Non Prime Select Guidelines call Jesse B Lucero 702-551-3125

Non-Prime Select
Underwriting Guidelines
Effective Date: 08/25/2014

Oaktree Funding Corp. Non-Prime Select [2]
August 25, 2014
TABLE OF CONTENTS
TABLE OF CONTENTS.....................................................................................................................................2
1 INTRODUCTION........................................................................................................................................12
1.1 LENDING PHILOSOPHY......................................................................................................................12
1.2 FAIR LENDING STATEMENT...............................................................................................................12
1.3 RESPONSIBLE LENDING STATEMENT ................................................................................................13
2 GENERAL PROGRAM INFORMATION .......................................................................................................14
2.1 PROGRAMS .......................................................................................................................................14
2.2 PRODUCTS.........................................................................................................................................14
2.3 PREPAYMENT PENALTY.....................................................................................................................14
2.4 DOCUMENTATION ............................................................................................................................15
2.5 MAXIMUM LTV/CLTV/HCLTV............................................................................................................15
2.6 MINIMUM AND MAXIMUM LOAN AMOUNTS..................................................................................15
2.7 MAX POINTS AND FEES.....................................................................................................................15
2.8 LOAN AGE..........................................................................................................................................15
2.9 EXCEPTIONS ......................................................................................................................................15
3 TRANSACTIONS ........................................................................................................................................16
3.1 ALTERNATE LOAN PROGRAM ANALYSIS...........................................................................................16
3.2 OCCUPANCY......................................................................................................................................16
3.2.1 PRIMARY RESIDENCE..................................................................................................................16
3.2.2 SECOND HOME...........................................................................................................................17
3.2.3 INVESTMENT PROPERTY ............................................................................................................17
3.3 PURCHASE.........................................................................................................................................18
3.4 GENERAL REFINANCE REQUIREMENTS.............................................................................................18
3.4.1 DETERMINING LOAN-TO-VALUE................................................................................................18
3.4.2 BENEFIT TO BORROWER ............................................................................................................19
3.4.3 PROPERTIES LISTED FOR SALE....................................................................................................20
3.4.4 CONTINUITY OF OBLIGATION ....................................................................................................20
3.4.5 REFINANCES IN ILLINOIS AND TEXAS .........................................................................................20

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3.5 RATE/TERM REFINANCE....................................................................................................................21
3.6 CASH-OUT REFINANCE......................................................................................................................22
3.6.1 SEASONING ................................................................................................................................22
3.6.2 CASH-OUT LIMITS.......................................................................................................................23
3.7 PERMANENT FINANCING FOR NEW CONSTRUCTION.......................................................................24
3.8 LAND CONTRACT/CONTRACT FOR DEED ..........................................................................................25
3.9 LEASE WITH PURCHASE OPTION.......................................................................................................25
3.10 NON-ARM’S LENGTH TRANSACTIONS.............................................................................................26
3.11 INHERITED PROPERTIES ..................................................................................................................26
3.12 FLIP TRANSACTIONS........................................................................................................................27
3.13 INELIGIBLE TRANSACTIONS.............................................................................................................27
4 BORROWERS ............................................................................................................................................28
4.1 CUSTOMER IDENTIFICATION PROGRAM (CIP)..................................................................................28
4.2 U.S. CITIZENS.....................................................................................................................................28
4.3 PERMANENT RESIDENT ALIENS.........................................................................................................28
4.4 NON-PERMANENT RESIDENT ALIENS................................................................................................29
4.4.1 VERIFICATION OF RESIDENCY STATUS.......................................................................................29
4.4.2 CREDIT REQUIREMENTS.............................................................................................................30
4.4.3 INCOME/EMPLOYMENT REQUIREMENTS..................................................................................31
4.4.4 ASSETS........................................................................................................................................31
4.5 FOREIGN NATIONALS........................................................................................................................32
4.5.1 VERIFICATION OF RESIDENCY STATUS.......................................................................................32
4.5.2 CREDIT REQUIREMENTS.............................................................................................................33
4.5.3 INCOME/EMPLOYMENT REQUIREMENTS..................................................................................34
4.5.4 ASSETS........................................................................................................................................34
4.6 EXCLUSIONARY LIST/OFAC/DIPLOMATIC IMMUNITY.......................................................................35
4.7 CO-BORROWERS ...............................................................................................................................35
4.8 NON-OCCUPANT CO-BORROWERS/CO-SIGNERS/ GUARANTORS ....................................................35
4.9 FIRST-TIME HOME BUYERS ...............................................................................................................36
4.10 VESTING AND OWNERSHP..............................................................................................................36

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4.11 LIMITED LIABILITY COMPANY (LLC).................................................................................................36
4.12 INTER VIVOS REVOCABLE TRUST ....................................................................................................37
4.13 LIMITED POWER OF ATTORNEY......................................................................................................38
4.14 MULTIPLE PROPERTIES AND MULTIPLE LOANS ..............................................................................38
4.15 INELIGIBLE BORROWERS.................................................................................................................38
5 CREDIT ANALYSIS......................................................................................................................................39
5.1 EQUAL CREDIT OPPORTUNITY ACT...................................................................................................39
5.2 CREDIT REPORT.................................................................................................................................39
5.2.1 AGE OF CREDIT REPORT/CREDIT DOCUMENTATION.................................................................39
5.2.2 GAP CREDIT REPORT ..................................................................................................................39
5.2.3 FRAUD ALERTS ...........................................................................................................................40
5.2.4 INQUIRIES...................................................................................................................................40
5.2.5 UPDATED PAYMENT HISTORIES.................................................................................................40
5.3 MINIMUM CREDIT REQUIREMENTS..................................................................................................41
5.3.1 CREDIT SCORES ..........................................................................................................................41
5.3.2 TRADELINE REQUIREMENTS ......................................................................................................41
5.3.3 STANDARD TRADELINES.............................................................................................................42
5.3.4 LIMITED TRADELINES .................................................................................................................42
5.3.5 INSUFFICIENT TRADELINES/NON-TRADITIONAL CREDIT ...........................................................42
5.4 MORTGAGE AND RENTAL PAYMENT VERIFICATION.........................................................................43
5.4.1 NON-PRIME PROGRAM..............................................................................................................43
5.4.2 RECENT HOUSING EVENT AND INVESTMENT PROPERTY PROGRAMS ......................................43
5.4.3 NO HOUSING HISTORY OR LESS THAN 12 MONTHS VERIFIED...................................................43
5.5 TIMESHARES......................................................................................................................................44
5.6 LATE PAYMENTS................................................................................................................................44
5.6.1 NON-PRIME PROGRAM SELECT .................................................................................................44
5.6.2 RECENT HOUSING EVENT AND INVESTMENT PROPERTY PROGRAMS ......................................44
5.7 PAST DUE ACCOUNTS .......................................................................................................................44
5.8 WRITTEN EXPLANATIONS FOR DEROGATORY CREDIT......................................................................44
5.9 DELINQUENT CREDIT BELONGING TO EX-SPOUSE............................................................................45

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5.10 LAWSUIT/PENDING LITIGATION .....................................................................................................45
5.11 COLLECTIONS AND CHARGE-OFFS ..................................................................................................46
5.12 JUDGMENTS AND TAX LIENS...........................................................................................................46
5.13 CHAPTER 7 BANKRUPTCY................................................................................................................47
5.13.1 NON-PRIME AND RECENT HOUSING EVENT PROGRAMS........................................................47
5.13.2 INVESTMENT PROPERTY PROGRAM........................................................................................47
5.14 CHAPTER 13 BANKRUPTCY..............................................................................................................47
5.14.1 NON-PRIME AND RECENT HOUSING EVENT PROGRAMS........................................................47
5.15 FORECLOSURE/SHORT SALE/DEED IN LIEU/NOTICE OF DEFAULT..................................................48
5.15.1 HOUSING EVENT DEFINITION ..................................................................................................48
5.15.2 NON-PRIME PROGRAM............................................................................................................48
5.15.3 RECENT HOUSING EVENT PROGRAM.......................................................................................48
5.16 CONSUMER CREDIT COUNSELING SERVICE (CCCS).........................................................................49
6 LIABILITIES................................................................................................................................................50
6.1 INSTALLMENT DEBT ..........................................................................................................................50
6.2 REVOLVING DEBT..............................................................................................................................50
6.3 ALIMONY/CHILD SUPPORT/SEPARATE MAINTENANCE....................................................................50
6.4 BUSINESS DEBT .................................................................................................................................51
6.5 CO-SIGNED OBLIGATIONS.................................................................................................................51
6.6 RETIREMENT/SAVINGS PLAN LOANS ................................................................................................51
6.7 LEASE OBLIGATIONS..........................................................................................................................52
6.8 DEPARTURE RESIDENCE....................................................................................................................52
6.8.1 CURRENT PRIMARY RESIDENCE PENDING SALE ........................................................................52
6.8.2 CONVERSION OF CURRENT PRIMARY RESIDENCE TO A SECOND HOME...................................52
6.8.3 CONVERSION OF CURRENT PRIMARY RESIDENCE TO INVESTMENT .........................................52
6.9 STUDENT LOANS ...............................................................................................................................53
6.10 CONTINGENT LIABILITIES ................................................................................................................53
6.11 HOUSING PAYMENTS......................................................................................................................53

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6.12 MATERIAL RECURRING NON-DEBT OBLIGATIONS..........................................................................54
6.13 UNDISCLOSED DEBTS......................................................................................................................54
7 DOCUMENTATION ...................................................................................................................................55
7.1 FULL DOCUMENTATION....................................................................................................................55
7.1.1 SALARIED/WAGE EARNERS ........................................................................................................55
7.1.2 SELF-EMPLOYMENT ...................................................................................................................57
7.1.3 ASSET DOCUMENTATION...........................................................................................................58
7.2 BANK STATEMENT DOCUMENTATION..............................................................................................59
7.2.1 GENERAL REQUIREMENTS .........................................................................................................59
7.2.2 INCOME CALCULATION FOR BANK STATEMENTS......................................................................60
7.2.3 PROGRAM RESTRICTIONS ..........................................................................................................61
7.2.4 ASSET DOCUMENTATION...........................................................................................................61
7.3 VERBAL VERIFICATION OF EMPLOYMENT (VVOE)............................................................................62
7.4 AGE OF DOCUMENTATION ...............................................................................................................62
8 EMPLOYMENT / INCOME ANALYSIS.........................................................................................................63
8.1 EMPLOYMENT HISTORY....................................................................................................................63
8.1.1 FREQUENT JOB CHANGES ..........................................................................................................63
8.1.2 GAPS IN EMPLOYMENT..............................................................................................................63
8.2 SOURCES OF INCOME .......................................................................................................................64
8.2.1 ANNUITY INCOME......................................................................................................................64
8.2.2 AUTOMOBILE ALLOWANCE........................................................................................................64
8.2.3 BONUS AND OVERTIME .............................................................................................................65
8.2.4 CAPITAL GAINS...........................................................................................................................65
8.2.5 CHILD SUPPORT, ALIMONY OR MAINTENANCE INCOME ..........................................................66
8.2.6 COMMISSION INCOME ..............................................................................................................66
8.2.7 DECLINING INCOME...................................................................................................................67
8.2.8 DISABILITY INCOME....................................................................................................................67
8.2.9 DIVIDEND/INTEREST INCOME....................................................................................................68
8.2.10 EMPLOYMENT BY A RELATIVE..................................................................................................68
8.2.11 FOREIGN INCOME ....................................................................................................................69

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8.2.12 FOSTER CARE INCOME.............................................................................................................69
8.2.13 LUMP-SUM DISTRIBUTIONS.....................................................................................................69
8.2.14 MINISTER/CLERGY INCOME.....................................................................................................70
8.2.15 NON-TAXABLE INCOME ...........................................................................................................70
8.2.16 NOTE RECEIVABLE INCOME .....................................................................................................71
8.2.17 PART-TIME/SECOND JOB INCOME...........................................................................................71
8.2.18 PENSION/RETIREMENT ............................................................................................................72
8.2.19 PUBLIC ASSISTANCE .................................................................................................................72
8.2.20 RENTAL INCOME ......................................................................................................................73
8.2.21 SEASONAL INCOME..................................................................................................................74
8.2.22 SELF-EMPLOYED INCOME ........................................................................................................75
8.2.23 SOCIAL SECURITY INCOME.......................................................................................................77
8.2.24 STOCK OPTIONS .......................................................................................................................77
8.2.25 TEACHER INCOME....................................................................................................................78
8.2.26 TIPS AND GRATUITIES ..............................................................................................................78
8.2.27 TRAILING SPOUSE OR CO-BORROWER INCOME/RELOCATION ...............................................78
8.2.28 TRUST INCOME ........................................................................................................................78
8.2.29 UNACCEPTABLE INCOME.........................................................................................................79
8.2.30 UNEMPLOYMENT COMPENSATION.........................................................................................79
8.2.31 VA SURVIVORS’ BENEFITS/DEPENDENT CARE .........................................................................79
9 RATIOS AND QUALIFYING ........................................................................................................................80
9.1 RATIOS...............................................................................................................................................80
9.2 COMPENSATING FACTORS TO EXCEED MAX RATIOS .......................................................................81
9.3 RESIDUAL INCOME............................................................................................................................81
9.4 PAYMENT SHOCK ..............................................................................................................................81
10 ASSET ANALYSIS .....................................................................................................................................82
10.1 DOWN PAYMENT ............................................................................................................................82
10.2 RESERVES ........................................................................................................................................82
10.3 VERIFICATION OF ASSETS................................................................................................................83
10.3.1 BORROWED FUNDS SECURED BY AN ASSET ............................................................................83

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10.3.2 CASH VALUE OF LIFE INSURANCE ............................................................................................83
10.3.3 CHECKING AND SAVINGS ACCOUNTS ......................................................................................84
10.3.4 EARNEST MONEY (CASH DEPOSIT ON SALES CONTRACT) .......................................................84
10.3.5 MINIMUM BORROWER CONTRIBUTION..................................................................................85
10.3.6 GIFT FUNDS..............................................................................................................................86
10.3.7 GIFTS OF EQUITY......................................................................................................................86
10.3.8 FOREIGN ASSETS ......................................................................................................................87
10.3.9 JOINT ACCOUNTS.....................................................................................................................87
10.3.10 NET PROCEEDS FROM SALE OF REAL ESTATE ........................................................................87
10.3.11 RENT CREDIT FOR LEASE WITH PURCHASE OPTION ..............................................................88
10.3.12 RETIREMENT ACCOUNTS .......................................................................................................88
10.3.13 SALE OF PERSONAL ASSETS....................................................................................................89
10.3.14 SALES CONCESSIONS OR PROPERTY INDUCEMENTS.............................................................89
10.3.15 SUBORDINATE/SECONDARY FINANCING...............................................................................90
10.3.16 SELLER CONTRIBUTIONS ........................................................................................................91
10.3.17 STOCKS, STOCK OPTIONS, BONDS, AND MUTUAL FUNDS.....................................................91
10.3.18 TRUST ACCOUNTS..................................................................................................................91
10.3.19 UNACCEPTABLE FUNDS..........................................................................................................91
11 PROPERTY...............................................................................................................................................92
11.1 GENERAL PROPERTY REQUIREMENTS ............................................................................................92
11.2 UNIFORM RESIDENTIAL APPRAISAL REPORT (URAR)......................................................................93
11.2.1 APPRAISAL REPORT REQUIREMENTS.......................................................................................93
11.2.2 AGE OF APPRAISAL...................................................................................................................94
11.2.3 ELECTRONIC SUBMISSION OF APPRAISAL REPORT..................................................................94
11.2.4 APPRAISER QUALIFICATIONS ...................................................................................................94
11.3 MINIMUM PROPERTY STANDARDS.................................................................................................95
11.4 PROPERTY LOCATION......................................................................................................................95
11.5 ELIGIBLE PROPERTY TYPES..............................................................................................................96
11.6 MARKET ANALYSIS ..........................................................................................................................97
11.6.1 NEIGHBORHOOD REVIEW........................................................................................................97

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11.6.2 COMPATIBILITY OF SUBJECT PROPERTY AND NEIGHBORHOOD..............................................97
11.6.3 PROXIMITY OF COMPARABLE SALES TO SUBJECT PROPERTY..................................................98
11.6.4 AGE OF COMPARABLE SALES ...................................................................................................98
11.6.5 PROPERTY VALUES WITHIN MARKET AREA .............................................................................99
11.6.6 REDLINING PROHIBITION.........................................................................................................99
11.6.7 OVER-IMPROVEMENTS............................................................................................................99
11.7 VALUATION ANALYSIS...................................................................................................................100
11.7.1 SALES COMPARISON APPROACH ...........................................................................................100
11.7.2 COST APPROACH....................................................................................................................101
11.7.3 INCOME APPROACH...............................................................................................................101
11.7.4 VALUATION ANALYSIS AND FINAL RECONCILIATION.............................................................101
11.7.5 APPRAISAL REVIEW PROCESS ................................................................................................101
11.8 PROPERTY CONSIDERATIONS........................................................................................................102
11.8.1 ACCESSORY UNITS..................................................................................................................102
11.8.2 DAMPNESS.............................................................................................................................102
11.8.3 DEED RESTRICTIONS...............................................................................................................102
11.8.4 DEFERRED MAINTENANCE.....................................................................................................103
11.8.5 DISASTER AREAS.....................................................................................................................103
11.8.6 ELECTRICAL SYSTEMS.............................................................................................................104
11.8.7 ENVIRONMENTAL HAZARDS ..................................................................................................104
11.8.8 ESCROWS FOR WORK COMPLETION......................................................................................104
11.8.9 FLOOD ZONE ..........................................................................................................................104
11.8.10 FOUNDATION SETTLEMENT.................................................................................................104
11.8.11 HEATING SYSTEMS...............................................................................................................105
11.8.12 LAND VALUE.........................................................................................................................105
11.8.13 MULTIPLE DWELLINGS ON ONE LOT....................................................................................105
11.8.14 NEW CONSTRUCTION ..........................................................................................................105
11.8.15 PEST INFESTATION ...............................................................................................................106
11.8.16 PLUMBING............................................................................................................................106
11.8.17 POSTPONED IMPROVEMENTS OR PROPOSED CONSTRUCTION..........................................106

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11.8.18 PRIVATE ROADS ...................................................................................................................106
11.8.19 PUD (PLANNED UNIT DEVELOPMENT).................................................................................107
11.8.20 REPAIRS................................................................................................................................108
11.8.21 RURAL PROPERTIES..............................................................................................................108
11.8.22 SEPTIC SYSTEM/SEWAGE DISPOSAL SYSTEM.......................................................................109
11.8.23 UNCONVENTIONAL FLOOR PLANS.......................................................................................109
11.8.24 WATER SUPPLY.....................................................................................................................109
11.8.25 ZONING AND LAND-USE REGULATIONS...............................................................................110
11.9 CONDOMINIUMS ..........................................................................................................................111
11.9.1 DEFINITIONS OF ESTABLISHED AND NEW CONDOMINIUMS.................................................111
11.9.2 GENERAL CONDOMINIUM REQUIREMENTS..........................................................................112
11.9.3 CONDOMINIUM PROJECT REVIEW STANDARDS....................................................................113
11.9.4 CONDOMINIUM INSURANCE.................................................................................................115
11.9.5 NON-WARRANTABLE CONDOMINIUMS ................................................................................115
11.9.6 CONDOMINIUM CONVERSIONS.............................................................................................115
11.9.7 SITE CONDOMINIUMS............................................................................................................115
11.9.8 INELIGIBLE PROJECTS.............................................................................................................116
12 PROPERTY INSURANCE.........................................................................................................................117
12.1 HAZARD INSURANCE.....................................................................................................................117
12.1.1 MINIMUM HAZARD INSURANCE COVERAGE.........................................................................117
12.1.2 DETERMINING THE AMOUNT OF REQUIRED HAZARD COVERAGE........................................118
12.1.3 DEDUCTIBLE AMOUNT...........................................................................................................119
12.1.4 EVIDENCE OF HAZARD INSURANCE .......................................................................................119
12.1.5 OPTIONAL COVERAGE............................................................................................................119
12.1.6 RATING REQUIREMENTS........................................................................................................120
12.2 PROJECT INSURANCE REQUIREMENTS .........................................................................................121
12.2.1 MINIMUM HAZARD INSURANCE COVERAGE.........................................................................121
12.2.2 HO-6 INSURANCE COVERAGE ................................................................................................121
12.2.4 GENERAL LIABILITY COVERAGE..............................................................................................122

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12.2.5 FIDELITY BOND COVERAGE ....................................................................................................122
12.3 FLOOD INSURANCE .......................................................................................................................123
12.3.1 FLOOD CERTIFICATE...............................................................................................................123
12.3.2 MINIMUM FLOOD INSURANCE COVERAGE ...........................................................................123
12.3.3 PROJECT FLOOD INSURANCE REQUIREMENTS......................................................................123
12.3.5 EVIDENCE OF FLOOD INSURANCE..........................................................................................124
13 TITLE INSURANCE.................................................................................................................................125
13.1 TITLE POLICY REQUIREMENTS.......................................................................................................125
13.1.1 BORROWER INFORMATION...................................................................................................125
13.1.2 COVERAGE AMOUNT .............................................................................................................125
13.1.3 INSURED NAME......................................................................................................................125
13.1.4 AGE OF REPORT......................................................................................................................125
13.1.5 VESTING .................................................................................................................................126
13.1.6 GAP COVERAGE......................................................................................................................126
13.1.7 TITLE POLICY FORMS..............................................................................................................126
13.1.8 TITLE POLICY UNDERWRITER .................................................................................................126
13.2 TITLE COMMITMENT REVIEW.......................................................................................................127
13.2.1 CHAIN OF TITLE ......................................................................................................................127
13.2.2 TITLE EXCEPTIONS..................................................................................................................127
13.2.3 SURVEY REQUIREMENTS........................................................................................................128
13.3 SERVICING.....................................................................................................................................128
EXHIBIT I: Oaktree Funding Exception Approval Form .........................................................................129
EXHIBIT II: Oaktree Funding Alternate Programs Analysis Form..........................................................130
EXHIBIT III: Oaktree Funding Benefit to Borrower Worksheet.............................................................131

August 25, 2014
1 INTRODUCTION
These guidelines serve to provide direction and consistency in loan, borrower, and property eligibility.
1.1 LENDING PHILOSOPHY
Oaktree Funding evaluates many aspects of the loan but primarily relies on evaluation of the borrower’s
ability to repay the loan to predict loan performance. Additional characteristics of the loan are also
examined including credit history, asset position, and the property being used for collateral. Oaktree
Funding has a no-tolerance policy as it relates to fraud. Originators should follow their own established
fraud and identity procedures on every loan in an effort to prevent and detect fraud (including, but not
limited to, Social Security number verification, verbal verifications of employment, processing of 4506-T,
etc.) Loans containing fraudulent documentation or information will immediately be declined and
forwarded for further review. If there is any determination of originator involvement, the originator will
be made inactive and the appropriate agencies notified. Oaktree Funding will also pursue borrower fraud
to the fullest extent of the law.
1.2 FAIR LENDING STATEMENT
Oaktree Funding operates in accordance with the provisions of the Fair Housing Act and Equal Credit
Opportunity Act. The Fair Housing Act makes it unlawful to discriminate in housing-related activities
against any person because of race, color, religion, national origin, sex, handicap, or familial status. The
Equal Credit Opportunity Act prohibits discrimination with respect to any aspect of a credit transaction on
the basis of sex, race, color, religion, national origin, marital status, age (provided the borrower has the
capacity to enter into a binding contract), receipt of public assistance, or because the borrower has in good
faith exercised any right under the Consumer Credit Protection Act. Oaktree Funding fully supports the
letter and spirit of both of these laws and will not condone discrimination in any mortgage transaction.

August 25, 2014
1.3 RESPONSIBLE LENDING STATEMENT
The primary focus of this lending program is the borrower’s ability to repay the mortgage obligation.
Loans purchased by Oaktree Funding should be affordable to the borrower in his or her pursuit of
homeownership.
Under the general Ability-to-Repay (ATR) standard, lenders must make a reasonable, good-faith
determination that the consumer has a reasonable ability to repay the loan. Lenders must verify
information using third-party records that provide reasonably reliable evidence of income or assets.
Lenders must consider eight underwriting factors to be in compliance:
1. Current or reasonably expected income or assets (other than the value of the property that secures
the loan) that the consumer will rely on to repay the loan
2. Current employment status (if you rely on employment income when assessing the consumer’s
ability to repay)
3. Monthly mortgage payment for this loan. You calculate this using the introductory or fully-
indexed rate, whichever is higher, and monthly, fully-amortizing payments that are substantially
equal
4. Monthly payment on any simultaneous loans secured by the same property
5. Monthly payments for property taxes and insurance that you require the consumer to buy, and
certain other costs related to the property such as homeowners association fees or ground rent
6. Debts, alimony, and child support obligations
7. Monthly debt-to-income ratio or residual income, that you calculated using the total of all of the
mortgage and non-mortgage obligations listed above, as a ratio of gross monthly income
8. Credit history

August 25, 2014
2 GENERAL PROGRAM INFORMATION
2.1 PROGRAMS
Oaktree Funding offers three loan programs. See the appropriate Oaktree Funding Non-Prime Select
Matrix for details.
Oaktree Funding Non-Prime Program
The Non-Prime Program allows for multiple 30-day and 60-day mortgage lates in the past 12 months and
unlimited consumer lates.
Oaktree Funding Recent Housing Event Program
The Recent Housing Event Program is designed for borrowers with a Housing Event in the most recent 24
months from date of application. See also Housing Event Definition Section 5.15.1.
Oaktree Funding Investment Property Program
The Investment Property Program allows for up to 20 financed properties and a foreclosure or short sale
in the past 24 months.
2.2 PRODUCTS
See applicable Oaktree Funding Non-Prime Select Matrix
2.3 PREPAYMENT PENALTY
Prepayment penalties on primary residence and second home transactions are prohibited.
For the Investment Property Program, a prepayment penalty is required (unless otherwise restricted by
state law) with a 2-year duration and a payoff fee equal to six months interest on 80% of the unpaid
principal balance at the time of payoff.

August 25, 2014
2.4 DOCUMENTATION
Full documentation and bank statement documentation are allowed.
2.5 MAXIMUM LTV/CLTV/HCLTV
See applicable Oaktree Funding Non-Prime Select Matrix
2.6 MINIMUM AND MAXIMUM LOAN AMOUNTS
See applicable Oaktree Funding Non-Prime Select Matrix for maximum loan amounts. Minimum loan
amount for all programs is $100,000.
2.7 MAX POINTS AND FEES
Total points, fees, and APR may not exceed current state and federal high-cost thresholds.
2.8 DOCUMENT AGE
The period between the note date and the loan docs cannot exceed 60 days.
2.9 EXCEPTIONS
Exceptions to published guidelines may be considered on a case-by-case basis. Loans with exception
requests should exhibit strong compensating factors. All exception requests must be submitted by the
originator in writing to Oaktree Funding on the Oaktree Funding Exception Approval Form (Exhibit I),
along with any supporting documentation.

August 25, 2014
3 TRANSACTIONS
3.1 ALTERNATE LOAN PROGRAM ANALYSIS
All loan applications are to be reviewed for possible approval under a traditional conventional conforming
or FHA loan program offered by the originator. Underwriter is to complete the Oaktree Funding Alternate
Program Analysis Form (Exhibit II) to ensure borrowers are proceeding under the appropriate loan
program.
3.2 OCCUPANCY
3.2.1 PRIMARY RESIDENCE
A primary residence is a property occupied by the borrower as his or her principle residence (may
also be referred to as owner-occupied). Primary residences are eligible for financing and are
restricted to one-unit dwellings only.
To qualify as a primary residence, the transaction must meet each of the following criteria:
• Property is located in the same general area as the borrower’s employment
• Borrower intend to occupy the subject property for the majority of the year
• Property possesses physical characteristics that accommodate the borrower’s family

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3.2.2 SECOND HOME
A second home is a dwelling occupied by the borrower in addition to their primary residence
(may also be referred to as a vacation home). Second homes are eligible for financing and are
restricted to one-unit dwellings only.
Typical second homes should meet the following criteria:
• Be located a reasonable distance away from the borrower’s primary residence
• Must be occupied by the borrower for some portion of the year
• Suitable for year-round occupancy
• Borrower must have exclusive control over the property
• Must not be subject to any timeshare arrangements, rental pools or other agreements
which require the borrower to rent the subject property or otherwise give control of the
subject property to a management firm
3.2.3 INVESTMENT PROPERTY
An investment property is an income-producing property that the borrower does not occupy (may
also be referred to as non-owner occupied).
Investment properties are eligible for financing and must meet all additional requirements set
forth in the underwriting guidelines. 1-4 unit properties are allowed.

August 25, 2014
3.3 PURCHASE
A purchase transaction is one which allows a buyer to acquire a property from a seller. A copy of the fully
executed purchase contract and all attachments or addenda is required. The lesser of the purchase price or
appraised value of the subject property is used to calculate the loan-to-value.
3.4 GENERAL REFINANCE REQUIREMENTS
Rate/term refinance and cash-out refinance transactions are allowed. See Rate/Term Refinance Section
3.5 and Cash-out Refinance Section 3.6 for additional information.
All investment property refinances require an appraisal review product. See Appraisal Review Process
Section 11.7.5 for requirements.
3.4.1 DETERMINING LOAN-TO-VALUE
If the subject property was acquired ˃ 12 months from application date, the appraised value must
be used to determine loan-to-value.
If the property was acquired ≤ 12 months from application date, the lesser of the current appraisal
value or previous purchase price plus documented improvements must be used.

August 25, 2014
3.4.2 BENEFIT TO BORROWER
In keeping with the commitment of responsible lending, all primary residence and second home
refinance transactions must have a measurable benefit to the borrower.
When determining the benefit on a refinance transaction, one or more of the following must exist
to support the benefit to the borrower:
• Balloon payoff
• Title transfer
• Property retention
• Rate reduction
• P&I reduction
• Debt reduction
• Uncontrolled cash-out
State-specific and/or federal benefit to borrower compliance requirements must be adhered to.
Underwriter is to complete the Benefit to Borrower Worksheet (Exhibit III) to ensure compliance
with the benefit to borrower policy. Files must contain documentation supporting the acceptable
benefit.
Additional restrictions apply if the new loan refinances an existing loan considered to be a special
mortgage.
A special mortgage is originated, subsidized, or guaranteed by or through a state, tribal, or local
government, or nonprofit organization that either bears a below-market interest rate at the time
the loan was originated or has nonstandard payment terms beneficial to the borrower, such as
payments that vary with income, are limited to a percentage of income, or where no payments are
required under specified conditions.
If the borrower will lose one or more of the benefits of the special mortgage, then both of the
following apply:
• Originator must check that the loan complies with all applicable state and local laws as
well as laws associated with the subject special loan program for compliance, and
• Originator must take special care to insure a net tangible benefit to the borrower

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3.4.3 PROPERTIES LISTED FOR SALE
To be eligible for a either a rate/term or a cash-out refinance, the subject property must be taken
off the market on or before application date. The borrower must also confirm in writing the
reason for the prior listing and intent to occupy the subject property.
For cash-out transactions, if the subject property was listed for sale in the six months prior to
application date, a 10% LTV reduction from the maximum available for the specific transaction is
required.
The lesser of the most recent list price or the current appraised value should be used to determine
loan-to-value for both rate/term or cash-out transactions.
3.4.4 CONTINUITY OF OBLIGATION
For both rate/term and cash-out refinance transactions, there must be continuity of obligation if an
outstanding lien will be satisfied through the refinance.
An acceptable continuity of obligation exists when any of the following are present:
• At least one borrower obligated on the new loan must be a borrower obligated on the
existing loan being refinanced
• At least one borrower has been on title and residing in the property for a minimum of six
months and has either paid the mortgage for the last six months or can demonstrate a
relationship (spouse, domestic partner) with the current obligor
• At least one borrower has recently inherited or was legally awarded the property through
a divorce or separation
• The existing loan being refinanced and title have been held in the name of a natural
person or an LLC, as long as the borrower was a member of the LLC prior to any
transfer. Transfer of ownership from a corporation to individual does not meet continuity
of obligation.
3.4.5 REFINANCES IN ILLINOIS AND TEXAS
Rate/term and cash-out transactions in the states of Illinois and Texas are not allowed at this time.

August 25, 2014
3.5 RATE/TERM REFINANCE
A rate/term refinance is the refinancing of an existing mortgage for the purpose of changing the interest
and/or term of a mortgage without advancing new money on the loan.
The mortgage amount for a rate/term refinance is limited to the sum of the following:
• Existing first mortgage payoff
• Closing costs and prepaid items (interest, taxes, insurance) on the new mortgage
• The amount of any subordinate mortgage liens used in their entirety to acquire the subject
property (regardless of seasoning)
• The amount of a home equity line of credit in first or subordinate lien position that was used in its
entirety to acquire the subject property (regardless of seasoning)
• Any subordinate financing that was not used to purchase the subject property provided:
o For closed end seconds, the loan is at least one year seasoned as determined by the time
between the note date of the subordinate lien and the application date of the new
mortgage
o For HELOCs and other open ended lines of credit, the loan is at least one year seasoned
and there have been less than $2,000 in total draws over the past 12 months
If the most recent first mortgage transaction on the property was a cash-out refinance within the last six
months, the new mortgage is not eligible as a rate/term and must proceed as a cash-out refinance. Note
date to note date is used to calculate the six months.
On rate/term transactions, the borrower may only receive cash back in an amount that is the lesser of 2%
of the new mortgage balance or $2000.

August 25, 2014
3.6 CASH-OUT REFINANCE
A cash-out refinance is a refinance that does not meet the rate/term refinance definition. Cash-out would
include a refinance where the borrower receives cash from the transaction or when an open ended
subordinate lien (that does not meet the rate/term seasoning requirements) is refinanced into the new
transaction.
A mortgage taken out on a property previously owned free and clear is always considered a cash-out
refinance.
The mortgage amount for a cash-out refinance transaction may include any of the following:
• Existing first mortgage payoff
• Closing costs and prepaid items (interest, taxes, insurance) on the new mortgage
• The amount of any subordinate mortgage liens that are being paid off, regardless of age
• Additional cash in hand reflected on the HUD-1
A letter from the borrower disclosing the purpose of the cash-out must be obtained on all cash-out
transactions. The underwriter should ensure the purpose of the cash-out is also reflected on the loan
application.
3.6.1 SEASONING
For all cash-out refinance transactions, a minimum of six months must have elapsed since the
most recent mortgage transaction on the subject property (either the original purchase transaction
or subsequent refinance). Note date to note date is used to calculate the six months. See also
Determining Loan-to-Value Section 3.4.1 for calculating LTV.
Cash-out on properties purchased by the borrower with cash and owned less than six months may
be considered on a case-by-case basis. Refinances to recoup cash investment are underwritten to
the existing guidelines for purchase transactions.

August 25, 2014
3.6.2 CASH-OUT LIMITS
When cash out exceeds $100,000, an appraisal review product is required. See Appraisal Review
Process Section 11.7.5 for additional requirements.
3.6.2.1 Primary Residence and Second Home Limits
The maximum amount of cash out allowed on a primary residence or second home
transaction is as follows:
• $100,000: no LTV reduction
• $300,000: 5% LTV reduction from the maximum available for transaction
3.6.2.2 Investment Property Limits
For investment properties owned ≤ 36 months, the loan amount on investment property
transactions may not exceed the original purchase price. If the requested loan amount
exceeds the original purchase price, the loan amount may be approved if the LTV is at
least 10% below the published maximum LTV.
For investment property transactions, the maximum amount of cash out allowed is as
follows:
• $100,000: no LTV reduction

August 25, 2014
3.7 PERMANENT FINANCING FOR NEW CONSTRUCTION
The conversion of construction-to-permanent financing involves the granting of a long-term mortgage to
a borrower to replace interim construction financing obtained by the borrower to fund the construction of
a new residence. The borrower must hold title to the lot, which may have been previously acquired or
purchased as part of the transaction.
When a refinance transaction is used, the borrower must have held legal title to the lot before he/she
applied for the construction financing and must be named as the borrower for the construction loan.
A construction-to-permanent transaction may be closed as a purchase, rate/term refinance or cash-out
refinance. All construction work must be complete. See New Construction Section 11.8.14 for additional
requirements.
When the borrower acquired the lot 12 or more months before applying for the construction financing, the
LTV is calculated by dividing the unpaid principal balance of the construction loan by the lesser of the
following:
• Current appraised value (both lot and improvements), or
• Sum of the documented costs of the construction and current appraised value of the lot
When the borrower acquired the lot within the 12 months preceding the date of applying for the
construction financing, the LTV calculated by dividing the unpaid principal balance of the construction
loan by the lesser of the following:
• Current appraised value (both lot and improvements), or
• Total acquisition cost (sum of documented construction costs and sales price of the lot)

August 25, 2014
3.8 LAND CONTRACT/CONTRACT FOR DEED
When the proceeds of a mortgage transaction are used to pay off the outstanding balance on a land
contract that was executed more than 12 months prior to the date of the loan application, the transaction is
considered rate/term refinance.
If the land contract was executed within 12 months of the date of the loan application, the transaction is
considered a purchase.
The following requirements apply:
• Primary residence only
• Copy of fully executed land contract and payoff(s) to be obtained
• Copies of canceled checks for 12 months (or term of the lease if less) as evidence of timely
payments
• If the land contract was executed less than 12 months ago, the borrower’s previous housing
payment history must also be verified to complete a completed 12-month history
• Liens on title to be paid in full and reflected on HUD-1 Settlement Statement at closing
• If the contract was executed less than 12 months ago, the lesser of the purchase price or the
current appraised value must be used to determine LTV. The current appraised value may be used
to determine LTV if the land contract was executed over 12 months ago.
• Cash-out and non-arm’s length transactions not eligible
3.9 LEASE WITH PURCHASE OPTION
Lease with purchase option transactions are allowed for primary residences only. Borrowers may apply a
portion of the rent paid to their down payment requirements. See Rent Credit for Lease with Purchase
Option Section 10.3.11 for additional requirements.
For lease with purchase option transactions, the file must contain:
• Copy of fully executed rental/purchase agreement verifying monthly rent and the specific terms
of the lease
• Copies of canceled checks for 12 months (or term of the lease if less) as proof of rental payments

August 25, 2014
3.10 NON-ARM’S LENGTH TRANSACTIONS
Non-arm’s length transactions involve a direct relationship outside of the subject transaction between a
borrower and a party to the loan transaction. These transactions must be fully disclosed as non-arm’s
length. The appraiser must be informed of the relationship and address whether or not the market value
has been affected.
Examples of non-arm’s length transactions may include, but are not limited to: family member sales;
relationships with loan officers, real estate brokers (listing and selling agents), closing agent, appraiser,
builder, or developer; trading properties with the seller; property seller foreclosure bailouts.
Non-arm’s length transactions are subject to all of the following requirements:
• Primary residence only
• Relationship must be fully disclosed
• No layering of risk present on loan transaction
• Borrowers cannot provide services on transaction (closing agent, title agent, appraiser, etc.)
• Borrower may not be an owner of a business entity selling the subject property
The following additional requirements apply to family sales:
• Borrower must provide a written explanation stating the relationship to the seller and the reason
for purchase.
• Borrower must provide a copy of the canceled earnest money check paid to the seller.
• Verification that the borrower has not been in title to the property in the past 24 months.
• Payment history for the seller’s mortgage on the subject property must be obtained and show no
pattern of delinquency within the past 12 months (if applicable).
• The underwriter must be satisfied that the transaction makes sense and that the borrower will
occupy the property as a primary residence.
• All liens on title to be paid in full and reflected on HUD-1 Settlement Statement.
• The lesser of sales price or current appraised value to be used to calculate the LTV.
• Gift of equity is permitted. See Gifts of Equity Section 10.3.7.
• An additional appraisal product is required. See Appraisal Review Process Section 11.7.5.
3.11 INHERITED PROPERTIES
Inherited properties are allowed as both rate/term and cash-out transactions. If the subject property was
inherited less than 12 months prior to application, the transaction is considered a cash-out refinance and is
subject to the following:
• Equity owners must be paid through settlement. A written agreement signed by all parties stating
the terms of the buy-out and property transfer must be obtained.
• Subject property has cleared probate and property is vested in the borrower’s name.
• Current appraised value is used to determine loan-to-value.

August 25, 2014
3.12 FLIP TRANSACTIONS
When the subject property is being resold within 365 days of its acquisition by the seller and the sales
price has increased more than 10%, the transaction is considered a “flip”. To determine the 365-day
period, the acquisition date (the day the seller became the legal owner of the property) and the purchase
date (the day both parties executed the purchase agreement) should be used.
Flip transactions are subject to the following requirements:
• All transactions must be arm’s length, with no identity of interest between the buyer and seller or
other parties participating in the sales transaction.
• No pattern of previous flipping activity may exist in the last 12 months. Exceptions to ownership
transfers may include newly constructed properties, sales by government agencies, properties
inherited or acquired through divorce, and sales by the holder of a defaulted loan.
• The property was marketed openly and fairly, through a multiple listing service, auction, for sale
by owner offering (documented) or developer marketing.
• No assignments of the contract to another buyer.
• An additional appraisal product is required. See Appraisal Review Process Section 11.7.5.
Flip transactions must comply with the HPML appraisal rules in Regulation Z. The full Reg Z revisions
can be found at http://www.consumerfinance.gov/regulations/appraisals-for-higher-priced-mortgage-
loans. A second appraisal is required in the following circumstances:
• Greater than 10% increase in sales price if the seller acquired the property in the past 90 days
• Greater than 20% increase in sales price if the seller acquired the property in the past 91-180 days
3.13 INELIGIBLE TRANSACTIONS
The following transactions are ineligible:
• Blanket loans
• Bridge loans
• Borrowers less than 18 years old
• Loans to employees of originator

August 25, 2014
4 BORROWERS
A borrower is a credit applicant who will have ownership interest in the subject property, sign the security
instrument, and sign the mortgage or deed of trust note. If two or more individuals own the property
jointly, and are jointly and severally liable for the note, all are considered to be borrowers.
4.1 CUSTOMER IDENTIFICATION PROGRAM (CIP)
The USA Patriot Act requires banks and financial institutions to verify the name, date of birth, address
and identification number of all borrowers. Underwriter to follow the published CIP procedures for each
originator to ensure the true identity of all borrowers has been documented.
4.2 U.S. CITIZENS
U.S. Citizens are eligible for financing.
4.3 PERMANENT RESIDENT ALIENS
A permanent resident alien is a non-U.S citizen authorized to live and work in the U.S. on a permanent
basis. Permanent resident aliens are eligible for financing. Acceptable evidence of lawful permanent
residency must be documented and meet one of the following criteria:
• I-151 – Permanent Resident Card (Green Card) that does not have an expiration date
• I-551 – Permanent Resident Card (Green Card) issued for 10 years that has not expired
• I-551 – Conditional Permanent Resident Card (Green Card) issued for 2 years that has an
expiration date, as long as it is accompanied by a copy of USCIS form I-751 requesting removal
of the conditions
• Un-expired Foreign Passport with an un-expired stamp reading as follows: “Processed for I-551
Temporary Evidence of Lawful Admission for Permanent Residence. Valid until mm-dd-yy.
Employment Authorized.”

August 25, 2014
4.4 NON-PERMANENT RESIDENT ALIENS
A non-permanent resident alien is a non-U.S. citizen authorized to live and work in the U.S. on a
temporary basis. Non-permanent resident aliens are eligible for financing with full documentation only.
Non-permanent resident alien borrowers are not eligible for bank statement documentation.
4.4.1 VERIFICATION OF RESIDENCY STATUS
The following visa classifications are allowed as non-permanent resident aliens:
• A-1, A-2, A-3
• E-1, E-2, E-3
• G-1 through G-5
• H-1
• L-1
• NATO
• O-1
• R-1
• TN NAFTA
Copies of the borrower’s passport and unexpired visa must be obtained. Acceptable alternative
documentation to verify visa classification is an I-797 form (Notice of Action) with valid
extension dates and an I-94 form (Arrival/Departure Record).
A valid employment authorization document (EAD) must be obtained if the visa is not sponsored
by the borrower’s current employer. If the visa will expire within six months of loan application,
it is acceptable to obtain a letter from the employer documenting the borrower’s continued
employment and continued visa renewal sponsorship (employer on the loan application must be
the same as on the unexpired visa).
If a non-U.S citizen is borrowing with a U.S. citizen, it does not eliminate visa or other non-
permanent resident alien documentation requirements. Co-borrowers in possession of spouse or
family member visas may be considered on a case-by-case basis.

August 25, 2014
4.4.2 CREDIT REQUIREMENTS
A U.S. credit report is required for each borrower on the loan using a valid Social Security
number. The credit report should provide merged credit information from the three major
national credit repositories. A 2-year housing history is required.
4.4.2.1 Qualifying U.S. Credit
The Qualifying U.S. Credit designation refers to a non-U.S. citizen borrower who meets
the Standard Tradeline requirements in Tradeline Requirements Section 5.3.2. A
Qualifying U.S. Credit borrower is eligible for all products and programs available on the
applicable Oaktree Funding Non-Prime Select Matrix.
4.4.2.2 Qualifying Foreign Credit
The Qualifying Foreign Credit designation refers to a non-U.S. citizen borrower who
does not meet the Standard Tradeline requirements in Tradeline Requirements Section
5.3.2 and are classified under Limited Tradelines. A Qualifying Foreign Credit borrower
may or may not have a U.S. credit report with no credit score, a single score, or a score
with insufficient tradelines. See Limited Tradelines Section 5.3.4 for LTV restrictions for
Limited Credit borrowers.
Qualifying Foreign Credit borrowers must establish an acceptable credit history. Three
open accounts with a 2-year history must be documented for each borrower reflecting no
late payments. The 2-year housing history may be used as tradeline. U.S. credit accounts
may be combined with letters of reference from verifiable financial institutions in a
foreign country to establish the three open accounts and an acceptable credit reputation. If
letters of reference are obtained, they must state the type and length of the relationship,
how the accounts are held, and status of the account. All contact information must be
provided for the person signing the letter. Any translation must be signed and dated by a
certified translator.

August 25, 2014
4.4.3 INCOME/EMPLOYMENT REQUIREMENTS
Standard guidelines apply for verifying income and employment of non-permanent resident
aliens.
4.4.4 ASSETS
Qualifying U.S. Credit non-permanent resident aliens must have 6 months PITIA reserves.
Qualifying Foreign Credit non-permanent resident aliens must have 12 months of PITIA reserves.
All funds for down payment, closing costs and reserves must be seasoned for 60 days and meet
the requirements in Asset Documentation Section 7.1.3 and Age of Documentation Section 7.4.
Foreign assets are acceptable. See also Foreign Assets Section 10.3.8. All assets used for down
payment and closing costs must be seasoned in a U.S. depository institution for 30 days prior to
closing.

August 25, 2014
4.5 FOREIGN NATIONALS
A foreign national is a non-U.S. citizen authorized to live in the U.S. on a temporary basis, but does not
meet the definition of a non-permanent resident alien.
Foreign nationals are eligible for second homes and investment properties with full documentation only.
Loans to foreign national borrowers with second home occupancy should be originated as such; however,
for qualification purposes, all foreign national loans will follow investor occupancy guidelines, credit
restrictions, and matrices.
Foreign national borrowers are eligible under the Oaktree Funding Investment Property Program only.
4.5.1 VERIFICATION OF RESIDENCY STATUS
The following visa types are allowed as foreign nationals:
• B-1and B-2
• H-2 and H-3
• I
• J-1 and J-2
• O-2
• P-1 and P-2
Copies of the borrower’s passport and unexpired visa must be obtained. Acceptable alternative
documentation to verify visa classification is an I-797 form (Notice of Action) with valid
extension dates and an I-94 form (Arrival/Departure Record). When applicable, a valid
employment authorization document (EAD) is required for U.S. employment if the visa is not
sponsored by the borrower’s current employer. Borrowers unable to provide evidence of lawful
residency status in the U.S. are not eligible for financing.
If a non-U.S citizen is borrowing with a U.S. citizen, it does not eliminate visa or other foreign
national documentation requirements. Co-borrowers in possession of spouse or family member
visas may be considered on a case-by-case basis.
Borrowers who are residents of countries which participate in the State Department’s Visa
Waiver Program (VWP) will not be required to provide a valid visa. Participating countries can
be verified through the U.S. Department of State website at
http://travel.state.gov/visa/temp/without/without_1990.html.

August 25, 2014
4.5.2 CREDIT REQUIREMENTS
A U.S. credit report should be obtained for each foreign national borrower with a valid Social
Security number. The credit report should provide merged credit information from the three
major national credit repositories. A 2-year housing history is required.
For borrowers without a valid Social Security number, an Individual Taxpayer Identification
Number (ITIN) is also allowed. An ITIN is acceptable if the borrower has the ITIN for purposes
of reporting taxes from passive income sources only and is not employed in the U.S. A traditional
U.S. credit report is not required for borrowers without a valid SSN.
Foreign National borrowers who do not have a SSN or ITIN may still proceed under the Foreign
National Program. All other program requirements still apply.
4.5.2.1 Qualifying U.S. Credit
The Qualifying U.S. Credit designation refers to non-U.S. citizen borrowers who meet
the Standard Tradeline requirements in Tradeline Requirements Section 5.3.2. A
Qualifying U.S. Credit foreign national borrower is eligible for all investment property
products and programs reflected on the Oaktree Funding Investment Property Non-Prime
Select Matrix.
4.5.2.2 Qualifying Foreign Credit
The Qualifying Foreign Credit designation refers to non-U.S. citizen borrowers who do
not meet the Standard Tradeline requirements in Tradeline Requirements Section 5.3.2
and are limited to a maximum LTV of 65%. A Qualifying Foreign Credit foreign
national borrower may or may not have a U.S. credit report with no credit score, a single
score, or a score with insufficient tradelines.
Qualifying Foreign Credit borrowers must establish an acceptable credit history. Three
open accounts with a 2-year history must be documented for each borrower reflecting no
late payments. The 2-year housing history may be used as tradeline. U.S. credit accounts
may be combined with letters of reference from verifiable financial institutions in a
foreign country to establish the three open accounts and an acceptable credit reputation. If
letters of reference are obtained, they must state the type and length of the relationship,
how the accounts are held, and status of the account. All contact information must be
provided for the person signing the letter. Any translation must be signed and dated by a
certified translator.

August 25, 2014
4.5.3 INCOME/EMPLOYMENT REQUIREMENTS
To document income received for salaried foreign national borrowers, the following items should
be obtained:
• Letter from employer providing current monthly salary, YTD earnings, and two months
valid pay stubs are to be obtained when possible. Pay stubs may be waived if the
borrowers employer does not provide them and verification of employment can be
obtained through other means.
• Letter from employer must be on company letterhead, including address and company
web address.
• Employer to be independently verified (via LexisNexis, D&B International Business
Search, Google, or other means of verification).
• All documents must be translated by a certified translator.
• If the borrower is employed within the U.S., standard income and employment
documentation requirements apply.
Self-employed foreign national borrowers are allowed when the following requirements have
been met:
• Borrower must be self-employed a minimum of 2 years.
• Self-employed business is to be independently verified (via LexisNexis, D&B
International Business Search, Google, or other means of verification).
• A letter from a CPA is required verifying income figures for the last two years and year-
to-date income figures. CPA is to be independently verified.
• All documents must be translated by a certified translator.
4.5.4 ASSETS
Foreign national borrowers must have 12 months PITIA reserves.
All funds for down payment, closing costs and reserves must be seasoned for 60 days and meet
the requirements in Asset Documentation Section 7.1.3 and Age of Documentation Section 7.4
Foreign assets are acceptable. See also Foreign Assets Section 10.3.8. All assets used for the
transaction must be seasoned in a U.S. depository institution for 30 days prior to closing.

August 25, 2014
4.6 EXCLUSIONARY LIST/OFAC/DIPLOMATIC IMMUNITY
All parties involved on each transaction must be screened through any exclusionary list used by the
originator. The originator should apply its exclusionary list policy to any loans originated under these
guidelines.
Parties to the transaction must also be cleared through OFAC’s SND List (borrowers, sellers, employers,
banks, etc.). A search of the Specially Designated Nationals and Blocked Persons List may be completed
via the U.S. Department of the Treasury website: http://sdnsearch.ofac.treas.gov/
Borrowers from OFAC sanctioned countries are ineligible. Access the link below for a list of sanctioned
countries: http://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx
Individuals with diplomatic immunity are not eligible due to the inability to compel payment or seek
judgment. Verification the borrower does not have diplomatic immunity can be determined by reviewing
the visa, passport, and/or the U.S. Department of State’s Diplomatic List at
http://www.state.gov/s/cpr/rls/.
4.7 CO-BORROWERS
Co-borrower is often used to describe any borrower other than the first borrower whose name appears on
the note. All borrowers are evaluated on their ability to meet credit requirements, and underwriting and
eligibility standards. All co-borrowers must occupy and take title to the subject property. Co-borrowers
may not be an interested party to the transaction. Possible examples include, but are not limited to, seller,
builder, realtor, appraiser (a buyer who also acts as their own buying agent is generally permitted.)
4.8 NON-OCCUPANT CO-BORROWERS/CO-SIGNERS/ GUARANTORS
Not allowed

August 25, 2014
4.9 FIRST-TIME HOME BUYERS
A first-time home buyer is defined as a borrower who had no ownership interest in a residential property
in the United States during the preceding 3-year period.
The following requirements apply to first-time homebuyer transactions:
• Primary residence and second homes only
• Full documentation required
• Minimum 560 score
• 6 months reserves after closing
If a borrower has not owned a property in the last 3 years but can document ownership in the preceding 5-
year period, the above criteria may be waived.
4.10 VESTING AND OWNERSHP
Ownership must be fee simple. Acceptable forms of vesting are:
• Individuals
• Joint tenants
• Tenants in Common
• Limited Liability Company (LLC)
4.11 LIMITED LIABILITY COMPANY (LLC)
Vesting in the name of an LLC is acceptable. The following standards apply:
• Allowed on Investment Property Program only
• Purpose of the LLC is for the ownership and management of real estate
• All owners of the LLC (no more than two) are borrowers on the transaction
• Loan must be disclosed to all borrowers and the LLC
• Assets and liabilities for all borrowers and the LLC should be reflected on the 1003(s) (see also
Multiple Properties and Multiple Loans Section 4.14)
• The following LLC documentation must be provided:
o Articles of Incorporation
o Operating Agreement
o Tax Identification Number
o Certificate of Good Standing
Originator must ensure loans vested in an LLC are solely business-purpose loans for the purchase or
refinance of investment properties. Vesting in an LLC is prohibited for owner-occupied transactions.

August 25, 2014
4.12 INTER VIVOS REVOCABLE TRUST
Inter Vivos Revocable Trusts are allowed when the requirements outlined below are met.
The trust must be established by one or more natural persons, solely or jointly. The primary beneficiary of
the trust must be the individual(s) who establishing the trust. The trust must become effective during the
lifetime of the person establishing the trust.
If the trust is established jointly, there may be more than one primary beneficiary as long as the income or
assets of at least one of the individuals establishing the trust will be used to qualify for the mortgage.
The trustee must include either:
• The individual establishing the trust (or at least one of the individuals, if there are two or more);
or
• An institutional trustee that customarily performs trust functions in and is authorized to act as
trustee under the laws of the applicable state.
The trustee must have the power to hold the title and mortgage the property. This must be specified in the
trust. One or more of the parties establishing the trust must use personal income or assets to qualify for
the mortgage.
A copy of the trust is required, or a signed attorney’s opinion may be obtained in lieu of the trust
documents. The opinion letter must indicate that the trust meets all published requirements and must also
include the following:
• name of the trust
• date executed
• settler(s) of the trust
• whether it is revocable or irrevocable
• whether the trust has multiple trustees
• name of trustees
• manner in which vesting will be held
The Attorney needs to also verify that the trust has not been revoked, modified, or amended in any
manner that would cause the representations to be incorrect.

August 25, 2014
4.13 LIMITED POWER OF ATTORNEY
A Limited Power of Attorney (POA) is acceptable when following requirements are met:
• POA is specific to the transaction
• Recorded with the Mortgage/Deed of Trust
• Contains an expiration date
• Used only to execute the final loan documents
• Borrower who executed the POA signed the initial 1003
• No interested party to the transaction (such as seller, broker, loan officer, realtor, etc.) may act as
Power of Attorney
• Not permitted on cash-out or foreign national transactions
4.14 MULTIPLE PROPERTIES AND MULTIPLE LOANS
When the subject property is a primary residence, there are no limitations on the number of other
properties the borrower(s) may currently have financed.
If the new mortgage is secured by a second home or an investment property, the borrower(s) may be
obligated on up to 20 financed properties (including his or her primary residence). Oaktree Funding
exposure may not exceed $2.5M aggregate with a maximum of five loans for each individual borrower.
Foreign National borrowers are restricted to one loan per borrower with Oaktree Funding. Two months
of additional reserves for each financed property is required. See also Reserves Section 10.2.
The financed property limit applies to the borrower's ownership of 1-4 unit financed properties and the
mortgage obligations on such properties. The limit is cumulative for all borrowers. Properties held in the
name of an LLC through joint or total ownership must also be included. Properties owned free and clear
and unimproved land are excluded from these restrictions.
4.15 INELIGIBLE BORROWERS
Due to the inability to compel payment or seek judgment, the following borrowers are not eligible for
financing:
• Borrowers with diplomatic immunity or otherwise excluded from U.S. jurisdiction
• Limited partnerships, general partnerships, corporations
• Borrowers whose income is not likely to continue for at least 3 years

August 25, 2014
5 CREDIT ANALYSIS
5.1 EQUAL CREDIT OPPORTUNITY ACT
The Federal Equal Credit Opportunity Act prohibits lenders from discriminating against credit borrowers
on the basis of race, color, religion, national or ethnic origin, sex, marital or familial status, age (provided
the borrower has the capacity to enter into a binding contract), disability, because all or part of the
borrower’s income is derived from a public assistance program or because the borrower has, in good
faith, exercised any rights under the Consumer Credit Protection Act. State laws may also prohibit
discrimination on certain additional basis such as sexual orientation.
5.2 CREDIT REPORT
A credit report is required for every borrower on the loan application who will sign the note. The credit
report should provide merged credit information from the three major national credit repositories. A valid
Social Security number (SSN) or ITIN (Individual Taxpayer Identification Number) is required for all
borrowers on the loan. See also Credit Requirements Section 4.5.2 for acceptability of ITINs for Foreign
National borrowers only.
The credit report should include verification of all credit references provided on the loan application and
must certify the results of public record searches for each city where the borrower has resided in the last
two years. Either a three-bureau merged report or a Residential Mortgage Credit Report (RMCR) is
required.
5.2.1 AGE OF CREDIT REPORT/CREDIT DOCUMENTATION
The credit report and credit documentation may not be greater than 90 days old at the time of
closing.
5.2.2 GAP CREDIT REPORT
A gap credit report is required within 10 days of closing.

August 25, 2014
5.2.3 FRAUD ALERTS
The three national credit repositories have developed automated messaging to help identify
possible fraudulent activity on a credit report. These alerts are known as HAWK Alerts. All
HAWK Alerts (including Active Duty Alerts) should be properly addressed and resolved prior to
submitting the loan to underwriting. An underwriting decision cannot be made without full
resolution of the alert.
5.2.4 INQUIRIES
Recent inquiries indicate that the consumer has actively been seeking credit. A letter of
explanation from the borrower or creditor is required for all inquiries within the most recent 90
days to determine whether additional credit was granted as a result of the borrower’s request.
5.2.5 UPDATED PAYMENT HISTORIES
Payment histories may be requested directly from a creditor when the credit report indicates
delinquencies have been removed or when the majority of credit is from a non-institutional
lender.

August 25, 2014
5.3 MINIMUM CREDIT REQUIREMENTS
5.3.1 CREDIT SCORES
All borrowers must have a valid score from at least two of the following three agencies: Experian
(FICO), Trans Union (Empirica), and Equifax (Beacon). Only scores from these agencies are
acceptable.
The primary wage-earner score will be used as the Representative Credit Score for each loan. To
determine the Representative Credit Score for the transaction, determine the score for each
individual borrower. Select the middle score when three agency scores are provided and the lower
score when only two agency scores are provided.
Refer to the applicable Oaktree Funding Non-Prime Select Matrix for specific credit score
requirements.
5.3.2 TRADELINE REQUIREMENTS
For primary residence and second home transactions, only the primary wage-earner must meet the
minimum tradeline requirements listed below. For investment property transactions, all borrowers
on the loan must meet the minimum requirements. If the tradeline requirements are not met, the
loan must qualify under Limited Tradelines or is ineligible.
To qualify as an acceptable tradeline, the credit line must be reflected on the borrower’s credit
report and have activity in the past 12 months. An acceptable 12- or 24-month housing history not
reporting on credit may also be used as a tradeline.
Credit lines on which the borrower is not obligated to make payments are not acceptable for
establishing a minimum history. Examples of unacceptable tradelines include loans in a
deferment period, collection or charged-off accounts, accounts discharged through bankruptcy,
and authorized user accounts. Student loans may be counted as tradelines as long as they are in
repayment and are not deferred.
MINIMUM TRADELINES
TRADELINES OCCUPANCY MINIMUM REQUIREMENTS
Standard
Tradelines
Primary and
Second Homes
3 tradelines reporting for 12+ months
with activity in last 12 months
or
2 tradelines reporting for 24+ months
with activity in last 12 monthsInvestment
Limited
Tradelines
Primary
Does not meet minimum
tradeline requirements

August 25, 2014
5.3.3 STANDARD TRADELINES
Borrowers qualifying with Standard Tradelines are eligible for all occupancy types and programs.
5.3.4 LIMITED TRADELINES
The following requirements apply when qualifying with Limited Tradelines:
• 10% minimum borrower contribution
• Minimum 6 months reserves after closing
When qualifying with Limited Tradelines, the lower of either the Representative Loan Score or a
540 score is used to qualify the borrower on the Non-Prime Matrix and Recent Housing Event
Matrix. The loan may be priced, however, using the actual Representative Loan Score.
Limited Tradelines are not allowed under the Investment Property Program.
5.3.5 INSUFFICIENT TRADELINES/NON-TRADITIONAL CREDIT
Non-traditional credit is not allowed. Each borrower must have a valid and usable score as
defined in Credit Scores Section 5.3.1.
If the borrower does not meet the requirements for Standard Tradelines but still has a valid credit
score, he or she may qualify under Limited Tradelines. See Limited Tradelines Section 5.3.4 for
additional information.

August 25, 2014
5.4 MORTGAGE AND RENTAL PAYMENT VERIFICATION
Mortgage and rental payments not reflected on the original credit report must be documented via an
institutional Verification of Rent or Verification of Mortgage (VOR/VOM). Verifications completed by
an individual or interested party are acceptable when accompanied by cancelled checks. A combined total
of all late mortgage and rent payments in the past 12 months must be used to determine the housing
history rating.
All mortgages and rental payments should be current at time of closing. If the credit report or VOR/VOM
reflects a past-due status, updated documentation is required to verify the account is current.
5.4.1 NON-PRIME PROGRAM
See the Oaktree Funding Non-Prime Select Credit Matrix to determine ratings for mortgage and
rental payments.
5.4.2 RECENT HOUSING EVENT AND INVESTMENT PROPERTY PROGRAMS
All mortgages and rental payments must be paid as agreed for the last 12 months, or since the
date the Housing Event was cured (if Housing Event occurred less than 12 months ago).
Mortgage and rental lates prior to the Housing Event may be disregarded.
To determine the housing default scenarios considered to be Housing Events, see Housing Event
Definition Section 5.14.1.
See Foreclosure/Short Sale/Deed In Lieu/ Notice of Default Section 5.15 for seasoning
requirements.
5.4.3 NO HOUSING HISTORY OR LESS THAN 12 MONTHS VERIFIED
Borrowers who do not have a complete 12-month housing history are subject to the following
restrictions:
• Minimum 6 months reserves after closing
• 10% minimum borrower contribution
• Payment shock is not considered
• VOR/VOM must be obtained for all months available reflecting paid as agreed

August 25, 2014
5.5 TIMESHARES
For credit review purposes, timeshare obligations will be considered installment loans.
5.6 LATE PAYMENTS
Rolling late payments are not permitted. Each occurrence of a contractual delinquency is considered
individually for loan eligibility.
5.6.1 NON-PRIME PROGRAM
Under the Non-Prime Program, there are no restrictions on the number of consumer debt late
payments that may have occurred.
5.6.2 RECENT HOUSING EVENT AND INVESTMENT PROPERTY PROGRAMS
Recent late payments on all consumer debt may not exceed the following:
• Most recent 12 months: may not exceed 2x30 and 0x60
• Most recent 13-24 months: may not exceed 1x60
5.7 PAST DUE ACCOUNTS
Past due consumer debts may be no more than 30 days past due at time of closing.
5.8 WRITTEN EXPLANATIONS FOR DEROGATORY CREDIT
Significant derogatory credit in the most recent two years should be explained by the borrower in writing.
Documentation supporting the borrower’s explanation may be required.
Significant consumer lates should also be addressed by the borrower. If the file contains sufficient
documentation to explain the lates, the underwriter may choose to waive further explanation from the
borrower.

August 25, 2014
5.9 DELINQUENT CREDIT BELONGING TO EX-SPOUSE
Delinquent credit which belongs to an ex-spouse may be excluded from the credit evaluation when all of
the following apply:
• Borrower provides a copy of the divorce decree or separation agreement which shows the
derogatory accounts belong solely to the ex-spouse
• Late payments occurred after the date of the divorce or separation
• Evidence of title transfer prior to any delinquent debt must be provided if debt is a mortgage, and
evidence of “buyout” as part of court proceedings
Collection accounts assigned to an ex-spouse may be excluded from aggregate collection totals with a
divorce decree or separation agreement assigning the account solely to the ex-spouse.
See also Contingent Liabilities Section 6.10.
5.10 LAWSUIT/PENDING LITIGATION
If the application, title, or credit documents reveal that the borrower is presently involved in a lawsuit or
pending litigation, a statement from the borrower’s attorney is required. The statement must explain the
circumstances of the lawsuit or litigation and discuss the borrower’s liability and insurance coverage. A
copy of the complaint and answer may also be needed. The title company closing the loan must be
informed of the lawsuit or litigation and provide affirmative coverage of our first lien position.

August 25, 2014
5.11 COLLECTIONS AND CHARGE-OFFS
The following accounts may remain open:
• Collections and charge-offs < 24 months old with a maximum cumulative balance of $2,000
• Collections and charge-offs ≥ 24 months old with a maximum of $2,500 per occurrence
• All medical collections with a maximum cumulative balance of $5,000
• Collections and charge-offs that have passed beyond the statute of limitation for that state
(supporting documentation required)
Collection and charge-off accounts outside of the parameters listed above may remain open if either of the
following is met:
• Borrower has sufficient reserves to cover all unpaid collections and charge-offs in addition to the
published reserve requirement; or
• Payment for open collections included in DTI calculation results in final DTI of 50% or less
(payment calculated at 5% of balance of all unpaid collections and charge-offs).
A combination of the two options above may also be considered. A portion of the total unpaid collection
balance may be included in the DTI while the remainder is covered by excess reserves. Collections and
charge-offs that cannot be factored into DTI or reserves must be paid off.
5.12 JUDGMENTS AND TAX LIENS
Judgments and tax liens must be paid off prior to or at closing. Adverse credit that will impact title must
be paid in full as title must insure our lien position without exception.
Court-ordered judgments may remain open if the borrower is currently in a repayment agreement with the
creditor. A copy of the repayment agreement and evidence of a minimum three payments must be
provided. The monthly payment must be included in the DTI calculation.
Outstanding tax liens may remain open on purchase transactions only on a case-by-case basis. A copy of
the repayment agreement and evidence of a minimum three payments must be provided. The maximum
payment required under the plan must be included in the debt-to-income ratio. Written confirmation from
the title company must also be obtained confirming (a) the title company is aware of the outstanding tax
lien, and (b) there is no impact to first lien position. Additional LTV reductions may be required based on
the size of the lien.

August 25, 2014
5.13 CHAPTER 7 BANKRUPTCY
5.13.1 NON-PRIME AND RECENT HOUSING EVENT PROGRAMS
Chapter 7 bankruptcies must be discharged for a minimum of 12 months from closing date.
5.13.2 INVESTMENT PROPERTY PROGRAM
Chapter 7 bankruptcies must be discharged for a minimum of 24 months from closing date.
5.14 CHAPTER 13 BANKRUPTCY
5.14.1 NON-PRIME AND RECENT HOUSING EVENT PROGRAMS
A Chapter 13 bankruptcy may remain open after loan closing when all of the following
requirements are met:
• At least 12 months repayment period in the bankruptcy has elapsed
• All required bankruptcy plan payments have been made on time
• The borrower has received written permission from bankruptcy court to enter into the
mortgage transaction
• Full bankruptcy papers may be required
A cash-out refinance to pay off the remaining balance of a Chapter 13 bankruptcy is allowed. In
addition to the meeting the requirements listed above, the transaction must provide an overall
reduction in monthly obligations for the borrower. See also Cash-out Refinance Section 3.6 for
additional information.
5.14.2 INVESTMENT PROPERTY PROGRAM
Chapter 13 bankruptcies must be discharged or dismissed for a minimum of 24 months from
closing date.

Non Prime Select Guidelines call Jesse B Lucero 702-551-3125

Non Prime Select Guidelines call Jesse B Lucero 702-551-3125

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