HELOC Program (Program offered in partnership with TCF Bank)

HELOC Program

(Program offered in partnership with TCF Bank)

This is a business-to-business communication provided for use by mortgage professionals only and is not intended for distribution to consumers or other third

parties. It is not an advertisement; as such term is defined in Section 2 26.24 of Regulation Z. Product information is subject to change without notice. HomeBridge

1-2 Unit Primary Residence

1,2

First Lien Purchase, Rate/Term or Cash-Out Refinance Transactions

CLTV

1, 2, 4

Maximum Combined Loan Amount

(First and HELOC)

Minimum

Credit Score

Current Prime Rate

Plus Below Margin

85.01% - 89.99%

$1,250,000

700

2.49%

80.01% - 89.99%

$2,000,000

760

.99%

80.01% - 89.99%

$2,000,000

730

1.49%

80.01% - 85%

$1,250,000

700

2.24%

60.01% - 80%

$2,000,000

760

.49%

60.01% - 80%

$2,000,000

730

.99%

60.01% - 80%

$1,250,000

700

1.74%

≤ 60%

$2,000,000

800

-.01%

≤ 60%

$2,000,000

760

-.24%

≤ 60%

$2,000,000

730

.74%

≤ 60%

$1,250,000

700

1.49 %

Footnotes:

1. 85.01% to 89.99% CLTV: Maximum HELOC amount is $350,000

2. 85% CLTV and below: Maximum HELOC amount is $500,000

3. Floor is the greater of 51 bps below the initial start rate or 4.99% unless the initial start rate is < 4.99% then the

floor is equal to the initial start rate

4. The applicable Fannie Mae/Freddie Mac CLTV limits apply when lower than detailed above (e.g. the maximum

CLTV on Fannie Mae 1-unit owner-occupied cash-out transaction is 80%; the 80% CLTV limit applies)

1-Unit Second Home

First Lien Purchase, Rate/Term or Cash-Out Refinance Transactions

CLTV

Maximum Combined Loan Amount

(First and HELOC)

Minimum

Credit Score

Current Prime Rate

Plus Below Margin

80.01% - 85%

$1,275,000

760

.99%

80.01% - 85%

$1,275,000

730

1.49%

60.01% - 80%

$1,275,000

760

.49%

60.01% - 80%

$1,275,000

730

.99%

≤ 60%

$1,275,000

800

-.01%

≤ 60%

$1,275,000

760

-0.24%

≤ 60%

$1,275,000

730

.74%

Footnotes:

1. Maximum HELOC amount is $250,000

2. Floor is the greater of 51 bps below the initial start rate or 4.99% unless the initial start rate is < 4.99% then

the floor is equal to the initial start rate

3. The applicable Fannie Mae/Freddie Mac CLTV limits apply when lower than detailed above (e.g. the

maximum CLTV on Fannie Mae 1-unit owner-occupied cash-out transaction is 80%; the 80% CLTV limit

applies)

TCF Bank HELOC Program

Page 2 of 10

HELOC Overview

• Minimum HELOC amount is $25,000

• Maximum HELOC amount for a primary residence is determined by CLTV:

- 85.01% to 89.99% CLTV: Maximum HELOC amount is $350,000

- 85% CLTV and below: Maximum HELOC amount is $500,000

• Maximum HELOC amount for a second home is $250,000

• Exceed conforming and high balance loan limits using a combo loan instead of a Jumbo

• Available with Fannie Mae or Freddie Mac transactions; this is not a stand-alone HELOC

• The borrower can avoid mortgage insurance and mandatory impounds on the first when doing HELOC concurrently

• Draw period: Years 1-10; interest-only payment required during draw period

• Repayment period: Years 11-30; principal and interest payment amortized over remaining term

• No prepayment penalty

• Borrower qualified on back-end DTI only; 45% back-end DTI except:

- < 720 FICO and credit report indicates 5 or more credit inquiries in prior 6 months; max back-end DTI 38%

TCF Bank HELOC Program

Page 3 of 10

Topic

Guideline

Required Documents

• TCF Notice and Authorization Concerning Your Loan Application (TCF 765 RLU-WSL)

Signed by all borrowers (all states)

• TCF HELOC Qualifying Worksheet (TCF 1017 RLU-WSL). Required for all transactions

(all states). Completed by Homebridge Underwriting

• TCF Pre-Application Disclosure and Fee Agreement (TCF Doc 1328 RLU/H) New York

only signed by all borrowers

• TCF Anti-Coercion Insurance Notice (TCF 1376 RLU) Florida only signed by all

borrowers

• TCF Net Tangible Benefit Worksheet (TCF Doc 1545 RL) Maryland refinance transactions

only signed by all borrowers

• Mortgage statements for any other financed properties owned by the borrower (if

taxes/insurance not impounded documentation showing amount of taxes/insurance paid is

required)

• DU/LP Findings for first mortgage

• A written VOE or year-end paystub if bonus/commission/OT income is used for qualifying

(regardless of percentage received)

NOTE:

• TCF issues the Command Credit HELOC Disclosure, the CFPB HELOC Booklet and the

BSA Disclosure directly to the borrower (not required to be signed/returned)

• A separate 1003/1008 is not required; the information from the first lien 1003/1008 is used

• An LE or CD is not issued on HELOCs; HELOCs are consumer loans and not subject to

TRID.

4506-T

Not required

Age of Documents

• Income documentation cannot be older than the applicable requirement for the first lien

product

• The credit report must be ≤ 80 days old at the time Homebridge submits the HELOC to

TCF

• The appraisal cannot be > 120 days old at the time the desk review is ordered by TCF or

> 150 days old at closing

Appraisals

• A full appraisal on the first lien is required (see Appraisal Waiver/ACE Offer topic below for

exception), and

• A desk review, ordered by TCF, is required

Appraisal Waiver/ACE Offer

• A Fannie Mae appraisal waiver or a Freddie Mac ACE offering on the first lien is eligible, in

lieu of a full appraisal, subject to Homebridge review for TCF eligibility

• An AVM, Property Condition Report (PCR), and/or desk review, ordered by TCF, will be

required on transactions where an appraisal waiver was offered and accepted on the first

lien

• An appraisal waiver/ACE is not eligible on the following transactions; a full appraisal will be

required:

- Purchase transactions with a CLTV > 80%

- HELOC amount > $250,000

- Combined loan amount (first lien and HELOC) exceeds $899,900

- 2-unit or second home transactions

Assets

Asset documentation not required

AUS

• Not required for HELOC

• AUS Findings from first mortgage required

TCF Bank HELOC Program

Page 4 of 10

Available Markets

All 50 states with the exception of:

• Alabama,

• Alaska,

• Hawaii,

• Louisiana,

• Mississippi,

• Oklahoma,

• Texas,

• West Virginia

NOTE: Guam, Puerto Rico and the Virgin Islands are also ineligible

Borrowers – Eligible

• U.S citizens,

• Permanent resident aliens

̵ An unexpired “Green Card” issued by the USCIS. A copy of the front and back required

• Non-permanent resident aliens.

̵ The non-permanent resident alien must live and work in the U.S. and provide all of the

following:

̵ Copy of unexpired passport, and

̵ An eligible unexpired visa (refer to Homebridge Fannie Mae or Freddie Mac

guidelines, as applicable, for acceptable visa types), and

̵ I-94 Form (Arrival/Departure Record) or I-797A (Notice of Action)

• Non-occupant co-borrower

- All borrowers will be credit qualified

- Only one (1) borrower is required to be on title

- Only one (1) borrower is required to occupy the property as their primary residence

Borrowers – Ineligible

• Borrowers with diplomatic immunity

• Foreign Nationals

• Borrowers without a social security number

• Borrowers previously convicted of mortgage fraud

Conversion of

Primary Residence

• If the borrower is converting their current primary residence to an investment property the

following is required to use proposed rental income for qualifying:

̵ A copy of a 12-month signed lease agreement, and

̵ 75% of the gross rent may be used to offset PITI

NOTE: No prior landlord experience required and no equity requirement for the departing

residence

Credit Report/Scores

Credit Score

• Minimum credit score varies by loan amount/LTV etc. Refer to the matrix on page one for

requirements.

• The primary borrower (the borrower with the highest income) must meet the minimum credit

score requirement. There is no minimum credit score for the lower wage earner.

• The representative credit score is determined as follows:

- If there are three (3) valid scores, the middle score is used. If two of the three scores

are a duplicate, the duplicate score is used.

- If there are two (2) valid scores, the lower of the two is used

- If there is one (1) valid score, that score is used

Tradelines

• A total of 3 tradelines (between all borrowers) with one seasoned a minimum of 3 years

required

NOTE: An installment tradeline is not required

• Accounts may be opened or closed

NOTE: Authorized user accounts do not qualify as a tradeline

TCF Bank HELOC Program

Page 5 of 10

Current/Departing

Residence Pending

Sale

The borrower’s PITIA payment may be excluded from the DTI calculation subject to the

following:

• A copy of the fully executed purchase contract/agreement is provided, and

• The transaction for the current/departing residence will close within 60 days of loan closing

on the HELOC transaction

Derogatory Credit

Bankruptcy

• Chapter 7 or 11: 4 years from discharge date

• Chapter 13:

- 2 years from discharge date, OR

- 4 years from dismissal date

Foreclosure/Short Sale/Deed-in-Lieu

A 4 year seasoning including any real estate transaction settled for less than owed (including

loan modification with principal reduction/forgiveness) is required

Disputed Accounts

Disputed accounts require proof of resolution

DTI

• Maximum 45% DTI back end only; no front end limit. See exception to 45% DTI below

• Maximum 38% DTI (back end) when the following applies:

- The primary borrower’s credit score is < 720, and

- The credit report indicates 5 or more credit inquiries in the previous 6 months

• The borrower is qualified using a P&I payment at 2% over the start rate

NOTE: 401(k) loans are not included in the DTI calculation. Account statement must be

provided to document the account balance is greater than the amount of the loan

secured by the account

Employment

W-2 Employees

• A one year employment history is required; education may be combined with employment to

satisfy the one year requirement

• Gaps in employment are acceptable; any gaps greater than 30 days will require a signed and

dated letter of explanation from the borrower

Self-Employed

• 2-year employment history required

Fees

• $295 origination fee (deducted from HELOC at closing)

• $75 annual maintenance fee (charged on first statement)

• A separate title fee applies when the HELOC is > $250,000. A Jr. Lien or Flag policy is

required. Title insurance is also required when there is a third lien to ensure the HELOC is

in second lien position

Financed Properties

Copies of the mortgage statement for any additional properties owned/financed by the borrower

including any properties owned through an LLC in their ownership is ≥ 25% are required.

NOTE: Documentation of taxes and insurance required if not impounded with the loan.

Flood Insurance

Flood insurance premiums must be paid in full prior to loan documents

Gift Funds

Gift funds are allowed; no minimum borrower contribution required

Gift of Equity

Allowed

TCF Bank HELOC Program

Page 6 of 10

HELOC Amount

Minimum HELOC Amount – Owner-Occupied and Second Home

• Minimum HELOC amount: $25,000

Maximum HELOC Amount

• Owner-Occupied Primary Residence

̵ 85.01% - 89.99% CLTV: $350,000

̵ ≤ 85% CLTV: $500,000

• Second Home

̵ ≤ 85% CLTV: $250,000

Income

2106 Expenses

2106 expenses are not deducted from income

Alimony/Child Support

Eligible subject to:

• A copy of the filed Separation Agreement or Divorce Decreed required

• Three (3) months bank statements or cancelled checks to document receipt

• Documentation indicating a minimum of 3 years continuance must be provided

Asset Depletion

Eligible subject to:

• 70% of the borrowers account divided by 360

• Borrower must be eligible to withdraw funds without penalty

Bonus Income

Bonus income is generally averaged over 24 months. A written VOE or year-end paystub from

prior year (regardless of percentage of income) is required

Commission/OT/Shift Differentials (Variable Income)

• Income is averaged using current YTD and previous year. A written VOE or year-end

paystub from prior year (regardless of percentage of income) is required

• If income for current year indicates decline of 20% or more the previous 2 years income will

be averaged

Borrower on Leave

• If the borrower is returning to work prior to the HELOC first payment due date (the 23

the month after the loan has funded) the borrower’s last paystub prior to the leave will be

used to calculate the full-time base income for qualifying

• If the borrower is not returning to work prior to the HELOC first payment due date the

income received prior to the leave and any income received during the leave will be used for

qualifying

NOTE: The borrower must provide written confirmation of their intent to return to work and

documentation must be provided from the employer that states the borrower’s return

to work date.

Declining Income

If income is declining by more than 20% the lower income is used

IRA Depletion

• 70% of the value may be used to determine income stream

• 3-year continuance required.

• If the distribution is newly established or recently changed a letter from the financial

institution required that states the amount of the distribution and the date of the first

distribution

K-1 Income

• If the borrower is 100% owner of the business or 100% owner with the co-borrower the

taxable income with depreciation added back is allowed

• If the borrower is not 100% owner taxable income is not eligible however guaranteed

payments, distributions, and items affecting shareholder basis can be used

TCF Bank HELOC Program

Page 7 of 10

Income (cont.)

Non-Taxable Income

A 3 years’ continuance is required for non-taxable income. Only the following types of non-

taxable income may be grossed -up 25%:

• Social security,

• Child support, and

• Foster care

Offer Letter/Employment Contract

Income is eligible if the start date is within 45 days of loan closing when the income and the

employment is commensurate with the borrower’s previous position

Rental Income

Rental income is subject to the following:

• Schedule E or 12 month signed lease required to document rental income

• If the monthly qualifying rental income minus the full PITIA is positive, it may be added to the

borrower’s total monthly income (calculate rental income using 75% of rental income

identified on lease or Schedule E)

• Negative cash flow is deducted from the total income when calculating borrower’s DTI

• Properties owned free and clear the rental income must be on Schedule E

• Refer to the Mortgage on Additional Properties topic for requirements if there is an interest-

only mortgage payment on an investment property

Restricted Stock Units

Eligible for qualifying income subject to:

• Documentation the income was received the previous year (tax return, bank statement, etc.)

• The income is reflected on the borrower’s current paystub, and

• A copy of an employer-generated vesting schedule, showing past and future vesting of

shares is provided

Seasonal Workers and Wages from Tips

Two (2) years tax returns required

Self-Employed Borrower Paid Wages

• If the self-employed borrower pays themselves wages, the income is averaged over the

prior year and the current year YTD income.

• If the YTD income does not accurately reflect the borrower’s normal earnings (e.g. the

borrower pays themselves at the end of the year and/or borrower receives inconsistent

income through out the year) the following documentation may be obtained to verify wages:

- Two (2) years most recent tax returns, or

- Two (2) years most recent W-2s, or

- Year-end paystubs from the most recent two (2) years

Income

Documentation

Salaried Borrowers

• Current paystubs for previous 30 days with YTD income (minimum 2 paystubs required)

• W-2 for previous year or year-end paystub

NOTE: If bonus/OT/commission etc. income used to qualify (regardless of percentage

of income) a written VOE or year-end paystub required

• Employment and income commencing after the Note date may be considered for qualifying

subject to meeting Fannie Mae or Freddie Mac requirements subject to Homebridge

management approval

Self-Employed Borrowers

• Two (2) years signed tax returns (personal and business, as applicable) and all schedules

required unless one (1) year if allowed by DU/LPA.

• Business losses will be subtracted from income

• Borrowers with ≥ 25% ownership interest may use ordinary business income for qualifying

NOTE: A P&L that covers 12 months, prepared by a 3

party, is acceptable for the most

recent years’ tax returns if the borrower has not completed their returns (e.g. if 2-

years documentation is required, the 2016 tax returns and a P&L covering 12

months’ prepared by a 3

party is acceptable for 2017 in lieu of the 2017 tax

returns.

TCF Bank HELOC Program

Page 8 of 10

Liabilities

Co-Borrower Mortgage Debt and Co-Signed Mortgage Debt

Co-borrower and co-signed mortgage debt may be excluded from the DTI when:

• Documentation is provided that another party has been making the payments for a minimum

of 12 months, and

• There have been no late payments in the previous 12 months (0x30 in 12 months), and

• The borrower does not currently occupy the property, and

• The property is not an investment property

Co-Signed Debt - Non-Mortgage

Co-signed non-mortgage debt may be excluded from the DTI when:

• Documentation is provided that another party has been making the payments for a minimum

of 12 months, and

• There have been no late payments in the previous 24 months (0x30 in 24 months)

Co-Borrower Debt – Non-Mortgage

Co-borrower non-mortgage debt may be excluded from the DTI when:

• The party making the payments is contractually obligated on the debt, and

• Documentation is provided evidencing the other party has been making the payments for a

minimum of 12 months, and

• There have been no late payments in the previous 12 months (0x30 in 12 months)

Court Ordered Assignment of Debt

A copy of the Divorce Decree or filed Separation Agreement must be provided to document debt

that was assigned by the court to the spouse/ex-spouse and to exclude from the DTI calculation

Forgivable Employer Loans

Employer loans that are forgivable are not required to be included in the borrower’s DTI

calculation as long as there are no payments due on the loan

Installment Debt

May be excluded from DTI calculation when account has ≤ 6 payments remaining excluding

lease payments; lease payments must be included in the DTI calculation regardless of the

number of payments remaining

Revolving Debt

If a payment is not shown on the credit report, 4% of the balance is used as a payment

Non-Mortgage Debt Paid by Business

Accounts paid through the borrower’s business are not required to be included in the borrower’s

DTI calculation when:

• Documentation provided the debt has been paid by the business (bank statements,

cancelled checks, etc.)

• There has been no delinquency in the most recent 12 months

Mortgage on Additional Properties

If the borrower owns additional property, second home or investment, and the mortgage

payment(s) are interest-only the borrower will be qualified using the full PITI payment

Payoff of Debt for Qualifying

Payoff of debt with proceeds from the HELOC is eligible for qualifying. Revolving accounts paid

off to qualify do not need to be closed

Student Loans

Student loan payments must be included in the DTI calculation

• The payment on the credit report will be used if reported

• Payment not reported on credit report or payment is deferred:

• 1% of the balance of the loan, or

• Obtain the estimated payment from the student loan lender/servicer

• Income based payments are acceptable

TCF Bank HELOC Program

Page 9 of 10

Mortgagee Clause

TCF National Bank ISAOA/ATIMA

Mail Code PCC-2E-I Attn: Escrow Dept.

1405 Xenium Lane

Plymouth, MN 55441

Mortgagee Clause –

Flood Insurance

TCF National Bank ISAOA/ATIMA

Mail Code PCC-2E-L Attn. Flood Clerk

1405 Xenium Lane

Plymouth, MN 55441

Non-Arm’s Length

Eligible subject to Homebridge Fannie Mae or Freddie Mac matrix requirements (as applicable)

Occupancy

• 1-2 unit owner-occupied primary residence

• 1-unit second home

Power of Attorney

Allowed on an exception basis for closing only; cannot be used for the execution of the initial

application and disclosures.

Prepayment Penalty

An early termination fee does not apply

Product

• 30 year term

• HELOC rate is current prime rate plus margin; refer to the matrices on pages 1 and 2 for

applicable margins

• Draw Period: Years 1-10; interest-only payments required during draw period

• Repayment Period: Years 11-30; principal and interest payments amortized over remaining

term of the loan

• Floor: The floor is the greater of 51 bps below the initial start rate or 4.99% unless the

initial start rate is less than 4.99% then the floor rate is the initial start rate

• Life Cap: 18%

Properties – Eligible

• Single family residence

• PUDs (attached/detached)

• Townhomes

• Condominium (attached/detached) Fannie Mae/Freddie Mac warrantable

• 2- unit owner-occupied

• Maximum 10 acres excluding Arizona; maximum 2 acres in Arizona

Properties – Ineligible

• 3-4 unit properties

• Investment property

• AZ properties with > 2 acres

• Manufactured home

• Modular

• Mobile home

• Leaseholds

• Dome, earth berm , or log homes

• Properties zoned for agriculture use

• Vacant land

• Property with a condition rating of C-5

• Commercial property

• Condominiums < 450 square feet

• Cooperative projects

• Non-warrantable condominiums

• New or newly converted condominium projects in FL without a PERS approval

TCF Bank HELOC Program

Page 10 of 10

Property with an

Unpermitted Addition

Allowed subject to applicable first lien guidelines and the desk review supports value

Reserves

Not required

Subordinate

Financing –

Refinance

Transaction

Existing subordinate financing must be resubordinated to third lien position. Refer to the Title

Insurance topic below for requirements

Title Insurance

• Title from the first is acceptable when HELOC amount is ≤ $250,000

• A Junior Lien or Flag policy will be required if the HELOC amount is > $250,000

• An additional full title policy for the HELOC amount will always be required if there is a third

lien to ensure the HELOC remains in second lien position

Transactions –

Ineligible

• Transactions involving investment property

• Transactions involving 3-4 units

• Transactions with a property that has a condition rating of C-5

• Transactions where the borrower has another open HELOC with TCF; only one TCF

HELOC is allowed