CMG FHA Guidelines

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CMG FHA Guidelines: Wholesale & Select Partner

Loan Matrix ? LTV/CLTV & Minimum Credit Score ......................................................................................................................................................2 Program Details, Highlights and Overlays....................................................................................................................................................................3 Part A ? Borrower & Application ................................................................................................................................................................................10 Part B ? Property Ownership Restrictions..................................................................................................................................................................18 Part C ? Occupancy ..................................................................................................................................................................................................19 Part D ? Underwriting Documentation........................................................................................................................................................................20 Part E ? Application ...................................................................................................................................................................................................23 Part F ? Credit Analysis .............................................................................................................................................................................................26 Part G ? Evaluating Income.......................................................................................................................................................................................38 Part H ? Asset Assessment .......................................................................................................................................................................................61 Part I ? Liability & Debt Analysis ................................................................................................................................................................................69 Part J ? Property Eligibility.........................................................................................................................................................................................75 Part K ? Geographic Restrictions...............................................................................................................................................................................87 Part L ? Disaster Policy .............................................................................................................................................................................................89 Part M ? Mortgage Insurance (UFMIP & Annual Premium)........................................................................................................................................90 Part N ? Property Insurance ......................................................................................................................................................................................91 Part O ? Title Insurance.............................................................................................................................................................................................98 Part P ? Departing Residence Policy ....................................................................................................................................................................... 100 Part Q ? Transaction Types (Purchase and Refinances) ......................................................................................................................................... 101 Part R ? Secondary Financing ................................................................................................................................................................................. 126 Part S ? Interested Party Contributions (IPCs) / Financing Concessions / Sales Concessions ................................................................................ 127 Part X - Links to CMG Policies, FHA Resources, Etc...............................................................................................................................................128 Part Y ? Product Codes / Terms / ARM Information.................................................................................................................................................129 Part Z - Recent Updates / 90 Day Lookback............................................................................................................................................................131

Loan Matrix ? LTV/CLTV & Minimum Credit Score

CMG Wholesale & Select Partner- FHA Loan Matrix & Guidelines Handbook 4000.1: Updated 12/2/2021

Click Here for Quicklink back to Table of Contents

Standard Loan Amounts & High Balance FHA Loans

Purchase

Cash Out

Rate and Term

No Cash Out Refinances Simple Refinance

Streamline Refinance

FICO

LTV CLTV

600 Standard loan amounts 2 620 High Balance 4

96.50% 5 96.50% 1

600 Standard loan amounts 2

620 High Balance 4

80% Case numbers on and after 9/1/2019 (85% prior to)

600 Standard loan amounts 2

620 High Balance 4

97.75%3

97.75%

600 Standard loan amounts 2 620 High Balance 4

97.75%3 97.75%

600 Standard loan amounts 2 620 High Balance 4

N/A3 none

1. 110% CLTV permitted with the use of eligible DPA, not to exceed 100% "Cost to Acquire" 2. Credit scores from 600-619 permitted subject to meeting all the following requirements:

? TOTAL Scorecard analysis required (except Streamlines). Manual downgrades are allowed with Approve/eligible findings. "Refer" findings are permitted. ? Non-traditional credit is not permitted except as outline in Credit Depth Policy. ? SFR/Cond/PUD only (no multi units) ? Standard loan amounts only. High balance loan amounts not permitted

? Cash out transactions require a second signature and the following: Max DTI 43%, No open collections/judgments, housing payment history required 0x30x24.

? For all transactions, borrowers must have a verifiable housing history or must demonstrate a regular savings pattern which demonstrates their financial maturity or require a CMG Level II second signature

? Qualifying Ratios: Up to 31/43% no comp factors required, CMG requires that both AUS approved and manually underwritten loans meet HUD's Acceptable Compensating Factors based on credit score and qualifying ratio. Note: HUD Compensating factors can be located in Part F-8 ? Manual Underwriting and full details are in HUD Handbook 4000.1 Chapter 5.

3. FHA Maximum Loan Amount Calculation applies. HUD approved secondary residences are subject to additional restrictions. 4. All High Balance Loans: Maximum 0x30x12 mortgage history and must score Approve/Eligible (Streamlines okay to be manually underwritten: HPH applies) 5. Refer to CMG's FHA 203(h) Disaster Relief Guideline Addendum for transactions eligible up to 100% LTV.



Information in these guidelines is for credit policy guidance only and is not a complete representation of CMG Financial (NMLS #1820) Lending Policies. Information is accurate as of the date of publishing and is subject to change without notice. The Guidelines outlined apply to Agency loans submitted to TOTAL Scorecard. In addition to applying these CMG-specific overlays, all loans submitted to TOTAL Scorecard must comply with the AUS Findings and FHA/Ginnie Mae requirements. To verify our state licenses, please log onto the following website: and

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Program Details, Highlights and Overlays

CMG Wholesale & Select Partner- FHA Loan Matrix & Guidelines Handbook 4000.1: Updated 12/2/2021

Click Here for Quicklink back to Table of Contents

All CMG Financial Guidelines will follow FHA/Ginnie Mae Guidelines (the HUD Handbook) in addition to CMG Financial overlays, when applicable.

Topic

Eligible Terms

Eligible Transactions

Escrows

Loan Amount Limits

Non-Occupant Co-Borrower(s) / Cosigner Number of Borrowers Occupancy

Details / Highlights / Overlays

Fixed: 15, 20, 25 and 30 year; ARM: 5/1 Arm, Margin 2%, Caps 1/1/5, Index based 1 Yr T-Bill (per WSJ) Good Neighbor Next Door eligible for 15 & 30 year terms only. HUD REO w/ $100 Down eligible for 15 & 30 year terms only. Note: Non-owner occupied Properties and HUD-approved Secondary Residences are only eligible for Streamline Refinancing into a fixed

rate Mortgage. Refer to Part Y ? Product Codes, Terms, ARM Information for additional information. Purchase, Rate & Term Refinance, Cash-out Refinance, Simple Refinance and Streamline Refinances permitted. A Net Tangible Benefit Worksheet must be completed on all refinance transactions. Section 203(h) transactions eligible as noted in CMG's FHA 203(h) Disaster Relief Guideline Addendum. HUD REO Transactions permitted, including $100 Down, HUD Repo with Repair Escrow, and Good Neighbor Next Door. Refer to Part Q ? Transaction Types ? Purchase transactions for additional details based on transaction type. Tax and Insurance escrows are required on all FHA loans. Effective on loans closed on or after January 1, 2016 that require flood insurance: the premiums related to the flood insurance must be escrowed - escrows for these premiums may not be waived, regardless of LTV. If flood insurance premiums are paid by a condominium association, homeowner's association or other group, no escrow is required. Note: CMG does not permit escrow for earthquake insurance. Minimum Loan Amount: None. Maximum Loan Amount: $1,000,000 In addition, maximum loan limits vary by unit county and by State and County as determined by HUD: With the exception of Streamlines without appraisals, the base loan amount (loan amount prior to UFMIP) may not exceed the limits published by HUD. For loans where a non-occupying borrower / cosigner is utilized the overall transaction ratios should generally not exceed 31/43 however, higher ratios may be considered if the overall financial strength of the non-occupying coborrower / cosigner can be established. Cash-out is not permitted. Note: Non-occupant co-borrower / cosigner may not be an interested party to the sales transactions, such as property seller, builder, or real estate broker. Refer to Part A-8 ? Non Occupying Borrowers & Cosigners for additional requirements, including LTV limitations.

There can be no more than 4 borrowers per loan.

Purchase, Rate/Term & Cash out: Owner Occupied, Primary Residence and HUD Approved Secondary Residences only. Simple Refinance is only permissible for owner-occupied Principal or HUD-approved Secondary Residences. Streamline Refinances permitted for owner occupied, HUD Approved Secondary Residences, and non owner occupied transactions. Refer to Part C ? Occupancy for additional details.



Information in these guidelines is for credit policy guidance only and is not a complete representation of CMG Financial (NMLS #1820) Lending Policies. Information is accurate as of the date of publishing and is subject to change without notice. The Guidelines outlined apply to Agency loans submitted to TOTAL Scorecard. In addition to applying these CMG-specific overlays, all loans submitted to TOTAL Scorecard must comply with the AUS Findings and FHA/Ginnie Mae requirements. To verify our state licenses, please log onto the following website: and

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CMG Wholesale & Select Partner- FHA Loan Matrix & Guidelines Handbook 4000.1: Updated 12/2/2021

Click Here for Quicklink back to Table of Contents

Topic

Details / Highlights / Overlays

Property Types

Qualifying Ratios Refinance Streamline

Refinance ? Cash Out

Secondary & Subordinate Financing / Down Payment Assistance

Underwriting

1-4 Family Dwellings, PUD, Townhomes, Row homes, Modular, HUD Approved Condominiums. See "Collateral" below for Ineligible Property Types. Leasehold estates must meet all FHA/HUD requirements. Manufactured Homes are eligible as noted in the Manufactured Home Guideline Addendum. AUS approved loans max DTI is per AUS. Level I exception is required for all FHA Transactions with a qualifying credit score of less than 660 and ratios exceeding 37/47 (BOTH ratios exceed the numbers, not just one; i.e, a 39/50 requires Level 1 review, whereas a 39/43 does not) Manual underwrites must meet all FHA requirements. (References: Chapter 5 of HUD Handbook 4000.1). Also, refer to Part F-8 ? Credit Analysis ? Manual Downgrades/Manual Underwriting.

Non credit qualifying permitted; however, a Verbal Verification of Employment (VVOE) must be completed within ten (10) days prior to the funding date. Refer to: Part Q-6 ? Transactions ? Refinances ? Streamlines.

? Refer to FICO/LTV Matrix for LTV restrictions and CMG minimum credit score requirements. ? 0x30 mortgage lates in the last 12 months. ? There is no limit to the maximum cash-out permitted. ? The Property securing the cash-out refinance must have been owned and occupied by the Borrower as their Principal Residence

for the 12 months prior to the date of case number assignment. Exception: In the case of inheritance, a Borrower is not required to occupy the Property for a minimum period of time before applying for a cash-out refinance, provided the Borrower has not treated the subject Property as an Investment Property at any point since inheritance of the Property. If the Borrower rents the Property following inheritance, the Borrower is not eligible for cash-out refinance until the Borrower has occupied the Property as a Principal Residence for at least 12 months.

? The Mortgagee must review the Borrower's employment documentation or obtain utility bills to evidence the Borrower has occupied the subject Property as their Principal Residence for the 12 months prior to case number assignment.

Refer to: Part Q-3 ? Refinance ? Cash Out.

? CMG does not permit new subordinate financing with any refinance transaction. ? For Purchase transactions, maximum CLTV is 100% of the Cost to Acquire if the secondary financing is from a Government

Agency/HUD-approved Non-Profit considered in instrumentality of government. CMG will permit up to a max 110% CLTV based on lessor of purchase price/appraised value for DAP's eligible be used to cover the borrowers minimum 3.50% down payment requirement. The cost to acquire is defined as Sales Price + Borrower Paid Closing Costs + Discount Points + Pre-paid Expenses. ? Refer to Part R: Secondary Financing for additional guidance. FHA Total Scorecard/AUS must be run; with the exception of Streamline Refinances (manual underwriting is required for all streamlines). ? High Balance Loan Amounts: AUS Accept Rating required; Refers are not permitted. Manual downgrades due to FHA / TOTAL

Scorecard requirements are eligible. ? Standard Loan Amounts: Generally, Refer/Eligible through TOTAL scorecard is permitted for BK, foreclosure, or erroneous

information only. Manual downgrades due to FHA / TOTAL Scorecard requirements are eligible. For additional guidance on Manual Underwriting, refer to Part F-8 ? Credit Analysis ? Manual Downgrades/Manual Underwriting.



Information in these guidelines is for credit policy guidance only and is not a complete representation of CMG Financial (NMLS #1820) Lending Policies. Information is accurate as of the date of publishing and is subject to change without notice. The Guidelines outlined apply to Agency loans submitted to TOTAL Scorecard. In addition to applying these CMG-specific overlays, all loans submitted to TOTAL Scorecard must comply with the AUS Findings and FHA/Ginnie Mae requirements. To verify our state licenses, please log onto the following website: and

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Category

Program Assets

Topic

Ineligible Features / Programs

First Time Homebuyers Good Neighbor Next Door (GNND) Maximum # of Financed Properties Multiple Mortgages to Same Borrower Power of Attorney

Ineligible Asset Types

CMG Wholesale & Select Partner- FHA Loan Matrix & Guidelines Handbook 4000.1: Updated 12/2/2021

Click Here for Quicklink back to Table of Contents

Details / Highlights / Overlays

? Military Impacted Areas ? Texas A6 loans ? Rebuttable Presumption loans are not eligible ? Section 32 loans are not eligible ? Temporary Buydowns are not permitted ? Section 184 ? FHA Back To Work ? Extenuating Circumstances ? MCC ? 203K Loans ? Energy Efficient Mortgages (EEM) ? Negative Equity Program ? Weatherization financing (II.A.8.i) ? Solar & Wind Technologies Financing (II.A.8.j)

? Loans to non-profit organizations ? Indian Reservations ? HOPE for Homeowners ? Construction to Permanent (CTP) Financing where the original note is modified is not eligible (II.A.8.g) ? Non-Arms Length Transactions are generally not allowed; to be eligible transaction must meet FHA guidelines and must receive exception approval. Bailouts not permitted. ? Dual roles on an FHA transaction are not permitted (An originator cannot have another real estate related position for any loan) ? Properties with individual water purification systems are not eligible

Allowed.

Permitted. Refer to Part Q-1 ? Purchases ? HUD REOs - GNND.

For FHA Financing the borrower may generally only have one FHA loan. Multiple loans to FHA Borrowers not permitted unless eligible per FHA Handbook 4000.1. Refer to section "B-2 ? Multiple Financed Properties"

Borrowers are limited to three (3) loans or one million dollars ($1,000,000) total in loans funded/purchased by CMG, whichever is less. Jumbo loans are excluded from loan amount limit, but still count towards the aggregate total of loans with CMG. Refer to "Part B-1 ? Multiple Loans to One Borrower".

CMG will not permit HUD exceptions for closing documents signed by an attorney-in-fact who is connected to the transaction. Refer to Section A-9 for additional guidance and requirements.

? 1031 exchanges are not permitted and are ineligible as an asset type. ? Custodial Accounts for Minors; accounts that are in a minor's name where the borrower is the only custodian of

the funds are not eligible for closing costs, reserves or downpayment. ? Pooled Funds ? Mattress Money / Cash on Hand ? Sweat Equity ? Trade Equity Refer to Part H ? Asset Assessment for additional information on eligible assets.



Information in these guidelines is for credit policy guidance only and is not a complete representation of CMG Financial (NMLS #1820) Lending Policies. Information is accurate as of the date of publishing and is subject to change without notice. The Guidelines outlined apply to Agency loans submitted to TOTAL Scorecard. In addition to applying these CMG-specific overlays, all loans submitted to TOTAL Scorecard must comply with the AUS Findings and FHA/Ginnie Mae requirements. To verify our state licenses, please log onto the following website: and

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Category

Assets

Collateral

Topic

Verification of Deposits

Ineligible Property Types

Appraiser Requirements

Condos

Properties Listed for Sale Deed Restricted Properties Property "Flips" Property Condition Re-negotiated purchase agreements

Sales Incentive

CMG Wholesale & Select Partner- FHA Loan Matrix & Guidelines Handbook 4000.1: Updated 12/2/2021

Click Here for Quicklink back to Table of Contents

Details / Highlights / Overlays

Not permitted as standalone documentation ? must be accompanied by computer printout or other statements directly from the banking institution. For additional requirements refer to Part D - Underwriting Documentation.

? Co-ops

? Properties with manufactured on site as either an ADU

? Bed and Breakfast Properties

or being used as storage

? Hobby Farms

? Properties where farm or agricultural income from the

? Live/Work Units

subject property is claimed on borrowers tax returns

? Section 8 properties

? Properties encumbered with private transfer fee

covenants

? Loans on properties significantly uncommon for the

area and lacking comparable sales

? Refer to "J-2 ? Ineligible Collateral"

Appraisal must be completed by an FHA Roster appraiser; a copy of the appraiser's license must be included in all

funded loan files. The transfer of an FHA appraisal from another lender is permitted; as a standard, an appraisal is

only good for 1 closed and funded loan. Re-use of an appraisal from a previously closed transaction is not

permitted.

Refer to "Part J ? Property Eligibility"

With the exception of FHA Streamlines, condominiums must be HUD approved and not expired at time of case number issuance: Note: CMG Financial will not process a DELRAP.

R/T Refinance: Must be off the market at least one day prior to application. Cash Out Refinance: Must be off the market at least six months prior to the application.

All deed restricted properties (including Age Restricted properties) must be reviewed and receive prior approval from CMG Corporate Credit. Refer to Part J-9 ? Properties Subject to Age Restrictions.

Standard FHA 90 day rule applies. Refer to Part Q-1 ? Additional Chain of Title Considerations for Purchase Transactions.

Property condition of C5 or C6 are not eligible. All repairs affecting safety, livability, or habitability must be completed prior to closing.

Generally renegotiated sales contracts are not allowed, however, minor adjustments due to condition or other relevant factors are permitted. Increasing of sales price after the appraisal is completed to provide seller credit is not permitted.

The maximum allowable sales incentive (commission, finder's fee, etc.) is limited to 8% of the sales price. Refer to Part S for more information on IPCs, Sales Concessions/Financing Concessions. For HUD REO sales incentives see Part Q ? HUD REOs



Information in these guidelines is for credit policy guidance only and is not a complete representation of CMG Financial (NMLS #1820) Lending Policies. Information is accurate as of the date of publishing and is subject to change without notice. The Guidelines outlined apply to Agency loans submitted to TOTAL Scorecard. In addition to applying these CMG-specific overlays, all loans submitted to TOTAL Scorecard must comply with the AUS Findings and FHA/Ginnie Mae requirements. To verify our state licenses, please log onto the following website: and

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Category

Topic

Derogatory Credit

Credit (Refer to Part F ? Credit Analysis for more information)

Credit Score / History

Credit Depth

Credit Inquiries

Paying Down/Off Debt to Qualify

CMG Wholesale & Select Partner- FHA Loan Matrix & Guidelines Handbook 4000.1: Updated 12/2/2021

Click Here for Quicklink back to Table of Contents

Details / Highlights / Overlays

All loans are subject to standard FHA requirements and waiting periods as noted below: ? BK Chapter 7 must be discharged 24 months preceding the case number assignment date. Exceptions for extenuating circumstances permitted but require Corporate Credit Approval. ? BK Chapter 13 must have been entered at least 12 months preceding the case number assignment date and be paid as agreed. In addition, plan must be paid out and discharged prior to closing; loan proceeds cannot be used to payoff a BK balance. ? Foreclosures must be settled a minimum of 36 months preceding the case number assignment date. Exceptions for extenuating circumstances permitted but require Corporate Credit Approval.

Refer to Derogatory Credit Matrix for applicable waiting periods. Refer to Part F: Credit Analysis for additional credit requirements. Notes: FHA's Back to Work ? Extenuating Circumstances is not permitted.

? Minimum score requirements are described in the FICO/LTV Matrix above. All borrowers must meet minimum credit score.

? Refer to Credit Depth section below & Part F ? Credit Analysis for additional requirements. ? Refer to Part F6 ? Housing Payment History for direction on mortgage/rental payment history requirements. Note: Mortgage only credit reports are acceptable for non credit qualifying FHA Streamline refinances. Credit and capacity analysis is not required for non credit qualifying Streamline refinances. Unless AUS approved, a minimum of two credit scores to be established for each Borrower; AUS approved loans require a minimum of one valid credit score to be established for each borrower. In order for credit score to be considered valid it must be generated based on sufficient credit. The definition of sufficient credit can vary by borrower. Generally, sufficient credit is defined as at least 3 valid tradelines showing a 24 month history and a debt account balance that demonstrates the borrower's ability to manage debt properly.

? It is not necessary that all 3 accounts are currently active/open but that the overall credit profile of the borrower demonstrates the borrower's ability to manage a reasonable debt load. Caution should be exercised when the borrower has no open accounts, however, when a borrower can demonstrate a history of managing reasonable debt load in the recent past, the credit depth requirement is met.

? Authorized user accounts, deferred student loans and secured credit card accounts are not applicable and should be disregarded.

Alternative credit by itself is not acceptable, however, if a borrower's situation is such that through either housing payment history (0x30x12 documented) or through an established regular savings pattern where the borrower is clearly managing his finances to save for a new home, it can be established that the borrower is demonstrating financial maturity, one alternative credit account may be utilized to meet the requirements above.

All credit inquiries within 120 days of the credit report are required to be addressed by the customer.

CMG Aligns with HUD Requirements, Refer to Paydown/Payoff of Debt in Part I-1



Information in these guidelines is for credit policy guidance only and is not a complete representation of CMG Financial (NMLS #1820) Lending Policies. Information is accurate as of the date of publishing and is subject to change without notice. The Guidelines outlined apply to Agency loans submitted to TOTAL Scorecard. In addition to applying these CMG-specific overlays, all loans submitted to TOTAL Scorecard must comply with the AUS Findings and FHA/Ginnie Mae requirements. To verify our state licenses, please log onto the following website: and

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Category

Topic

Prior Mortgage Credit Reject (MCR) 4506T & Income Validation

Annuity/Retirement/ Distribution Income

CMG Wholesale & Select Partner- FHA Loan Matrix & Guidelines Handbook 4000.1: Updated 12/2/2021

Click Here for Quicklink back to Table of Contents

Details / Highlights / Overlays

CMG does not accept loan files with a documented MCR.

? A fully complete and signed 4506T for each borrower is required. Refer to CMG's Income Validation Policy for details regarding tax transcripts.

? Any distribution that is being used to qualify must be established prior to the application date ? Copy of the distribution schedule must be provided ? Copy of at least one month's distribution check must be provided ? Assets being depleted due to distribution cannot be used for reserves

Income (Refer to Part G: Evaluating Income for more information)

Projected Income

Loans involving a new job for the borrower that will begin after closing may be eligible subject to all of the following requirements:

? The subject transaction is for the purchase of a 1-unit primary residence; ? borrower must have a minimum 640 qualifying credit score; ? maximum DTI is 50%; ? the Borrower's employment offer must be non-contingent and the non- contingent offer letter must be

retained in the loan file; ? the Borrower's written acceptance of the employment offer must be retained in the loan file; ? the Expected/Projected income cannot be derived from a family-owned business; ? the Borrower must have cash reserves to support the mortgage payment and any other obligations during

the employment gap plus and additional one month's reserves of PITIA; ? the time frame between the Note Date and the start of employment (the employment gap) must not exceed

60 days (Income must be guaranteed to begin within 60 Days of mortgage closing); ? the income is calculated in accordance with the standards for the type of income being received; ? a post-closing copy of the borrower's first paystub / proof of receipt of income must be obtained and verified

to support income used to qualify and retained in the loan file.

Salaried Borrowers All HUD Handbook requirements must be met.



Information in these guidelines is for credit policy guidance only and is not a complete representation of CMG Financial (NMLS #1820) Lending Policies. Information is accurate as of the date of publishing and is subject to change without notice. The Guidelines outlined apply to Agency loans submitted to TOTAL Scorecard. In addition to applying these CMG-specific overlays, all loans submitted to TOTAL Scorecard must comply with the AUS Findings and FHA/Ginnie Mae requirements. To verify our state licenses, please log onto the following website: and

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