Saint Cloud Mortgage

30 Year Fixed Full Documentation Program Details

RATE SHEET DESIGNATION

Program I - Part Time Farm Program identifies- 30 Year Fixed rate product and no-negative adjustables.

LOAN TYPE OVERVIEW

This fully amortizing fixed and adjustable rate product is available in a 30 year term. It is not assumable and has no prepayment penalty.

ELIGIBLE PROPERTY

A part-time farm is an agricultural property of at least 5 acres in size or under 5 acres and generates $5,000 or more in sustained annual gross of agricultural income. The term " agricultural income" refers to income derived from crop or livestock operations. No current Farm/Ranch use required over 5 acres.

The property must contain a single family detached properly occupied by the mortgager(s). This Residence should constitute at least 25% - 30% of the appraised value of the property. (Private Mortgage Insurance may be required for higher percentage of land).

The property owner/occupant may derive income from the agricultural land on the property that is rented to another. The owner/occupant need not be actively involved in agricultural activities.

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LOAN LIMITS

Transaction Type	Max LTV	Max CLTV	Loan Limits
Purchase or Rate & Term Refinance	90% 75% 70% 60%	90% 85% 85% 85%	$0-$650,000 $0-$900,000 $0-$1,500,000 $0-$3,000,000
Cash Out Refinance	75% 70% 65% 60% 55%		$0-$417,000 $0-$650,000 $0-$900,000 $0-$1,500,000 $0-$3,000,000
Second Home	70% 65% 60% 55% 50%	75% 75% 75% 75% 75%	$0-$417,000 $0-$650,000 $0-$900,000 $0-$1,500,000 $0-$2,000,000

• First mortgage not to exceed 75% LTV if subordinate financing exists.
• Second Homes, No Cash Out

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BORROWER CREDIT HISTORY

Credit history will be reviewed for the past seven years for major credit problems, and the past 24 months for minor ones. If there are no serious concerns, the borrowers credit should be acceptable if in the last 12 months there were:

• Revolving credit accounts with no more than 2 X 30 days late.
• Installment credit accounts with no more than 1 X 30 days late.
• All housing debt (first or second mortgage, rent) with no payments past delinquent.

A minor isolated record of poor credit or a late payment is acceptable but it must be satisfactorily explained and there must be other accounts with excellent credit ratings. A pattern of slow payments, undisclosed debts, suits, judgments, bankruptcies, etc., will be thoroughly investigated. Liens and garnishments must be paid prior to closing. A bankruptcy must be fully discharged and the borrower must have re-established good credit. Prior foreclosure not allowed.

• $0- 400,000 Mid Fico 660
• $0- 1,000,000 Mid Fico 680
• $0- 3,000,000 Mid Fico 700

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MORTGAGE INSURANCE

LTV	% Coverage	Monthly Premium(%)
To 80%	12%	32 BP

Loans requiring mortgage insurance are subject to the following additional requirements:

• Minimum 4 months PITI cash reserve
• properties in areas with declining value are not eligible
• Minimum FICO score or equivalent of 660 Lessor score permitted on case by case basis and must have compensating factors.

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QUALIFYING RATIOS

Flexibility depending on strength of compensating factors. Borrowers cannot be qualified using projected farm income. The property must have a history or producing agricultural income.

• Max Back-End ratio of 40 for Self Employeed
• Max Back-End ratio of 45 for W-2 Employees

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INCOME

The following types of subject property agricultural income may be used for borrower qualifying purposes:

1. Sales of agricultural or aquatic properties including proceeds received from the sale of nursery or greenhouse stock, forest products (including Christmas trees, timber and firewood) or similar crops.

2. Rental or lease income derived from land and/or buildings used as part of the farming operations

3. Sale of livestock raised or purchased (excluding non-recurring sales of breeding livestock)

4. Stud and / or breeding fees

The following types of subject property income may not be used for borrower qualifying purposes:

1. Products from the sale of product or animals raised for home or pleasure, such as gardens, one of two beef cattle, kennels, or recreational horses.

2. Proceeds from the sale of end products from associated operations such as sawmills kilns, feed mills, etc.

3. Boarding fees resulting from ongoing operation of livestock boarding businesses.

4. Race winnings.

5. Fees received from training or lessons on the property.

6. Rent of buildings for a non-agricultural use, or rent of excess dwellings on the security property.

7. Rent or operating income from a commercial (non-agricultural) enterprise located on the property.

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SUBORDINATE FINANCING:

LIEN SEASONING REQUIREMENTS FOR REFINANCES

This loan program defines subordinate liens seasoned for less than one year as "cash out". If paid out from the proceeds, the LTV ratio cannot exceed to maximum for "cash out" transactions.

Subordinate liens seasoned for at least one year are not considered as cash out. They can be paid off using maximum LTV ratios applicable to "no cash out" refinances.

A subordinate liens in the form of home equity line of credit is subject to similar restrictions. An equity line with draws of $2,000 or more in the last 12 months is considered "cash out". Equity lines with draws totaling less than $2,000 during the last 12 months is not considered "cash out".

GIFT FUNDS

• A gift from a relative who does not live on the subject property, provided the borrower has a minimum of 10% down payment from own finds.
• A gift from a relative who has lived with the borrower for the past twelve months and will continue to do so, is allowed, provided the borrower has a minimum 5% down payment from own funds.
• When the LTV is 75% or less, all of the down payment may be in the form of gift from a relative, who may or may not reside in the subject property.

NON-OCCUPANT BORROWERS

Not allowed.

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TERMITE INSPECTION

Required in all states serviced by ST. CLOUD MORTGAGE, INC. with the exception of Colorado and Montana.

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APPRAISAL GUIDELINES

Each rural property loan is, in effect a custom loan and therefore, requires a little more effort than a SFR/lot appraisal. Yet, as with traditional residential loans, the KEY in an excess-acreage property loan will rest on the comparable properties utilized to determine value. Such "comparables" are significant in 2 basic areas:

1. IN ALL CASES, The residence itself must have 3 comps of similar size and structure (i.e., subject 3bedroom 2 bath 1800 sq. ft.) – Room / bed / bath counts must be similar and sq ft. should be within +/- 200-300 sq. ft.. A 1,200 or 3,000 sq. ft. home is NOT an acceptable comp for a property like the 1900 sq. ft. subject shown above. Likewise, a manufactured/modular home requires manufactured/modular comparables.
    
2. Subject Parcel size must also be similar. However, we understand that exact comps for both home and parcel size are sometimes not available. IN THOSE CASES, the appraiser can utilize similar-sized "improved" tracts, without concern for the type/size of home on the comp. In other words, the LAND portion of value would be the sale, less an estimated value of the comp. Home and typical sfr parcel. Purpose here is to establish the value of the land itself.

In actuality, the appraiser may need to submit 2 complete sets of comparables: One set to support the value of the home and one set to support the per-acre value of the land (further explained below).

PLEASE NOTE:

Split appraisals involving additional bare land tracts of similar size to the subject are no longer acceptable, since such unimproved land may not represent the actual marketability of the combined home/parcel of the subject as a "whole:"

(As stated above), Excess Land Addendum should, instead, utilize "improved" (residential) sales with similarly size parcels (size and type of house is irrelevant). This is based on the theory that tract of land would have a higher per-acre value due to it’s availability to be improved, vs. an improved tract similar in size to the subject, due to it’s lack of use as a potential development site. In other words a 50-acre tract might be worth $3,000 per acre in the market to a person looking to develop it, but may only be worth $1,500 per acre to a person who intended to, say, add it to his 5-acre tract as a "buffer" zone.

ADDITIONAL ITEMS

• Narrative appraisals are no longer acceptable for rural/acreage RESIDENTIAL loans. All appraisals are on 1004 form
• Distance to comps can be out to 30 miles (radius).
• Time on comps – to 12 months previous. However, time search can be extended to 2 years if sufficient comps not avail (appraiser must address in writing)

~ Information Above is for Guideline Purposes Only. Final Approval of All Loan Conditions is Subject to  Underwriter Acceptance. ~

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