Common use of Sources for Closing Costs/Prepaids Clause in Contracts

Sources for Closing Costs/Prepaids. Funding in addition to the minimum borrower contribution may be obtained from the “sources of borrower’s funds” as permitted under the Selling Guide, as well as any combination of the following sources: 1. Gift from a relative (for purposes of MyCommunityMortgage, a relative is defined as the borrower’s spouse, child, dependent, domestic partner, fiance, fiancee, or any other individual related to the borrower by blood, marriage, adoption or legal guardianship). 2. Unsecured loan or grant from a governmental entity, the borrower’s employer or a nonprofit organization (including churches, but a credit union is not considered to be a nonprofit organization for the purpose of this paragraph). 3. Secured loan that complies with the terms for Community Seconds mortgages. 4. The following sources may only be used for closing costs and/or prepaid items and may not be used as funds for the borrower’s down payment: • Unsecured loan from Lender in accordance with the requirements below: • Lender may finance closing costs with personal (unsecured) loans, provided that the applicable Xxxxxx Xxx regional office reviews and approves Lender’s unsecured loan program in the context of Lender’s Community Reinvestment Act (“CRA”) and Home Mortgage Disclosure Act (“HMDA”) efforts. • The interest rate to the borrower must not be greater than the note rate of the first Mortgage, but the regional office may approve rates of up to two percentage points above the first Mortgage rate. In all instances, credit card financing and loans from overdraft protection on checking accounts are not permissible. In addition, Lender may not charge a borrower in this scenario any origination fees, discount points, interest rate, or other fees greater than those charged to other high loan-to-value ratio customers. • Monthly payments for the personal loan must be taken into account in both the total obligations-to-income ratio and the housing expense-to-income ratio. The unsecured loan must be a fully amortizing term loan, with a fixed-rate and fixed-payments. (No variable-rate, variable-payment, or balloon loans are permitted.) • Lender’s participation under this section must be specifically approved in advance by the applicable regional office. • A copy of the unsecured loan documents must be placed in the loan file. • “Interested party” contribution, as permitted in accordance with the Selling Guide; provided, however, such interested party contribution may not in any event exceed 3.00% of the lesser of the sales price or appraised value of the property. If an interested party contribution in any amount is provided, the Mortgage is ineligible for delivery to Xxxxxx Mae for MBS where the LTV is 100%; in such cases, Mortgages would only be eligible for cash delivery. Where the LTV is 100%, Lender represents and warrants that no Mortgage will be delivered for MBS to Xxxxxx Xxx if there is any interested party contribution. If the LTV is less than 100%, and an interested party contribution is utilized, Lender shall add the LTV to the interested party contribution, as a percentage, to determine MBS delivery eligibility. For example: • An LTV of 98% plus an interested party contribution of 3% would equal 101%, making the loan ineligible for MBS delivery. • An LTV of 98% plus an interested party contribution of 2% would equal 100%, making the loan eligible for MBS delivery.

Sources for Closing Costs/Prepaids. Funding in addition to the minimum borrower contribution may be obtained from the “sources of borrower’s funds” as permitted under the Selling Guide, as well as any combination of the following sources: 1. a) Gift from a relative (for purposes of MyCommunityMortgagethese terms and conditions, a relative is defined as the borrower’s spouse, child, dependent, domestic partner, fiancefiancé, fianceefiancée, or any other individual related to the borrower by blood, marriage, adoption or legal guardianship). 2. b) Unsecured loan or grant from a governmental entity, the borrower’s employer or a nonprofit organization (including churches, but a credit union is not considered to be a nonprofit organization for the purpose of this paragraph). 3. c) Secured loan that complies with the terms for Community Seconds mortgages. 4. d) The following sources may only be used for closing costs and/or prepaid items and may not be used as funds for the borrower’s down payment: • Unsecured loan from Lender in accordance with the requirements below: • Lender may finance closing costs with personal (unsecured) loans, provided that the applicable Xxxxxx Xxx regional office reviews and approves Lender’s unsecured loan program in the context of Lender’s Community Reinvestment Act (“CRA”) and Home Mortgage Disclosure Act (“HMDA”) efforts. • The interest rate to the borrower must not be greater than the note rate of the first Mortgage, but the regional office may approve rates of up to two percentage points above the first Mortgage rate. In all instances, credit card financing and loans from overdraft protection on checking accounts are not permissible. In addition, Lender may not charge a borrower in this scenario any origination fees, discount points, interest rate, or other fees greater than those charged to other high loan-to-value ratio customers. • Monthly payments for the personal loan must be taken into account in both the total obligations-to-income ratio and the housing expense-to-income ratio. The unsecured loan must be a fully amortizing term loan, with a fixed-rate and fixed-payments. (No variable-rate, variable-payment, or balloon loans are permitted.) • Lender’s participation under this section must be specifically approved in advance by the applicable regional office. • A copy of the unsecured loan documents must be placed in the loan file. • “Interested party” contribution, as permitted in accordance with the Selling Guide; provided, however, such interested party contribution may not in any event exceed 3.00% of the lesser of the sales price or appraised value of the property. If an interested party contribution in any amount is provided, the Mortgage is ineligible for delivery to Xxxxxx Mae for MBS where the LTV is 100%; in such cases, Mortgages would only be eligible for cash delivery. Where the LTV is 100%, Lender represents and warrants that no Mortgage will be delivered for MBS to Xxxxxx Xxx if there is any interested party contribution. If the LTV is less than 100%, and an interested party contribution is utilized, Lender shall add the LTV to the interested party contribution, as a percentage, to determine MBS delivery eligibility. For example: • An LTV of 98% plus an interested party contribution of 3% would equal 101%, making the loan ineligible for MBS delivery. • An LTV of 98% plus an interested party contribution of 2% would equal 100%, making the loan eligible for MBS delivery.