of the LTV are required:
o For M.I. coverage requirements = base loan amount prior to the addition of the FSPMI*
o Pricing & LTV program eligibility = loan amount after the addition of the FSPMI. Loan amount after addition of the
FSPMI may not exceed 97% LTV as stated in product matrix.
Reminder: Add-ons, FICO scores and other parameters must be met exactly as posted on the Rate Sheet
FLIPPING
Effective immediately, purchase transactions for properties that are owned by the Seller and resold < 90 days can be
Approved by the UW. The Sellers’ acquisition date is evidenced by the Preliminary Title report’s recordation of Grant
Deed to date borrower’s purchase contract was executed – all contract terms accepted by the seller. All of the
following requirements must be met
Loan file is reviewed and counter signed by Operations Manager.
OPS “Flip” field In UW screen must be correctly populated. (Note: instructions were previously communicated
and requires field to be completed for all flips resold 0180 days)
 Single Family 1unit
 Owner Occupied properties and Second Homes(this includes PUD and Condos)
 Maximum LTV of 90% for Owner Occupied Homes and. If the entire down payment is comprised of gift funds, the
maximum LTV is 70%
 Minimum 5% borrower own funds must be vested into the transaction
 Max LTV of 80% for Second Homes- no gifts or secondary financing allowed
 Secondary Financing is permitted if obtained from institutional lender. Max CLTV will be 90%.for Owner Occupied
Only- secondary financing not allowed for second homes
 The maximum number of ownership transfers within the most recent 90 days is limited to ONE. (E.G. multiple
title/ownership transfers within a 90 day period is not permitted)
 Must be a bona fide fully arms length transaction.
 FSBO or other NonArms length transactions are not permitted
 At interest transactions are not permitted
 If the Seller is an entity (LLC, trust, etc), documentation showing legal registration of the entity such as articles of
operation with the seal, or a business license.
 The borrower(s) can have no affiliation with the entity of any kind
Standard SPM policy regarding acceptable purchase contract documentation applies, including but not limited to:
o Complete executed purchase contract is in file with all addenda attached and reviewed by UW
o Seller is currently on title and must remain on title throughout closing
 A full appraisal report will be required with a Field Review which must support appraisal value. Limited appraisal
reports or PIW is not permitted.
The Underwriter will be responsible to evaluate appraisal report to ensure:
 The subject property’s sales history makes sense for the market as addressed on appraisal report
 Appraiser must confirm property improvements made for properties that were purchased through a distressed
sale and where substantial renovations to the property were made and is now selling for a profit
§ The renovations must be documented and verified
§ Increase in value must be supported by Appraiser’s comments and photo’s reflecting Seller’s
improvements/rehab/capital improvements were made to the property beyond normal “clean up”, repairs and
The information provided is intended for use by mortgage professionals and financial institutions only. Rates and programs subject to change without notice
Sierra Direct Product guide.
Last revision: 05/21/2013
19
SIERRA DIRECT- Conventional Loan Products Featured Topics
Standard Fixed Rate Products: T300FD-30 yr, T301FD-15yr, T304FD-20yr and T305FD- 10yr
Standard ARM products: A341FD- 5/1 and A342FD- 7/1 Adjustable Rate
Jumbo products: T300JFD-30 yr Fixed, T301JFD-15 yr Fixed, A341JFD-5/1 ARM and A342JFD-7/1ARM
refurbish
PLEASE REFER TO THE POLICY & PROCEDURES MANUAL FOR FULL REQUIREMENTS
Gas, Oil and Minl
Rights Leases
Restrictions removed as of 03/20/2013
The information provided is intended for use by mortgage professionals and financial institutions only. Rates and programs subject to change without notice
Sierra Direct Product guide.
Last revision: 05/21/2013
20
SIERRA DIRECT- Conventional Loan Products Featured Topics
Standard Fixed Rate Products: T300FD-30 yr, T301FD-15yr, T304FD-20yr and T305FD- 10yr
Standard ARM products: A341FD- 5/1 and A342FD- 7/1 Adjustable Rate
Jumbo products: T300JFD-30 yr Fixed, T301JFD-15 yr Fixed, A341JFD-5/1 ARM and A342JFD-7/1ARM
FEATURED TOPIC
CRITERIA
GEOGRAPHIC
RESTRICTIONS
HOLD-BACKS
(ESCROW REPAIR)
SPM Geographic restrictions apply
INCOME
(Employment
related Assets)
Fannie Mae’s published policy for “Employment-Related Assets as Qualifying Income” may be utilized when SPM lump sum
distribution annuity policy requirments cannot be met.
All Fannie requirements including but not limited to LTV parameters, occupancy, property types, documentation and
income calculation requirements must be met.
 Standard Fixed Rate Products: 10, 15, 20 and 30 year loan terms
 Jumbo Fixed Rate Products: 15 and 30 year loan terms.
 Standard ARM Products: 5/1 and 7/1 30 year Adjustable Rate Mortgage
 Jumbo ARM product: 5/1 and 7/1 Adjustable Rate Mortgage
Follow FannieMae guidelines for Borrowers with 5 to 10 financed properties –
*****MINIMUM FICO SCORE OF 720*****
SEE SECTION B2-2-03 FOR SPECIFIC REQUIREMENTS
Reminder: DU cannot determine exactly how many properties are owned and financed by Borrowers. UW is
responsible to determine all applicable guidelines are met
For Borrowers with >4 financed properties- Cash Out Transactions for Investor & 2nd Homes is not available
unless transaction falls under delayed financing requirements
Standard Fannie Conforming and FannieMae High Balance County loan limits
LOAN TYPES/
TERM
MAX. FINANCED
PROPERTIES
MAX. LOAN AMT
NON-ARMS
LENGTH
Escrow Repair Hold-backs are permitted subject to SPM hold-back policy requirements
 Definition: Non-arm's length (NAL) transactions defined for this product/program guideline specifically as:
o Purchase transactions in which there is a relationship or business affiliation between the Seller and the Buyer of the
property. For Sale by Owner (FSBO) transactions are not considered NAL, but may be restricted for certain loan
transactions such as Flipped properties.
 While FSBO transactions are not considered NAL, the Underwriter is expected to exercise proper due diligence when
approving these transactions. The following criteria must be met:
 A written, fully executed purchase agreement is required
 The Underwriter must be able to document the method in which the property was marketed
 Appraisal report (if applicable) must indicate purchase contract was reviewed by appraiser
o NAL policy does NOT apply to refinance transactions
o There is no “At interest” (AIT) requirement or restriction unless specifically stated such as the Flipping policy
 NAL transactions for the purchase of existing properties are allowed unless specifically forbidden for the particular
scenario, such as Delayed Financing, Flipping policy or if otherwise stated.
 Purchase of newly constructed properties: if the borrower has a relationship or business affiliation (any ownership
interest, or employment) with the builder, developer, or seller of the property:
o Only purchase mortgage loans for a primary residence is permitted.
o Newly constructed homes secured by a second home or investment property wherein the borrower has a relationship
or business affiliation with the builder, developer, or seller of the property are not eligible for financing.
Clarification: The NAL definition herein stated is specific to SD products only. Unless otherwise stated, or restricted all
occupancy types are permitted
The information provided is intended for use by mortgage professionals and financial institutions only. Rates and programs subject to change without notice
Sierra Direct Product guide.
Last revision: 05/21/2013
21
SIERRA DIRECT- Conventional Loan Products Featured Topics
Standard Fixed Rate Products: T300FD-30 yr, T301FD-15yr, T304FD-20yr and T305FD- 10yr
Standard ARM products: A341FD- 5/1 and A342FD- 7/1 Adjustable Rate
Jumbo products: T300JFD-30 yr Fixed, T301JFD-15 yr Fixed, A341JFD-5/1 ARM and A342JFD-7/1ARM
Paying
off/Paying down
debts
The UW is responsible to evaluate payoff or pay down of debts in relation to the overall loan analysis. The Borrower’s
history of credit use must be considered in determining whether the appropriate approach is to include or exclude debt for
qualification. Each loan transaction must stand on its’ own merits and must pose an acceptable risk to SPM and meet
Fannie guidelines
The information provided is intended for use by mortgage professionals and financial institutions only. Rates and programs subject to change without notice
Sierra Direct Product guide.
Last revision: 05/21/2013
22
SIERRA DIRECT- Conventional Loan Products Featured Topics
Standard Fixed Rate Products: T300FD-30 yr, T301FD-15yr, T304FD-20yr and T305FD- 10yr
Standard ARM products: A341FD- 5/1 and A342FD- 7/1 Adjustable Rate
Jumbo products: T300JFD-30 yr Fixed, T301JFD-15 yr Fixed, A341JFD-5/1 ARM and A342JFD-7/1ARM
FEATURED TOPIC
PREFORECLOSURE/
SHORT SALE
Waiting periods
Property
Eligibility
CRITERIA
UW may consider approving Pre-foreclosure/Short Sale transactions if a minimum of TWO years waiting period has been
completed. Per FannieMae guidelines, the waiting period is calculated from the date the action (E.G. short sale) is
completed to the date of the initial loan application. A fully executed final HUD-1 closing statement may be used to
compare the disbursement date of the short sale to the initial loan application date to document the short sale.
 Two year waiting period option can only be applied if all of the requirements herein stated are met: otherwise the
standard waiting period will apply.
 Maximum LTV is the lesser of 90% LTV or the applicable LTV stated in product matrix
 UW must obtain and review all of the following documentation:
o The borrower's fully executed written LOE must attribute the cause of the financial difficulties to factors beyond his or
her control.
o Supporting third-party documentation specific to the circumstances (E.G. job loss, reduction of income, divorce,
medical, etc.) must correlate to borrower's explanation and timetable of events, and confirm the events were an
isolated occurrence, which resulted in a sudden, significant, and prolonged reduction in income or a catastrophic
increase in financial obligation.
 Examples of documents confirming the event were beyond Borrower’s control include but are not limited to: copy of
a divorce decree, medical reports or bills, notice of job layoff, job severance papers, etc.
 The difficulties must not be ongoing or likely to recur.
 All applicable FannieMae guidelines will apply
 Standard property and occupancy eligibility requirements.
 Hobby Farms: One-Unit SFR Primary Residence properties located in rural or semi-rural locations with primary
residential use may be considered eligible when some of the acreage is used for “Hobby Farm” purposes. Examples:
Small barns and/or riding rings, small orchards or vineyards, etc. The UW may approve such properties subject to:
o Appraisal requirements:
 Full appraisal report required with interior and exterior photo’s including photo’s of the non-residential use
 The appraisal report must value the property as residential real estate ( Property must be residential in nature and
supported by Appraiser’s indication of highest and best use as residential property
 Agricultural use cannot exceed > 20% of total acreage
 Hobby Farm use of the property may not result in any significant alterations
 Subject property must conform to zoning and allow Hobby Farm use
 Outbuildings must be minimal and their valuation must be minor and of relatively insignificant value in relation to
the total appraised value. Also, outbuildings must be typical of the subject property’s market as demonstrated by
the Appraiser’s ability to provide valid comparable sales indicating there is an active, viable market for properties
with these types of amenities.
 Properties with large, substantial outbuildings (such as silo’s, large barns, storage facilities, or other types of
buildings used for commercial, industrial, working farm, ranch or orchard purposes) will not be eligible for financing
even if the appraiser assigns no value to these buildings.
Continued on following page
The information provided is intended for use by mortgage professionals and financial institutions only. Rates and programs subject to change without notice
Sierra Direct Product guide.
Last revision: 05/21/2013
23
SIERRA DIRECT- Conventional Loan Products Featured Topics
Standard Fixed Rate Products: T300FD-30 yr, T301FD-15yr, T304FD-20yr and T305FD- 10yr
Standard ARM products: A341FD- 5/1 and A342FD- 7/1 Adjustable Rate
Jumbo products: T300JFD-30 yr Fixed, T301JFD-15 yr Fixed, A341JFD-5/1 ARM and A342JFD-7/1ARM
FEATURED TOPIC
Property
Eligibility
(Hobby Farmscontinued from
previous page)
SELF-EMPLOYED
BRW.
CASH FLOW
(Using Bus.
Income for
qualifying)
INCOME
(Tax transcripts)
Secondary
Financing
Texas50(a)(6)
Topics not
addressed
CRITERIA
Continued from previous page
o The reported income on Borrower’s tax returns from this source must be carefully analyzed and treated as follows:
 The Gross income (not net income) must be minimal. E.G. substantial gross income may be an indication of
“commercial business” operation.
 Losses must be included in the DTI and cannot be disregarded
Ineligible properties include: Manufactured/Modular homes, Non-warrantable condos, co-ops, commercial properties,
working farms (except as specifically eligible under Hobby Farms), and property with Resale Deed Restrictions other than
for those listed as being eligible.
If business income other than Schedule C Sole Proprietors is used, the inclusion of business income, retained earnings, or
capital withdrawal may be used as qualifying income providing that the 1084 cash flow analysis is completed in
accordance with FannieMae requirements including:
 UW receives and reviews complete set of 2 yrs. Business tax returns (all statements must be attached) in addition to
personal returns.
 1084 Cash flow analysis form must be completed for all applicable business entities and Underwriter must clearly
document the manner in which the qualifying income was calculated
 All FannieMae self employment income, documentation and business analysis requirements must be met
 Reminder:
o For Corporate entities, the Borrower must own 100% of the business in order to use business income.
o A Partnership’s, LLC’s or S-Corp owner’s proportionate share of business income is based on his or her percentage of
capital ownership in the business, as shown on Schedule K-1.
The IRS-issued transcripts of the borrower’s individual and business federal income tax returns that were filed with the
IRS for the most recent two years may be utilized in lieu of validated returns. All of the FannieMae requirements will
apply including but not limited to:
 The information provided must be complete and legible
 The transcripts must include the information from all of the applicable schedules
Refer to FannieMae guides for other requirements regarding assets, income trends, etc.
HELOC’s with Credit Line ReductionsAll loan transactions wherein a Credit Line Reduction is required, in lieu of a formal recorded Modification Agreement from
the Lien Holder on secondary financing, the following would be acceptable documentation

Fully Executed Agreement between Borrower(s) and Secondary Lienholder, or

Letter from Secondary Lienholder referencing the modified loan amount, or

Correspondence from Secondary Lienholder that existing HELOC reached the end of the draw period, and now in
the repayment plan with no further draws/advances possible.
No longer needed is a formal Modification Agreement, nor does the Subordination Agreement needed to reflect the
“Modified Line Amount”.
Loans subject to Texas 50(a)(6) requirements are not eligible for financing under this product
All Featured Topics listed in the product guide reflect SPM's current offerings for the Sierra Direct product. Topics not
specifically addressed in this product guide may follow requirements published in the P&P. If the P&P does not specifically
address the topic, please contact your Operations Support team.
The information provided is intended for use by mortgage professionals and financial institutions only. Rates and programs subject to change without notice
Sierra Direct Product guide.
Last revision: 05/21/2013
24
SIERRA DIRECT- Conventional Loan Products Featured Topics
Standard Fixed Rate Products: T300FD-30 yr, T301FD-15yr, T304FD-20yr and T305FD- 10yr
Standard ARM products: A341FD- 5/1 and A342FD- 7/1 Adjustable Rate
Jumbo products: T300JFD-30 yr Fixed, T301JFD-15 yr Fixed, A341JFD-5/1 ARM and A342JFD-7/1ARM
Vesting
Requirements
Fractional interest percentage vesting is allowed
The information provided is intended for use by mortgage professionals and financial institutions only. Rates and programs subject to change without notice
Sierra Direct Product guide.
Last revision: 05/21/2013
25
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