Thank you for choosing Oaktree Funding Corp! We have many exciting Products & Programs to help you meet and exceed your borrower's expectations! Please see below for our minimum credit score and some of our program flyers. We have a very deep investor base and most of our loan programs have very little overlays, you will quickly find that we are a great partner for getting deals DONE! Thank you again for choosing Oaktree Funding!
2. CONSTRUCTION-TO-PERMANENT FINANCING.....................................................................................................11
4506-T...................................................................................................................................................................................11
CREDIT REPORT & CREDIT SCORE..........................................................................................................................11
HOUSING PAYMENT HISTORY...................................................................................................................................11
MINIMUM CREDIT STANDARDS & ADVERSE CREDIT........................................................................................12
ESCROW WAIVERS.........................................................................................................................................................12
FINANCING & SALES CONCESSIONS........................................................................................................................13
HIGH COST LOANS.........................................................................................................................................................13
SUBORDINATE FINANCING .........................................................................................................................................13
HIGH PRICED LOANS.....................................................................................................................................................13
BUYDOWNS.......................................................................................................................................................................13
POWER OF ATTORNEY .................................................................................................................................................13
ASSUMABILITY................................................................................................................................................................13
NOTES & RIDERS.............................................................................................................................................................13
Index AA
3. NON-CONFORMING RESIDENTIAL JUMBO PRODUCT
Lending Grid
Fixed-Rate and Hybrid Adjustable-Rate | All products are Fully-Amortizing (no balloons or IOâs)
Fixed Rate Features: 15 and 30 year
ARM Features (30-year): Fully Amortizing 5/1 | Margin: 2.50% Caps: 2/2/5* | Index: 12m-LIBOR
Fully Amortizing 7/1, 10/1 | Margin: 2.50% Caps: 5/2/5* | Index: 12m-LIBOR
*Initial Cap 2% (5/1s), and Initial Cap 5% (7/1s + 10/1s) / 2% Subsequent Initial Adjustment Cap / 5% Lifetime Cap (over initial rate)
80% Max LTV: Subject to 5% LTV/CLTV reduction; See underwriting guidelines below
ELIGIBILITY MATRIX
Primary (1-Unit) UPB Range Max LTV
*
Min FICO Reserves (Months) DTI
Purchase / Rate
Term
$417,001-$1.0 Million 80% 720 9 43%
$417,001-$1.0 Million 75% 700 9 43%
$1,000,001-$1.5 Million 80% 740 18 43%
$1,000,001-$1.5 Million 75% 720 18 43%
$1,500,001-$2.0 Million 70% 720 12 43%
$2,000,001-$2.5 Million 65% 720 12 43%
Primary (1-Unit):
Cash-Out
$417,001-$1.0 Million 75% 700 9 43%
$1,000,001-$1.5 Million 70% 700 9 43%
$1,500,001-$2.0 Million 55% 720 12 43%
Second Home:
Purchase / Rate
Term
$417,001-$1.0 Million 75% 720 9 43%
$1,000,001-$1.5 Million 70% 720 9 43%
$1,500,001-$2.0 Million 65% 720 12 43%
Second Home:
Cash-Out
$417,001-$1.0 Million 70% 700 12 40%
$1,000,001-$1.5 Million 65% 700 12 40%
$1,500,001-$2.0 Million 50% 720 12 40%
Primary (2-Unit):
Purchase / Rate
Term
$417,001-$1.0 Million 70% 700 12 40%
$1,000,001-$1.5 Million 65% 700 12 40%
$1,500,001-$2.0 Million 50% 720 12 40%
Primary (2-Unit):
Cash-Out
$417,001-$1.0 Million 70% 700 12 40%
$1,000,001-$1.5 Million 65% 700 12 40%
$1,500,001-$2.0 Million 50% 720 12 40%
Page 1
4. 3
ELIGIBLE
PROPERTIES
Primary (1-Unit) / Second Home: Detached and Attached Single Family;
Eligible Condos and PUDs(1)
Primary (2-Unit) Owner-Occupied Only(2)
: Detached 2-Unit Purchase and
Refinance transactions eligible to Maximum LTV/CLTV offered except in Soft
Market areas (3)
Cash-Out Restrictions: Cash proceeds (outside of payment of liens secured by
subject property) are permitted and should not exceed $300,000; Primary and
Second Homes only; Purchase and Refinance transactions eligible to Maximum
LTV/CLTV offered except in Soft Market areas(3)
(1)
Eligible Condos and Planned Unit Developments (PUDs) Project must meet FNMA Limited Project
Review criteria
(2)
2-unit detached must be owner occupied
(3)
Subject to 5% LTV/CLTV reduction
INELIGIBLE
PROPERTY TYPES
3-4 unit properties
Mixed use properties
Leaseholds, Manufactured Homes, or Mobile Homes
Unwarrantable Condo, Cooperatives, or Condotels
Unimproved Land and property currently in litigation
Log homes, Timeshares, or Geodesic Domes
Working farm and Ranches
Properties with < 750 Sq. feet of living area, or > 10-acres
Properties held in a business name
Commercial Enterprise (e.g.: Hotel, Bed and Breakfast, Boarding House)
Properties with encroachments
Zoning violations including residential properties zoned commercial
Non armâs length transaction defined as a pre-existing relationship between the
buyer and seller
ELIGIBLE
BORROWERS
U.S. Citizen
All Borrowers must have a valid social security number
Irrevocable Trust limited / General Partnership and Corporations are not
permitted
Inter Vivos Revocable Trust (revocable at any time by the Trustor)
Permanent Resident Aliens: with proof of lawful permanent residence plus 24
months United States employment history
Non-Permanent Resident Aliens
Non-Permanent Resident: Allowed with proof of lawful permanent residence
plus 24-months United States employment history
Page 2
5. 4
MAXIMUM
FINANCED
PROPERTIES
Maximum of four (4) financed properties for all occupancies
per loan
Borrowers with greater than two financed properties are required at least
18 months reserves
APPRAISAL
REQUIREMENTS
UPB $417,001 to $1,500,000:
One Full URAR for loan amounts up to and including $1,500,000 (e.g. Form
1004, Form 1073) All appraisals will be subject to the Oaktree Funding
appraisal review process.
UPB $1,500,001+:
Two Full URARs for loan amounts > $1,500,001 it is recommended (but not
required) to send appraisals in to Oaktree Funding for appraisal review for prior
to close
LTV will be based on the lower of (i) the Two Full URARs, and (ii) for
purchase money loans, the purchase price, subject to Oaktree Funding appraisal
review process.
Appraisal Standards:
All appraisers must hold at least the minimum required state license and a copy
of the license must be submitted with the appraisal.
Appraisals must be completed in compliance with FIRREA/USPAP and all
applicable regulatory requirements.
1004MC required.
On Purchase transactions, the appraiser must review the sales contract.
Appraisal 1st
generation PDF required.
Oaktree Funding will purchase loans secured by properties with
âunpermittedâ structural additions under the following circumstances:
The subject additions complies with all investor guidelines.
The quality of the work is described in the appraisal and deemed acceptable
(âworkmanlike qualityâ) by the appraiser.
The addition does not result in a change in the number of units comprising the
subject property (e.g., 1-unit property, converted in to a 2- unit property).
If the appraiser gives the unpermitted addition value, the appraiser must be able
to demonstrate market acceptance by the use of comparable sales with similar
addition and state the following in the appraisal:
Non permitted additions are typical for the market area and a typical buyer would
consider the âunpermitted âaddition square footage to be part of the overall
square footage of the property.
The appraiser has no reason to believe the addition would not pass inspection for
a permit.
PROJECT WARRANTY
STANDARDS
Condominiums must be warrantable
Refer to FNMA guidelines for the requirements of warrantability
Oaktree Funding will not purchase non-warrantable condos
Page 3
6. GEOGRAPHIC
RESTRICTIONS &
INELIGIBLE STATES
Max LTV/CLTV reduced by 5% when:
Appraisal indicates in the Neighborhood Section Housing Trends or 1004MC
Median Comparable Sale Price that property values are declining
Ineligible States: Massachusetts & All other states Oaktree Funding is not licensed to do
business.
STATE-SPECIFIC
CRITERIA:
TEXAS REFINANCES
(NO CASH-OUT ONLY)
Refinances in the state of Texas are eligible. If the current loan is a Texas
50(a)(6) the refinance must meet Texas Regulation 50 (a)(6)
This allows a prior Cash-Out refinance under Texas law to be refinanced as a No
Cash-Out refinance with no ($0.00) cash out to the borrower but must follow
existing Texas Cash Out procedures
MORTGAGE
INSURANCE
Not applicable (80% Max LTV):
Insured LTVs (over 80%) are not eligible for this program.
UNDERWRITING
GUIDELINES
Full documentation only
This product is manually underwritten (DU/LP not required)
If a topic is not specifically addressed within this product description or the
FNMA Selling Guide policies will apply
All loans must satisfy stable monthly income, ratios, assets, reserves and
acceptable credit reputation guidelines.
AGE OF CREDIT
PACKAGE
Credit Package (Max Age)
Purchase or Refinance: 90-days to the Note date
Proposed and New Construction: 120-days to the Note date
Page 4
7. SELF-EMPLOYED
INCOME
REQUIREMENTS
Self-Employment:
Minimum 3-year history of self-employment in the same business (1)
Declining income trends are generally not acceptable
Most recent three-years (3) IRS Tax Return Transcript
Most recent two-years (2) business tax returns with all schedules
Most recent two-years (2) IRS Form 1040 with all schedules (2)
(1)
To ensure the credit file can document and verify a sustainable and consistent (or increasing)
business earnings trend to qualify the applicant(s)
(2)
If the most recent IRS 1040 Form is older than 90-days, a statement of P&L covering the
period between (i) the end of the most recent tax return year through (ii) present date is required
PASSIVE INCOME
REQUIREMENTS
Passive-Income:
A minimum two-year (2) history of receiving passive income from the same
source is required
Verification of existence of current portfolio generating passive income to
support continuance for three or more (>=3) years
Most recent two-years (2) IRS Form 1040 with all schedules
Most recent two-years (2) IRS Tax Return Transcript
RENTAL INCOME
REQUIREMENTS
(INCOME PROPERTY)
Rental Income:
Borrower must qualify using the sum of the full PITI on all properties with no
negative equity (verified by Zillow/Trulia web searches or a Oaktree Funding
approved AVM);
-OR-
Borrower must demonstrate (2) prior rental history with IRS Schedule E (Form
1040) for at least two years, and (2) have at least 10% market equity (tools defined
above) on all ORE (Other Real Estate) in order to use and calculate rental income.
Verified equity position on REO should be dated within 60- days to the Note.
Refer to Reserve section for additional reserve requirements.
DEBT
RATIOS
Refer to Eligibility Matrix
Note: DTI(1)
calculation on Hybrid ARMs for QM(2)
purposes qualify at:
Hybrid 5 = QUALIFY @ â hybrid initial start rate + 5% Life Cap
Hybrid 7+10 = QUALIFY @ hybrid initial start rate
(1)
Maximum back-end Debt-to-income (DTI) ratio limit is 43%
(2)
Based on the current Qualified Mortgage (QM) Rule issued by the CFPB
Page 5
8. 7
Asset amortization is a calculation used to generate a monthly income stream from a
borrowerâs personal assets. The eligible borrower should be of retirement age (59Âœ>) to
use this income & not be full-time employed. It can be combined with other income such
as Social Security, Pension or other investment income only.
ASSET BASED INCOME
(ASSET AMORTIZATION)
REQUIREMENTS
Eligibility Requirements:
Max. 70% LTV/CLTV for Primary Residence & Second Homes Only.
Borrower and Co-borrower must be individual or co-owners of all asset accts with
no other account holders listed on the documentation.
100% of eligible assets must be verified using a calculation period of 30 yrs.
All assets must be in a U.S. financial institution- No Foreign Assets
Borrower and Co-borrower must have full unrestricted access to the funds and
joint accounts to be used must have both account holders on the loan.
The sum of eligible assets as defined are net of any discounts & minus any funds
used for closing and/or minimum reserves required for the program.
Other reported earnings from Capital Gains or INT/DIV already considered &
averaged as âeffective incomeâ cannot be included or double counted.
Eligible Asset Types:
Considered assets must be comprised of the following readily marketable assets which
must be available to the borrower with no penalty & is limited as follows:
Bank Deposits â Checking, Saving, Money Market accounts â 100% Publicly
traded stocks & bonds â 65% (stock options not allowed) Mutual Funds â 65%
Retirement Accounts â 401(K)plans or IRA, SEP or KEOGH accounts â 65%
(can only be used if distribution is not already set up)
Asset Amortization Calculation Policy:
Eligible asset amount to be amortized over a 360 month period. (30 YR)
Rate of return is the 1 YR LIBOR index as published within the Wall Street
Journal
Page 6
9. SALARIED
INCOME
REQUIREMENTS
Full Documentation Program â Required Standards:
4506-T signed at application and closing, is required for all transactions
Most recent YTD paystubs covering at least 30-days and two years W2âs
Two years personal tax returns when the borrower has twenty-five percent or
more (>=25%) ownership interest in the business.
All income documentation must be dated within 90-days of the date the notice
signed
Most recent two years (2) tax transcripts are required for each borrower whose
income is utilized as a source of repayment
Generally, when the documentation use to verify income is from the same
calendar period as the tax transcripts, the information must match exactly (1)
(1)
If the income documentation is from the current calendar year and the transcripts
are from a previous year there can be acceptable variances. If this variance exceeds
20% document the rationale for using current income. W2 Transcripts do not satisfy
this requirement. If tax transcripts are not available (due to recent filing) a copy of the
IRS notice showing âNo records of returns filedâ is required all with documented
acknowledgment receipt (such as IRS officially stamp tax returns or evidence that the
return was electronically received or extensions) from the IRS and the previous two
years tax transcripts.
Verbal verification required for all borrowers. Within 5-business days prior to
closing for salaried borrowers. Within 30-calendar days prior to closing for
self-employed.
ACCEPTABLE SOURCE
OF FUNDS
Business Funds are not eligible for this program
All funds for reserves must come from borrowers own demonstrated savings
If using gift fund:
The borrower is required to meet a 5% minimum down payment from his or her
own personal funds for all purchase transactions.
All borrower funds must be documented with two most recent monthsâ asset
statements or VOD covering a minimum of 60 consecutive days.
All unusual large deposits must be explained and source must be documented.
Verify the borrowerâs actual receipt of the funds realized from sale or
liquidation when non-liquid assets are used for any part of the down-payment or
required cash to close
Page 7
10. GIFT FUNDS
Gift funds are permitted subject to the following criteria:
Primary residence purchase money transactions only
Minimum down payment is 20% (max 80% LTV): First 5% of down payment
must come from borrowerâs own personal funds
Once the first 5% of the buyer's own funds are verified, a gift can be used for the
remaining down payment and closing costs
Notes:
Gift funds are not allowed to meet reserve requirements.
Gift funds can be applied towards closing costs/pre-paids above minimum
required investment.
Gift letter, signed by the donor that includes the amount of the gift, date the
funds were transferred, a statement that no repayment is expected, the donorâs
name/address/phone number and relationship to the borrower source of funds.
The loan file must verify that sufficient funds to cover the gift were in the
donorâs account and have been transferred to the borrowerâs account prior to
closing. Gift funds may not be transferred at the settlement table.
INELIGIBLE ASSETS
Business Funds
INTERESTED PARTY
CONTRIBUTIONS
The property seller or any interested party (builder, developer, lender, real estate agent or
any of their affiliates) can pay closing costs, prepaid items and escrows.
All contributions are based on the CLTV of each loan.
Primary and Second Homes: †80% - 6%
DISCLOSURES
Fully Amortized
Fixed Rate: Standard Disclosure Package as required by state and federal regulations
Hybrid ARMS:
5/1, 7/1, 10/1 ARM: Standard Disclosure Package as required by state and federal
regulations
CLOSING PACKAGE
REQUIREMENTS
All products are fully amortizing
Fixed Rate: Conventional Fixed Rate as required by FNMA, state and federal
regulations
Hybrid ARMs:
5/1, 7/1, 10/1 ARM: Conventional ARM as required by FNMA, State and federal
regulations
9
Page 8
11. Reserves required for the subject property are based on the loan amount as follows:
Loan
Amount
LTV
Required
PITIA Reserves (months)
$417,001* - $1,000,000 80% 9
$417,001* - $1,000,000 75% 9
$1,000,001 -$1,500,000 80% 18
$1,000,001 -$1,500,000 75% 18
$1,500,001 -$2,000,000 70% 12
$2,000,001 -$2,500,000 65% 12
RESERVES
For required minimum FICO Score see ELIGIBILITY MATRIX
Reserve funds must be verified with 2 consecutive monthsâ bank statements or
VOD
All reserves are calculated on the Note Rate for all loan types using the full
Principal, Interest, Taxes, Insurance, Assessments (âPITIAâ) payment
Mandatory Data Requirement: The required number of months of PITIA reserves
on the subject property must be manually calculated and input into the front end
system on every loan prior to final loan approval
In addition to the minimum reserves required for the subject property, 6 months
PITIA reserves is required for each additional property owned by all borrowers
Acceptable PITIA Documentation: The minimum documentation to correctly verify
the full PITIA payment should be from one of the following sources:
1) Current monthly mortgage statement; 2) Copy of Homeowners insurance policy; 3)
Copy of recent tax bill or web search to taxing authority; 4) copy of mortgage note,
etc.
Defined Acceptable Reserve Accounts
The types of assets that can be used for reserves and the value of those funds are as
follows:
Account/Asset Type Eligibility
Checking/Savings/Money Market 100%
Publicly traded stocks, bonds and mutual funds 65%
IRAs; SEP or Keogh accounts 65% / 100%(1)
Annuities 65% / 100%(1)
Vested amount of 401(k) Plans 65%(2)
Trust Assets Up to 100% (3)
(1)
100% of the account value may be used for borrowers aged ℠59 œ
(2)
65% of the vested amount; No more than 50% of the total reserve requirement may come from
401(k). The terms and conditions under which funds may be withdrawn or borrowed must be
verified
(3)
Borrower/Co-Borrower must have full access to consider; Copy of complete trust or trustee letter
is required
Page 9
12. REFINANCE
DEFINITIONS
PLEASE NOTE: NON-
FNMA STANDARD
Limited Cash-Out Refinance:
Pay off of 1st
lien
Pay off in whole, the outstanding principal balance of the existing
subordinate mortgage that was used to acquire the subject property (purchase
money 2nd
lien only) OR
Pay off in whole the outstanding principal balance of a 12 month seasoned
closed- end mortgage as of the Note Date OR
Pay off of any subordinate HELOC with cumulative draws <$2000 in the past
12 months as of the Note Date OR
If HELOC draws total more than $2000 in past 12 months, then the
borrower must confirm and provide documentation on property
improvements.
Pay related closing costs and prepaid items
The inclusion of any delinquent property taxes, HOA dues, tax liens,
garnishments, or judgments is not eligible and should not be included in the
new loan amount.
Disbursed cash-out to borrower not to exceed 2% or $2,000, whichever is
less If a prior Cash-Out transaction (as determined by the HUD-1) is now
being refinanced as a Limited Cash-Out refinance within 6 months of the
prior transaction (as determined by the Note date), it will be considered a
Cash-Out Refinance.
Borrower must have 12 months minimum ownership to base LTV on
appraised value, otherwise the lesser of purchase price or current appraised
value will be used. The ownership date is measured from date of acquisition
(HUD-1 closing date) to date of application.
Cash Out Refinance:
Pay off of liens secured by the subject property only, to include unseasoned
(i.e. open less than 12 months) junior liens exceeding the 2% or $2,000 draw
limit.
Cash proceeds (outside of payment of liens secured by the subject property)
are permitted and should not exceed $300,000.
Proceeds may be disbursed directly to the borrower(s) or any other
payee. Pay related closing costs, financing costs, and prepaid items;
Cash out refinances on properties located in Texas are ineligible.
Seasoning for Cash Out Refinance:
Borrower must have 12-month minimum ownership to base LTV on appraised
value; otherwise the lesser of purchase price or current appraised value will be
used.
The ownership date is measured from the date of acquisition (HUD-1 closing date)
to date of application
Page 10
13. CONVERSION REFINACE
CONSTRUCTION-TO-
PERMANENT FINANCING
Oaktree Funding can originate a mortgage in which the loan proceeds pay off interim
construction financing of a single family residence. This is called a âconversion of
construction financing to permanent financingâ.
All loans must meet the standards as set forth below. Oaktree Funding does not
offer
Single-Closing Construction-to-Permanent Financing.
TRANSACTION DEFINITION STANDARDS
All transactions will be treated as a Refinance.
Limited Cash-Out: Borrower(s) must have legal title to land prior to application and
must be named as borrower on construction financing.
LTV/CLTV/HCLTV Ratios: Are based on the âas-completedâ appraised value
regardless of the length of time the borrower has owned the lot. Underwriting reserves
the right to ask for additional documentation for cost, etc. when warranted.
It is necessary to choose Const/Perm as the Loan Purpose in the loan origination system
and to complete the Purpose of Refinance field in order to ensure accurate loan delivery.
4506-T
Required for all loans. Most recently filed:
Salaried: 2 years of IRS tax return transcripts
Self-Employed: 3 years of IRS tax return transcripts
CREDIT REPORT &
CREDIT
SCORE REQUIREMENTS
Credit Report Requirements
A full residential mortgage credit report (RMCR) or Tri-Merged in-file conforming to
FNMA/FHLMC requirements should be used
Credit Score Requirements
The RMCR or tri-merged in-file should reflect credit scores from all 3 repositories and
meet the minimum program standards as follows:
Minimum FICO for all qualifying borrowers see product ELIGIBILITY MATRIX
HOUSING PAYMENT
HISTORY
If not contained within the credit report, the following documentation must be
provided by a third party:
VOM - A 24 month minimum mortgage payment history is required to reflect no
late payments in the last 24-months.
VOR - A 12 month minimum rental payment history is required to reflect no late
payments in the last 12-months.
Page 11
14. MINIMUM CREDIT
STANDARDS
AND ADVERSE CREDIT
POLICY
Minimum Credit Standards: Credit score will be considered valid only if it is
comprised of:
Non-First Time Home-Buyers: Minimum of 10-active and open trade lines,
of which (i) minimum of 3-trade lines open for at least 36-months; and (ii) 1-
prior satisfactory mortgage payment history.
First Time Home-Buyers: Minimum of 3-active and open trade lines, all of
which are established for both (i) minimum of 36-months; and (ii) satisfactory
VOR for the prior 24-months.
Adverse Credit Policy:
In addition to the minimum credit standards and score requirements, the following
adverse credit standards apply:
No public records within the last 24 months
No bankruptcies or foreclosures , short sales, deed in lieu of and modification
within the last 7 years
No significant derogatory ratings on any trade line activity within the last 36
months (including installment or revolving accounts)
ESCROW WAIVERS
California (CA):
Escrows may be waived at the borrowers request without conditions
There are no other underwriting conditions or overlays that apply for loans in
CA
All other States:
May be waived at the borrowers request, subject to underwriting review (1)
(1)
Underwriting Review Criteria
Escrow waiver requests are subject to underwriting review and approval per the
following criteria:
Refer to Matrix:
Maximum DTI refer to Matrix
A review of the title work for evidence of tax liens or other evidence of failure to
pay tax obligations.
File cannot reflect evidence of lapsed hazard insurance coverage
Loan documentation should support a history of timely independent payment of escrow
items. Borrowers with a prior history of delinquent taxes or lapses in homeownerâs
coverage are not eligible to waive escrows.
Page 12
15. FINANCING & SALES
CONCESSIONS
Interested Party Contributions are allowed in accordance with Fannie Mae
Standards
6% of value with LTV/CLTV ratios less than or equal to 80%
Amounts in excess of these limits must be deducted from the lower of sales price or
appraised value when calculating the LTV
HIGH COST
LOANS
Oaktree Funding will not purchase High cost loans
SUBORDINATE
FINANCING
Not allowed
HIGH PRICED
LOANS
Oaktree Funding will not purchase High price loans on this Program
BUYDOWNS Ineligible
POWER OF ATTORNEY Eligible with prior approval by Oaktree Funding & Take Out Investor
ASSUMABILITY Not allowed
NOTES & RIDERS
All products are fully amortizing
Fixed Rate: Multistate Fixed Rate Note #3200 (or state specific as required)
Hybrid ARM (5/1, 7/1 & 10/1 ARM): Note 3528 & Rider 3187
Page 13