Section 2 Products - South State Bank 1, 2014 Topic Guidelines (Conforming Fixed Rate) LP Requirements Loans evaluated by Freddie Mac Loan Prospector must meet the following

-2.1 - July 1, 2014

Section 2

Products

Product Introduction ---------------------------------------------------------- ----------- 2.2

Conforming Fixed Rate (including DU RefiPlus) ---------------------------- ------- 2.3

Conforming LIBOR ARMs ---------------------------------------------- --------------- 2.8

Fannie Mae HomePath Mortgage --------------------------------------- --------------- 2.13

FHA Program Overlays------------------------------------------------------------------- 2.14

VA Program Overlays--------------------------------------------------------------------- 2.15

USDA Program Overlays----------------------------------------------------------------- 2.16

Capital Markets Jumbo Fixed & ARMs------------------------------------------------ 2.17

Flagship Jumbo NC/SC LIBOR ARMs------------------------------------------------- 2.31

- 2.2 - July 1, 2014

Product Introduction

Loan programs offered to the Wholesale & Correspondent Lending Divisions may vary from time to time at South State Bank’s sole discretion. The following is a list of traditional loan products and guidelines.

Daily Pricing includes Service Release Premiums (SRP). Loan Level Price Adjustments (LLPA) and Fees are listed on the current day’s rate sheets and are subject to change.

Changes in LLPA or Fees will be sent via e-mail, fax, and/or written MEMO delivered by USPS first class mail. Changes will be sent prior to the change(s) taking effect.

Note: It is the Broker or Correspondent’s responsibility to ensure the appropriate e-mail address, fax number, and mailing address on file is current.

- 2.3 - July 1, 2014

Conforming Fixed Rate Mortgage (10 – 30 Year Fixed Terms)

Topic Guidelines

Program Type & Loan Term

Primary / Second Home / Investment Term Program Code

30 Year Fixed CFR30 20 Year Fixed CFR20 15 Year Fixed CFR15 10 Year Fixed CFR10

Minimum/Maximum Loan

Min Loan Amount Max Loan Amount $75,000 $417,000 or Conforming Limit

Lower loan amounts may be considered with applicable fee

Maximum LTV/CLTV/HCLTV Primary Residence

Purchase/No Cash Out Refinance

Property Type Max LTV CLTV/HCLTV

Min Credit Score

SFD/Condo/PUD 95/95/95% 620*

MI requirements may differ

2 Unit 85/85/85% 620*


3-4 Unit 75/75/75% 620

Cash Out Refinance

Property Type Max LTV CLTV/HCLTV TV

Min Credit Score

SFD/Condo/PUD 85/85/85% 620*


2-4 Unit 75/75/75% 620

Maximum LTV/CLTV/HCLTV Secondary Residence



Min Credit Score

SFD/Condo/PUD 90/90/90% 620*


Cash Out Refinance


Min Credit Score

SFD/Condo/PUD 75/75/75% 620

Maximum LTV/CLTV/HCLTV Non-Owner-Occupied


Property Type Max LTV

CLTV/HCLTV Min Credit

Score SFD/Condo/PUD 75/75/75% 720

2-4 Unit Ineligible Ineligible

- 2.4 - July 1, 2014

Topic Guidelines (Conforming Fixed Rate)

Eligible States of Origination GA, MD, NC, SC, TN, VA, WV

Escrow Waiver Available for all loans with LTV ≤ 80% with fee

Assumable No

Buydowns Permanent Buy-downs Only

Subordinate Financing

Must meet LTV/CLTV restrictions stated above

Must comply with Fannie Mae Selling Guide for Acceptable Subordinate Financing Types

Documentation & Income Requirements

Follow AUS findings report for items not addressed in this guide (see LP Requirements section for overlays) – Additional supporting documentation may be required

Qualifying Ratios Max DTI of 43%

Eligible Borrowers US Citizens Permanent Resident Aliens Non-Permanent Aliens

Eligible Property Types

One Unit SFD, 2-4 Unit (Primary Only), PUD, & Established Condominium

New Condominium Projects Not Eligible

Multiple Property Ownership

Follow FNMA guidelines for number of properties financed.

South State will finance a maximum of 4 properties or up to $1,000,000 total exposure, whichever is less.

4506-T Wholesale A completed, signed, dated, and unexpired IRS form 4506-T for all

borrowers whose income is used to qualify must be included in file submission authorizing South State to obtain income information for all borrowers.

A new 4506-T must be signed at closing.

Correspondent A completed, signed, dated, and unexpired IRS form 4506-T for all

borrowers whose income is used to qualify must be included in file submission.

4506-T is to have been executed by the Correspondent with the transcripts also included in file submission.


- 2.5 - July 1, 2014


Conversion of Principal Residence

Second Home Mortgage payment for current residence and new residence must be

counted against borrower for qualifying. 6 months PITI for reserve requirements.

Investment Property If less than 30% equity in current residence then six months PITI for

existing primary and six months PITI for new property. If equity in current residence is greater than or equal to 30% then up to

75% of rental income may be used to qualify. If less, no rental income may be used.

To include rental income, the following must be documented: Fully executed lease agreement Security deposit from tenant Bank statement verifying funds of security deposit Validation of home value

Appraisal Eligible Appraisal Forms

Full Interior-Exterior 1004 / 1073 (Condo) Property Inspection Waiver (PIW)

Must receive DU PIW findings Only eligible on South State Serviced DU Refi Plus mortgages Hazard declarations page must be included with the initial file

submission. Coverage required in the amount equal to 100% of the insurable value of improvements as determined by the INSURER or the loan amount, as long as such is a minimum of 80% of the insurable value of improvements as determined by the INSURER.

Increase underwriting fee $75 on initial GFE disclosure for PIW execution.

Ineligible Appraisal Forms

Freddie Mac LP offered Exterior-Only Inspection Appraisal Reports (2055 & 466-Condo)

LP offered Condition and Marketability Report (2070 - no value given)

LP offered Property Inspection Alternative (PIA) – Similar to PIW

Escrows for Completion

Escrows for completion may be allowed on a case by case basis. Escrows for items that affect livability will not be considered.

Title/Deed Restrictions

The following are ineligible for purchase:

Life Estates Irrevocable Trusts 1031 Exchanges Un-Permitted Additions

- 2.6 - July 1, 2014


Refinance – Permanent Financing for an Existing Construction Loan

South State does not provide financing for initial construction loans. The refinance of a construction loan to permanent financing is allowed.

Limited Cash-Out Refinance

Standard Agency refinance guidelines apply. Maximum LTV based on appraised value and subject to LTV/CLTV

restrictions in Refinance Matrix above.

Cash-Out Refinance

Borrower(s) must have held legal title to the lot for at least six months prior to the closing of the permanent mortgage.

All other standard Agency cash-out refinance guidelines apply. Maximum LTV based on appraised value and subject to LTV/CLTV


Private Mortgage Insurance

General Coverage Requirements

Fixed Rate > 20 Years Fixed Rate < 20 Years LTV Coverage LTV Coverage

> 90% But ≤ 95%

30% > 90% But ≤

95% 25%

> 85% But ≤ 90%

25% > 85% But ≤

90% 12%

> 80% But ≤ 85%

12% > 80% But ≤

85% 6%

Transactions requiring mortgage insurance may be subject to MI Company overlays

Fannie Mae standard coverage levels required

Private Mortgage Insurance Disclosure

All transactions requiring Mortgage Insurance must include appropriate Private Mortgage Insurance Disclosure to borrower(s).

Underwriting Loans must be evaluated by Fannie Mae Desktop Underwriter or Freddie Mac Loan Prospector (see LP Requirements for additional overlays)

Loans receiving the following message through AUS are not eligible for purchase:

Out of Scope or Error DU Expanded Approval (DU Refi Plus Only) DU Refer with Caution LP A Minus LP Caution

Manually underwritten loans are not eligible

- 2.7 - July 1, 2014


LP Requirements Loans evaluated by Freddie Mac Loan Prospector must meet the following requirements:

Max LTV/CLTV of 95% unless lower max LTV/CLTV listed in Product Matrix above

620 minimum score up to 80%, 700 minimum score over 80% Max LTV/CLTV of 90% for non-occupying co-borrower with income used

for qualification No manufactured housing Max DTI 43% If tax returns required to document income, 2 years must be obtained Full interior/exterior appraisal required MI Coverage must meet Fannie Mae minimum requirements

DU Refi Plus Loan Currently Serviced by South State

125% LTV/CLTV/HCLTV Maximum Current MI Certificate may be transferred Loan Level Pricing Adjustment Caps:

Primary > 80% LTV & Term < 20 years – 0 points Primary > 80% LTV & Term > 20 years – 0.75 points Primary < 80% LTV, all Second Home & Investment – Standard

LLPA’s

Loan Currently NOT Serviced by South State

105% LTV/CLTV/HCLTV Maximum Owner Occupied Single Family Detached 660 Minimum FICO Current MI Certificate may not be transferred Transactions requiring mortgage insurance (new certificate) are not eligible

for PIW – Full interior/exterior appraisal required Loan Level Pricing Adjustment Caps:

Primary > 80% LTV & Term < 20 years – 0 points Primary > 80% LTV & Term > 20 years – 0.75 points Primary < 80% LTV – Standard LLPA’s

- 2.8 - July 1, 2014

Conforming Libor Adjustable Rate Mortgage


Min Loan Amount Max Loan Amount $75,000 $417,000 or Conforming Limit

Lower loan amounts may be considered with applicable fee

Maximum LTV/CLTV/HCLTV Primary Residence


Property Type Max LTV CLTV/HCTLV TV

Min Credit Score

SFD/Condo/PUD 90/90/90% 620*


2 Unit 75/75/75% 620

3-4 Unit 65/65/65% 620

Cash Out Refinance

Property Type Max LTV CLTV/HCTLV

Min Credit Score

SFD/Condo/PUD 75/75/75% 620 2-4 Unit 65/65/65% 620

Maximum LTV/CLTV/HCLTV Secondary Residence



Min Credit Score


Cash Out Refinance


Min Credit Score


Maximum LTV/CLTV/HCLTV Non-Owner-Occupied


Property Type Max LTV

CLTV/HCTLV Min Credit

Score SFD/Condo/PUD 65/65/65% 720

2-4 Unit Ineligible Ineligible

Topic Guidelines


Primary / Second Home / Investment Term Program Code

3/1 ARM (30 Year Am) CARM31 5/1 ARM (30 Year Am) CARM51 7/1 ARM (30 Year Am) CARM71 10/1ARM (30 Year Am) CARM101

- 2.9 - July 1, 2014

Topic Guidelines (Conforming ARM – Including NC/SC Conforming Flagship)

Eligible States of Origination

GA, MD, NC, SC, TN, VA, WV

NC/SC Conforming Flagship ARM

Program guides are applicable for the NC/SC Conforming Flagship ARM pricing.

Escrow Waiver Available for all loans with LTV ≤ 80% with fee

Assumable No

Buydowns Permanent Buydown Only

Subordinate Financing

Must meet LTV/CLTV Restrictions stated above


Documentation & Income Requirements

Follow AUS findings report for items not addressed in this guide (see LP Requirements section for overlays) – Additional supporting documentation may be required

Qualifying Ratios Max DTI of 43%

Eligible Borrowers US Citizens Permanent Resident Aliens Non-Permanent Aliens

Eligible Property Types

One Unit SFD, 2-4 Unit (Primary Only), PUD, & Established Condominium

New Condominium Projects Not Eligible


Follow FNMA guidelines for number of properties financed.

South State will finance a maximum of 4 properties or up to $1,000,000 total exposure, whichever is less.

4506-T Wholesale A completed, signed, dated, and unexpired IRS form 4506-T for all

borrowers whose income is used to qualify must be included in file submission authorizing South State to obtain income information for all borrowers.


Correspondent A completed, signed, dated, and unexpired IRS form 4506-T for all

borrowers whose income is used to qualify must be included in file submission.



- 2.10 - July 1, 2014



Second Home

Mortgage payment for current residence and new residence must be counted against borrower for qualifying.

6 months PITI for reserve requirements.

Investment Property

If less than 30% equity in current residence then six months PITI for existing primary and six months PITI for new property.

If equity in current residence is greater than or equal to 30% then up to 75% of rental income may be used to qualify. If less, no rental income may be used.


Appraisal Eligible Appraisal Forms

Full Interior-Exterior 1004 / 1073 (Condo)

Ineligible Appraisal Forms

Property Inspection Waiver (PIW) – DU RefiPlus only available on Conforming Fixed Rate product

Freddie Mac LP offered Exterior-Only Inspection Appraisal Reports (2055 & 466-Condo)

LP offered Condition and Marketability Report (2070 - no value given)

LP offered Property Inspection Alternative (PIA) – Similar to PIW


Escrows for completion may be allowed on a case by case basis. Escrows for items that affect livability will not be considered.






Cash-Out Refinance




- 2.11 - July 1, 2014


Title/Deed Restrictions

The following are ineligible for purchase:

Life Estates Irrevocable Trusts 1031 Exchanges Un-Permitted Additions

Private Mortgage Insurance

General Coverage (subject to change)

3/1, 5/1, 7/1, 10/1 Conforming ARM

LTV Coverage > 85% But ≤ 90% 25%

> 80% But ≤ 85% 12%

Transactions requiring mortgage insurance may be subject to MI Company overlays

Fannie Mae standard coverage levels required

Private Mortgage Insurance Disclosure

All transactions requiring Mortgage Insurance must include appropriate Private Mortgage Insurance Disclosure to borrower(s).

Caps

Product Max First

Adjustment

Max Subsequent Adjustment

Max Life Adjustment

3/1 Libor 2% 2% 6% 5/1 Libor 5% 2% 5% 7/1 Libor 5% 2% 5%

10/1 Libor 5% 2% 5%

Margin 2.25%

Index One Year WSJ Libor

Disclosures Appropriate ARM Disclosure is required.

Convertible No

Qualifying Payment Initial fixed rate period 3 years

Greater of the note rate plus 6% or the fully indexed rate Initial fixed rate period 5 years

Greater of the note rate plus 5% or the fully indexed rate

Initial fixed rate period greater than 5 years

Note rate or fully indexed rate

- 2.12 - July 1, 2014


Underwriting Loans must be evaluated by Fannie Mae Desktop Underwriter or Freddie Mac Loan Prospector (see LP Requirements for additional overlays)

Loans receiving the following message through AUS are not eligible for purchase:

Out of Scope or Error DU Expanded Approval (DU Refi Plus Only) DU Refer with Caution LP A Minus LP Caution


LP Requirements Loans evaluated by Freddie Mac Loan Prospector must meet the following requirements:

Max LTV/CLTV of 90% unless lower max LTV/CLTV listed in Product Matrix above

620 minimum score up to 80%, 700 minimum score over 80% Max LTV/CLTV of 90% for non-occupying co-borrower with income

used for qualification No manufactured housing Max DTI 43% If tax returns required to document income, 2 years must be obtained Full interior/exterior appraisal required MI Coverage must meet Fannie Mae minimum requirements

- 2.13 - July 1, 2014

Occupancy Purpose Property TypeMax Loan Amount

Max LTV/CLTV/

HCLTV

Minimum Credit

Maximum DTI

Reserve Requirement

1 Unit - Attached & Detached, Condo, PUD

$417,000 95%/95%/95% 660 43%As Required per Fannie Mae DU



2 Units $533,850 85%/85%/85% 660 43%As Required per Fannie Mae DU

2 Units $533,850 80%/80%/80% 620 43%As Required per Fannie Mae DU

3-4 Units$645,300 3 Unit $801,950 4 Unit

75%/75%/75% 620 43%As Required per Fannie Mae DU









1 Unit - Borrower with 5-10 Financed

Properties$417,000 75%/75%/75% 720 43%

As Required per Fannie Mae DU

Purchase

• DU messages relating to items outside standard Fannie Mae eligibility addressed above may be ignored

• 30 year fixed rate conforming product

• HomePath product is for the purchase of Fannie Mae-owned properties designated by Fannie Mae as eligible

Investment Purchase

Fannie Mae HomePath Mortgage - 30 Year Fixed

Primary Residence

Purchase

• Mortgage Insurance is not required for transactions over 80% LTV

• Condo Eligibility - Review of the entire project's Master Insurance policy(s) is the only project eligibility requirement

• Primary residence, Interested Party Contributions of 6% on LTV's greater than 90% are eligible

• DU approval is required - Recommendation must reflect "Approve/Eligible"

NOTES/OVERLAYS:

• Copy of the "Listing Details" page from www.homepath.com showing HomePath Mortgage logo is Required

• Property appraisals are not permitted - The sales price listed on the sales contract is used as the property value

• A market rent schedule obtained from an appraiser is acceptable for determining rent for qualifying purposes

• Properties where the "Listing Details" page reflects only the HomePath Renovation Mortgage logo are not eligible

Second Home

- 2.14 - July 1, 2014

Occupancy Purpose Property TypeMax Loan

AmountMax

LTV/CLTV Minimum

CreditMaximum DTI

Purchase 1-4 UnitMax MSA FHA

Loan Limit96.5%/100% 640 43%

Refinance 1-4 UnitMax MSA FHA

Loan Limit97.75%/97.75% 640 43%

Cash Out Refinance

1-2 UnitMax MSA FHA

Loan Limit85%/85% 640 43%

Streamline Refinance

Second Home

Investment

Ineligible

Ineligible

Ineligible

FHA 15 & 30 Year Fixed

Primary Residence

• Maximum of 4 financed properties (cumulative)

• DU approval is required - Manual underwrites are not eligible

• Cash Out refinance - Properties listed for sale must be canceled 6 months prior to initial loan application

• New subordinate financing is not allowed on Refinance transactions

• Max 6% seller contributions

NOTES/OVERLAYS:

• 0 x 30 or greater on mortgage lates in the most recent 12 months for Refinance transactions

• Minimum 12 month chain of title required

• Condominiums and Manufactured Housing are not eligible

• Minimum term is 180

• Maximum 4 borrowers per transaction

• Non Occupant Co-borrower is allowed for 1 unit only - No Cash Out

• Streamline Refinance is not eligible

• Maximum of 1 x 30 on mortgage lates in the most recent 12 months for Purchase transactions

• Cash Out refinance requires a 6 months payment history on subject property

• Properties sold within 90 days of seller's acquisition with a sales price > 20% over acquisition are Ineligible

• Power of Attorney is ineligible on Cashout Refinance transactions

- 2.15 - July 1, 2014


AmountMax

LTV/CLTV Minimum

CreditMaximum DTI

Purchase 1-4 Unit $417,000 100%/100% 620 43%

Refinance "Other" (Loans that refi construction or installment land contract)

1-4 Unit $144,000 90%/90% 620 43%

Cash Out Refinance (called "cash-out" by VA even if borrower receives no cash)

1-4 Unit $417,000 90%/90% 620 43%

VA IRRRL

Second Home

Investment Ineligible

VA 15 & 30 Year Fixed

Primary Residence

Ineligible

Ineligible

• Non Occupant Co-borrower is not allowed

• Maximum of 1 x 30 on mortgage lates in the most recent 12 months for Purchase transactions

• Maximum of 4 financed properties (cumulative)

• Minimum term is 180


• Cash Out refinance requires a 6 months payment history on subject property

• True Cash Out refinance - Properties listed for sale must be canceled 6 months prior to initial loan application

NOTES/OVERLAYS:

• Bonus entitlement may not be used on Refinance "Other"

• Condominiums and Manufactured Housing are not eligible

• 0 x 30 or greater on mortgage lates in the most recent 12 months for Refinance transactions

• Max LTV/CLTV can be exceeded by the inclusion of the VA Funding Fee

• DU approval is required - Manual underwrites are not eligible

• IRRRL transactions are not eligible

• Flip transactions are not eligible - Title reveals changes in ownership in the course of a few months


• New subordinate financing is not allowed on Refinance transactions

• Power of Attorney is ineligible on Cashout Refinance transactions

- 2.16 - July 1, 2014


AmountMax

LTV/CLTV Minimum

CreditMaximum DTI

Purchase 1-4 Unit $417,000 100%/100% 640 29%/41%

Refinance

Cash Out Refinance

Streamline Refinance

Second Home

Investment

• Foreclosure/Short Sale within 36 months of application - Bankruptcy discharged within 2 years of application


• Ownership of 1 additional dwelling - Outside commuting area, not structurally sound, or not functionally adequate

• Properties sold within 90 days of seller's acquisition with a sales price > 20% over acquisition are Ineligible

• Non Occupant Co-borrower is not eligible


• Credit waivers are not allowed

• Outstanding collection accounts, regardless of age, with no arrangements for payments are ineligible

• Each borrower must have a minimum of 2 scores reporting

Ineligible

Ineligible

• All Refinance transactions are ineligible

• Maximum 4 borrowers per transaction

• Maximum of 1 x 30 cumulative on any secured or unsecured debt in the past 12 months

• 2-4 Unit, Condominiums and Manufactured Housing are not eligible

NOTES/OVERLAYS:

Primary Residence

Ineligible

Ineligible

• Single Family Residence and PUDs only

• LTV/CLTV is based on Appraised Value

• Max LTV/CLTV can be exceeded by the inclusion of the financed Guarantee Fee

• GUS approval is required - Manual underwrite is not eligible

Ineligible

USDA 30 Year Fixed

- 17 - July 1, 2014

Capital Markets Jumbo Product

Topic Guidelines


Primary Residence & Second Home Term Program Code

15 Year Fixed JFCMI15 30 Year Fixed JFCMI30

5/1 ARM (30 Year Only) JACMI51 7/1 ARM (30 Year Only) JACMI71 10/1 ARM (30 Year Only) JACMI101


Min Loan Amount Max Loan Amount

$417,001 $1,500,000

Maximum LTV/CLTV & Loan Amount Primary Residence

Purchase/No Cash-Out Refinance 1 Unit, PUD

Max Loan Amount

Max LTV/CLTV/HCLTV

Min Credit Score

$1,500,000 80/80% 760 $1,500,000 75/75% 720 $1,500,000 70/70% 700

Cash-Out Refinance 1 Unit, PUD

Max Loan Amount

Max LTV/CLTV/HCLTV

Min Credit Score

$1,500,000 70/70% 720

Max Cash Out

LTV/CLTV/HCLTV < 50% = $500,000

LTV/CLTV/HCLTV > 50% = $300,000

Note: Max cash out includes pay off of subordinate liens

Maximum LTV/CLTV Secondary Residence

Purchase/No-Cash Out Refinance 1 Unit, PUD

Max Loan Amount

Max LTV/CLTV/HCLTV

Min Credit Score

$1,000,000 75/75% 720 $1,000,000 70/70% 700 $1,500,000 70/70% 720

Second Home not eligible for cash-out refinance

Maximum LTV/CLTV Non-Owner Occupied

Ineligible

Declining Market Policy Maximum LTV/CLTV/HCLTV financing is subject to a reduction of 5% for properties located in a declining or distressed market.

Declining/distressed market is defined as the neighborhood section of the appraisal indicates that Property Values are declining

Reduction is waived when the following criteria is met: o Minimum FICO score of 740 o 6 months reserves in addition to standard requirement o LTV/CLTV/HCLTV < 65%

- 18 - July 1, 2014

Topic Guidelines (Capital Markets Jumbo Fixed & ARM)

Eligible States of Origination (TPO)

GA, MD, NC, SC, TN, VA, WV

Underwriting Manual Underwrite Required

There are No Exceptions to this guide

Contact South State Underwriting for questions on any items not addressed in guide

Appraisal Full Interior-Exterior 1004

Market Conditions Addendum 1004MC required

1004D required for conversion of interim construction financing to permanent transactions (2 close only)

The date of appraisal(s) must be within 120 days of closing – If greater than 120 days, a new appraisal will be required, recertification is not eligible

Transactions Requiring 2 Appraisals

All transactions with loan amount > $1,000,000

First Time Homebuyer (see also First Time Homebuyer section)

Appraisal – Valuation

Comparables

The appraisal should contain at least 3 recently closed comparables

Generally the appraisal should not contain comps greater than 6 months from the report date

Comparables between 6-12 months are typically permitted with acceptable appraiser explanation

Comparables greater than 12 months from the report date are not permitted

Typically comps used should be within 1 mile of the subject, as well as similar in age, size, features, amenities

Net Adjustments should not exceed 15% of the comparable’s sales price, gross adjustments should not exceed 25%, and individual line items should not exceed 10%

Assumable Not eligible

Buy-downs Not available

Continuity of Obligation

For a refinance of an existing lien (no cash-out or cash-out) continuity of obligation must be present. Acceptable continuity of obligation exists when any of the following conditions are met:

At least 1 borrower obligated on the new loan was also a borrower obligated on the existing loan being refinanced

The borrower has been on title and residing in the property for 6 months and has either paid the mortgage for the last 6 months or can demonstrate a relationship with the current obligor

The borrower recently inherited or was legally awarded the property (divorce, separation, etc)

The title on the existing loan has been held in the name of a natural person or an LLC and the borrower was a member of the LLC prior to the transfer – Transfer must occur prior to application

Note: Transfer of ownership from a corporation to an individual does not meet the acceptable continuity definition. If continuity of obligation does not exist, the loan will be underwritten as a purchase transaction.

- 19 - July 1, 2014


Convertible Not eligible


Current Home Pending Sale Mortgage payment for current residence and new residence must be counted

in qualifying ratios

Converting to Second Home Mortgage payment for current residence and new residence must be counted

in qualifying ratios

Converting to Investment Property Equity in current residence must be greater than or equal to 30% to use 75%

of rental income to qualify If less than 30% equity, no rental income may be used and the mortgage

payment for current resident plus the new residence must be counted in qualifying ratios

To include rental income, all of the following are required: o Fully executed lease agreement o Copy of canceled check for security deposit o Bank statement verifying deposit in borrower’s account o Validation of home value through appraisal no older than 6 months

from date of application

Credit History Minimum of 3 trade lines from a traditional source that reported for 24 months or more, and

1 open mortgage trade line in the last 36 months o 0 x 30 – previous 12 months; 1 x 30 – previous 24 months o See “First Time Homebuyer” section for applicable credit history

requirements o Borrowers currently owning home free and clear requirement is waived

for free and clear period – A copy of the title is required Borrower(s) must have a minimum of two credit scores A letter of explanation is required for any new account opened within 60

days of credit report date where the total credit extended is greater than $10,000

- 20 - July 1, 2014


Derogatory Credit

Borrowers with previous severe derogatory credit history must have re-established acceptable credit since the event with at least 3 satisfactorily paid accounts.

Delinquent credit impacting title must be paid off prior to or at close. Charge-offs or collection accounts that do not impact title are not required to be paid off if the cumulative balance does not exceed $5,000. If the total exceeds $5,000, all collection balances must be paid in full and past due brought current.

Bankruptcy

None in the past 7 years based on the discharge or dismissal date

Foreclosure/Deed-in-Lieu/Notice of Default

None in the past 7 years

Foreclosure filed/consummated/redeemed, delinquent property taxes, delinquency of 120 days or more, and workout agreements are treated the same as Foreclosure (as per title work, tax certificate, and/or credit report)

Pre-Foreclosure Sale/Short Sale/Short Refinance/Modification

None in the past 4 years

Consumer Credit Counseling Service (CCCS)

None in the past 7 years based on the completion date

Documentation Full Documentation Required

Credit report/credit verifications, income and asset documentation may not be more than 90 days at time of close o Stock asset values used for dividend/interest income may be no more

than 30 days old at close

2 years income documentation required – See “Income” section for detailed information

Assets must be sourced & seasoned for 60 days - 2 months asset statements required o Statements must provide – Borrower as account holder, account #, time

period covered, current balance, & statement date o See Eligible Funds section for additional asset information

Previous 24 month primary housing payment history is required o Should include mortgage payment, rental payments or combination o 0 x 30 – previous 12 months; 1 x 30 – previous 24 months

Fully processed 4506-T with Tax Transcripts required for all borrowers, personal returns only

Certificate of Occupancy required on all new construction properties

Eligible Borrowers US Citizens

Permanent Resident Aliens – Proof of lawful residency required

Not Eligible

Non-Permanent Resident Aliens

Limited Partnerships, General Partnerships, Corporations

- 21 - July 1, 2014


Eligible Funds Asset documentation must be sourced and seasoned for 60 days. Large or irregular deposits (in excess of 5% of the transaction) must be explained and may require additional documentation.

Acceptable for Down Payment/Closing Costs & Reserves

Funds from borrower’s checking or savings account(s)

Proceeds from sale of borrower’s personal assets o Value and evidence of sale must be verified

Proceeds from a loan secured by borrower’s assets (example: loan secured by other real estate)

Proceeds from sale of other real estate

Stock, retirement accounts, COD, pension &/or other savings plan

Business funds when borrower is the sole owner and the company’s CPA provides a statement that withdrawal of the funds will not negatively affect the business

Specific to Down Payment/Closing Costs

Gift funds are eligible on Primary & Second Home o 5% minimum borrower contribution before gift may be used o Gift letter required stating donor’s relationship, address, phone #,

amount of gift, & no repayment required o Donor must be related to borrower – Domestic partner acceptable with

proof of shared residency history o Evidence of donor’s ability to provide the funds – 60 days sourced &

seasoned

Proceeds from a loan secured by financial assets (401K, stock, life insurance, etc)

Ownership & proof of liquidation is required when stock, retirement accounts, COD, etc are used for down payment/closing costs

Specific to Reserves

60% of the net vested amount of assets located in retirement funds may be used for liquid reserves

70% of the value of stocks, bonds, and mutual funds in non-retirement accounts may be used for liquid reserves

Reserves Loan Amount (Primary, 1 Unit) Months of PITI

≤ $1MM 6 Months Liquid

> $1MM 12 Months Liquid

Second Home requires 12 months liquid reserves

An additional six (6) months reserves is required for each financed property owned by the borrower(s)

First Time Homebuyer requires 12 months liquid reserves

See “Eligible Funds” section for information on allowable funds for reserves

Employment History

2 year employment history required

Gaps In Employment

All gaps exceeding 1 month must be explained in writing

Borrowers re-entering the workforce with less than 2 year employment history must be employed with current employer a minimum of 6 months and previous employment must be fully documented

- 22 - July 1, 2014



Escrows for completion are not allowed

Escrow Waiver Available with fee

Note: Partial waiver of insurance only is acceptable with fee

First Time Homebuyer

First time homebuyers, defined as no ownership interest in a residential property during preceding 3 years, are allowed with additional restrictions:

Primary residence only

$1,000,000 max loan amount

720 minimum credit score

24 month housing history, 0 x 30 required o Payments documented via an institutional VOR or canceled

checks/bank records o Borrowers living rent free are not eligible

12 months liquid reserves required

Payment shock cannot exceed 200%

Income This section outlines guides specific to different borrower income sources. If income has been declining or inconsistent, the lowest annual compensation over the prior 2 year period should be used.

Annuity & Pension Income – Verified by one of the following:

Copy of retirement award letter(s)

12 months’ most recent bank statements showing receipt, OR

Most recent years’ W-2, 1099, or signed tax return along with copies of 2 most recent bank statements showing deposit of income

Asset Dissipation

Must be an employment related asset & borrower must be of retirement age

Borrower must have unrestricted access to the account and can only use if distribution is not already set up

70% of the value is to be used if the employment related asset is in the form of stocks, bonds, and mutual funds

Funds used for closing or required reserves must be subtracted out of value

Maximum LTV/CLTV/HCLTV 70%

Purchase & rate term refinance only

Divide “Net Documented Assets” (value after funds for transaction are subtracted and any discounts applied) by 360 for monthly income figure

Automobile Allowance

Verified allowance minus all unreimbursed expenses – Add figure to income (if negative reduce income by)

Automobile payment(s) is included in ratios

Bonus/Incentive Income

Must be consistent and documented for a minimum of previous 2 years

Written verification from the employer defining the dollar amount paid during past 24 months, OR

The most recent 30 days paystub & 2 years W-2’s or signed tax returns

If being used for down payment and is the only source of funds, it may not be counted as income

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Income (continued) Capital Gains/Losses

Sale of assets – including mutual funds, but excluding the sale of real estate

2 year history & sufficient assets to continue generating similar earnings required evidenced by 2 years signed tax returns

If assets generating capital gains are being sold as part of the mortgage transaction, income must be reduced by the % of assets that are being sold

Commission Income

2 years receipt required, same employer/same line of work

2 years signed tax returns & year to date earnings

Child Support/Alimony

Divorce decree/separation agreement, AND

Copies of court records, bank statements or canceled checks reflecting 12 months receipt

Disability Income

Verify benefits with a copy of the awards letter or a statements from the benefit’s payer

Dividend/Interest Income

Received for previous 24 months with current YTD in line with previous earnings

Verification of stock assets no older than 30 days at closing with sufficient assets remaining to generate income

Document with 2 years tax returns (4 years for non-public company stock)

The cash/stocks/bonds producing dividend/interest income may not be used as a source for down payment or pledged as security

Employed by a Relative

Document income with 2 years tax returns and a current 30 day paystub reflecting YTD earnings

Non-Taxable Income

Non-taxable portion (verified on 1040) may be grossed up 25%

Notes Receivable Income

May be used to qualify if received at least 12 months and will continue for at least 3 years

Evidenced by – a copy of the 12 month seasoned note, individual tax returns, AND copies of bank statements

Overtime & Part-Time/Second Job

Must have been received for previous 24 months

Document with 1 current 30 day pay stub with YTD earnings & W-2’s or tax returns for previous 2 years

Rental Income

Tax returns for the prior 2 years, including Schedule E, AND a current lease are required

A 2 year history from time of application of managing residential investment properties is required o Must be free of unexplained gaps greater than 3 months o This can be waived for borrowers converting current primary to

investment who meet the conversion guides and no other rental income is being used (See Conversion of Primary Residence)

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Income (continued) Salaried Income/Wage Earner

Document via current 30 day pay stub with YTD earnings, 2 years W-2, and a verbal verification of employment executed within 10 calendar days of closing

Self-Employed

25% or more ownership interest in a business

Self-employment income not used to qualify must still follow self-employment documentation guidelines

2 years signed personal and business returns (if applicable), including all schedules, K-1s, and statements required o A year-to-date profit and loss statement may be required when the

application date is more than 120 days after the end of the business tax year

Self-Employed Verification of Existence of Business is required within 10 calendar days prior to close

Social Security and Retirement – Including retirement distributions, document via:

Copy of social security award letter

2 years tax returns

2 years 1099, OR

3 months bank statements

Proof of continuance required for retirement distributions

Social Security Disability – Document via:

Copy of social security award letter, AND

12 months bank statements showing direct deposit

Trust Income

Trust must be irrevocable to use income A copy of the trust agreement or trustee’s statement confirming the amount,

frequency, & duration of payments is required

Verification of Employment Requirements

Salaried Verbal Verification

Must be executed within 10 calendar days of closing

Confirm the borrower is employed at time of verification

Include the name & phone number of the person processing the verification

Include the name, position, & phone number of the person providing the employment verification

The telephone number of the borrower’s employment must be verified independently

Self-Employed Verification of Existence of Business

Must be executed within 10 calendar days of closing

The existence of business must be verified through a disinterested 3rd party which can include: o CPA o Regulatory agency o Professional association

Documentation secured from source is required

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Ineligible Transactions

Investment Transactions

Interest Only

Properties listed for sale within 6 months of refinance application date

Properties titled to a separate legal entity (LLC, corporation, limited partnership, etc)

Non-QM transactions

High Cost/Section 32 Transactions (HOEPA)

Higher Priced/Section 35 Mortgage Loans (HPML)

Lease-Purchase Option

Leasehold Properties

Escrows for Work Completion

Properties purchased through auction

Note: This list is not inclusive of all ineligible parameters. Please review guidelines in their entirety to ensure loan eligibility, including “Property Eligibility” section.

Interested Party Contributions/Sales Concessions

Maximum 3rd Party Concessions are 6%. Ineligible Concessions and concessions above 6% must be deducted from the purchase price prior to determining LTV.

Allowable Concessions

Permanent reduction of the interest rate on the mortgage

Payment of mortgage financing charges (discount points, loan fees, origination fees, property taxes, insurance escrows, etc)

Pay the cost of other items typically paid by borrower (appraisal fee, application fee, attorney fees, title insurance, transfer taxes, etc)

Ineligible Concessions

Payment of HOA dues

Concessions not addressed above

Lawsuit/Pending Litigation

Borrower presently involved in a lawsuit or pending litigation:

Primary Purchase or Rate Term Refinance only

A statement from borrower’s attorney explaining circumstances, potential liability, & insurance coverage may be necessary

The title company must be informed of the lawsuit/litigation & provide affirmative coverage

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Liabilities Installment Debt

Payments may be excluded from the DTI calculation if there are less than 10 payments remaining to pay in full o Excluded payment may not exceed 5% of borrower’s qualifying

income o Installment debt cannot be paid down to 10 payments in order to

exclude

Revolving Debt

The minimum required payment as stated on the credit report should be used in DTI calculations, unless,

Revolving accounts where there are less than 10 payments remaining based on the remaining balance divided by the payment, may be paid off and closed to exclude from DTI calculation o If there are more than 10 payments remaining the debt must be

included in the DTI and cannot be paid off & closed to exclude o Revolving debt cannot be paid down to 10 payments in order to

exclude o Excluded payment may not exceed 5% of borrower’s qualifying

income

Revolving accounts with no payment listed on the credit report and no supplemental documentation to support a payment less than 5% of the balance, require 5% of the outstanding balance to be used as payment (Ex: American Express revolving accounts)

Home Equity Lines of Credit

The qualifying payment used for all HELOCs, including non-subject property, is the greater of the payment listed on the credit report or 1% of the entire line amount, regardless of balance

Alimony/Child Support

Payments may be excluded from the DTI calculation if there are less than 10 payments remaining to pay in full o Excluded payment may not exceed 5% of borrower’s qualifying

income

Business/Co-signed Debt

For co-signed debt, if the credit report does not reflect borrower is co-signer, a copy of the note/security instrument is required to verify borrower is not the primary obligor

Proof of payment by the business/primary obligor is required to exclude debt from borrower’s DTI calculations o 12 months, consecutive canceled checks are required for proof o If 12 months cannot be obtained, the debt must be included in DTI

New accounts with less than 12 months proof of payment, must always be counted in borrower’s DTI calculations


Maximum of four mortgaged residential properties, regardless of occupancy

An additional six (6) months reserves is required for each financed property owned by the borrower(s)

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Non-Arms Length Transactions

Primary residence only

Ineligible if additional risk factors are present (distressed sale, selling assets for down payment, etc)

Appraiser must be informed of the non-arms length transaction and address whether or not the market value has been affected

Principals or employees of lender or service provider cannot provide services on their own transactions

Additional Family Transaction Requirements

Gift of Equity letter required

Foreclosure bailouts ineligible o Payoff statement & VOM required on current mortgage as verification

HUD-1 must reflect all liens on title paid, not all proceeds going to family member

Current appraised value used for LTV purposes when borrower purchasing subject property from a family member

Non-Occupying Co-Borrower

Primary, 1-unit, SFR only

Occupying borrower DTI may not exceed 40%

Non-occupying co-borrower must sign the Note as well as be on title prior to closing on a refinance or must take title at closing on a purchase

Non-occupying co-borrower must have a family or long standing relationship with the borrower and may not be an interested party to the transaction

Occupancy Primary Residence & Second Home

Payment Shock

Payment Shock is defined as the percentage of change from the Borrower(s) current housing payment to the Borrower(s) new housing payment. It reflects total rental payment or the PITIA on the Borrower’s Primary Residence.

POA Requirements A Limited Power of Attorney may be used for execute the closing documents provided the POA meets the following requirements:

POA is specific to the transaction

Contains an Expiration Date

POA is used only to execute final loan documents

Borrower(s) signed the initial 1003

No interested party to the transaction may be POA

POA is recorded with the Mortgage/Deed of Trust

Private Roads Acceptable subject to the following:

Title company must insure access to the subject property from a public street

An adequate, legally enforceable agreement or covenant for maintenance is required o Should include provisions for payment of repairs, default remedies, &

term of the agreement

If the state has statutory provisions defining the responsibilities of property owners for maintenance & repairs, no separate agreement or covenant is required

Maintenance costs must be included in borrower’s ratios

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Property Eligibility Eligible Property Types

1 Unit Single Family Attached & Detached

PUD (Type E & F) o Project Budget & PUD Questionnaire required on New PUD (Type F)

Rural Properties – Primary Only

Historical Homes – 2 comps listed with the historical society required

Accessory Units/In-Law Units/Non-Conforming Addition acceptable if: o 1 unit property o Typical, common and acceptable in subject market o 3 comps provided on appraisal with similar accessory unit o Rental income may not be used o Accessory unit must not jeopardize future hazard insurance claims o Accessory unit must be substantially smaller

Ineligible Property Types

Condominiums

Co-ops

2-4 Unit Properties

Lease-Purchase Option

Leasehold Properties

Properties Greater Than 10 Acres

Properties Less Than 600 Square Feet

Mixed-Use Properties

Manufactured, Modular, & Log Home Properties

Note: Special consideration must be given for properties where land value exceeds 35% of total value to ensure typical & common in market area.

Purchase Transactions

Verification of a satisfactory chain of title is required for a minimum of 24 months

The seller must be on title for a minimum of 90 days, (from the date seller takes title to date sales contract executed)

Qualifying Ratios Maximum DTI = 40%

Max DTI of 43% is allowed when the following are met: o LTV/CLTV/HCLTV ratio is five percent (5%) below the indicated

maximum, and o Reserves (on the subject property) are six (6) months more than the

required minimum, and o Payment Shock is less than 50%

Qualifying payment used for Equity Lines of Credit

Greater of the payment listed on the credit report or 1% of the entire line amount, regardless of balance

Initial fixed rate period 5 years

Greater of the Note rate plus 2% or the fully indexed rate

Initial fixed rate period great than 5 years

Greater of the Note rate or the fully indexed rate

Note: See “Liabilities” section for additional information specific to inclusion/exclusion of borrower debt

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Refinance (Cash-Out)

Primary Residence only

Maximum cash-out limits: o LTV/CLTV/HCLTV < 50% = $500,000 o LTV/CLTV/HCLTV > 50% = $300,000

Max cash out includes pay off of subordinate liens

6 month seasoning required since the most recent first mortgage transaction (purchase or refinance) from Note date to Note required for cash out

Properties listed for sale within 6 months prior to application date are ineligible

Copy of the Note for any subordinate lien is required

Subordinate liens not provided by a financial institution are not eligible

Refinance (Rate Term)

Proceeds used to pay off current first mortgage, including closing costs and prepaids

Proceeds may be used to pay off junior liens used to purchase the property or those with 12 months seasoning o Home equity line of credit draws cannot exceed a total of $2,000 in

previous 12 months

A maximum of $5,000 incidental cash may be received back by the borrower

If owned less than 6 months, LTV is based on lesser of the current appraised value or the original purchase price plus the cost of any documented improvements

Properties listed for sale within 6 months prior to application date are ineligible

Permanent Financing for Newly Constructed Home

The conversion of construction-to-permanent financing, replacing interim construction financing on a new home with a long term mortgage, may be treated as a purchase, refinance or cash-out refinance. South State does not offer interim construction financing. Permanent financing is eligible.

Purchase Borrower used proceeds from the interim construction financing to purchase

the lot The LTV is calculated by dividing the unpaid principal balance by the lesser

of the appraised value or the total acquisition costs (costs of improvements + purchase price of the lot)

Limited Cash-Out Refinance Borrower held legal title to the lot prior to construction financing application

and is named as the borrower for the construction loan For borrowers who acquired the lot 12 months or more before applying for

the construction financing, LTV is based on the current appraised value For borrowers who acquired the lot within the 12 months preceding the

application dated for the construction financing, LTV is based on the lesser of the appraised value or the total acquisition costs (costs of improvements + purchase price of the lot)

Cash-Out Refinance Must meet all requirements for a Limited Cash-Out Refinance Borrower(s) must have held legal title to the lot for at least six months prior

to the closing of the permanent mortgage

Note: For qualification purposes taxes are calculated at 1.5% of the property value used to calculate LTV.

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Secondary Financing

Secondary financing must meet LTV/CLTV/HCLTV restrictions stated in the Product Matrix. There also may be no terms that restrict prepayment of the secondary transaction.

Simultaneous Closing

Copy of loan approval & copy of the executed Note at closing

Subordinate Existing Financing

The terms of the second lien (copy from lender if not able to determine from credit), unsigned copy of subordination agreement prior to close, & executed subordination agreement at close are required

Greater of the payment listed on the credit report or 1% of the entire line amount, regardless of balance is used as payment for Equity Line of Credit

Term Fixed Rate Term

10 to 30 year amortization

Terms < 180 months will be priced as 15 years; > 180 months will be priced as 30 years

ARM Term

5/1 & 7/1initial fixed rate period options

30 year amortization only

4506-T Wholesale A completed, signed, dated, and unexpired IRS form 4506-T for all borrowers

whose income is used to qualify must be included in file submission authorizing South State to obtain income information for all borrowers.


Correspondent A completed, signed, dated, and unexpired IRS form 4506-T for all borrowers

whose income is used to qualify must be included in file submission. 4506-T is to have been executed by the Correspondent with the transcripts

also included in file submission. A new 4506-T must be signed at closing.

ARM Specific

Caps

Product Max First

Adjustment

Max SubsequentAdjustment

Max Life Adjustment

5/1 Libor Jumbo 2% 2% 5%




Lookback Most recently available 1 Year LIBOR 45 days prior to the interest rate change date

Margin 2.25%

ARM Term 30 year amortization only

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NC/SC Flagship Jumbo Libor ARMs

Topic Guidelines


Primary Residence & Second Home Term Program Code

3/1 ARM (30 Year Am) FSTPO31 5/1 ARM (30 Year Am) FSTPO51 7/1 ARM (30 Year Am) FSTPO71 10/1ARM (30 Year Am) FSTPO101


Min Loan Amount Max Loan Amount

$417,001 $1,500,000

Maximum LTV/CLTV & Loan Amount Primary Residence

Purchase/No Cash-Out Refinance 1-2 Unit, PUD, Condo

Max Loan Amount Max LTV/CLTV Min Credit Score

$1,000,000 80/80% 720 $1,500,000 70/70% 720 $1,000,000 65/65% 700 $2,000,000 65/65% 720

3-4 Unit

Max Loan Amount Max LTV/CLTV Min Credit

Score $1,000,000 65/65% 740 $1,500,000 60/60% 740

Cash-Out Refinance 1-2 Unit, PUD, Condo

$1,000,000 70/70% 740 $1,500,000 65/65% 740

Max Cash Back in hand $250,000

3-4 Unit not eligible for cash-out refinance

Maximum LTV/CLTV Secondary Residence

Purchase/No-Cash Out Refinance 1 Unit, PUD, Condo

Max Loan Amount Max LTV/CLTV Min Credit

Score $1,000,000 80/80% 740

Second Home not eligible for cash-out refinance

Maximum LTV/CLTV Non-Owner Occupied

Ineligible

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Topic Guidelines (NC/SC Flagship Jumbo ARMs)

Eligible States of Origination

NC & SC

Escrow Waiver Available with fee

Assumable No

Convertible No

Buy-downs Not Available

Subordinate Financing Must meet LTV/CLTV Restrictions stated above


If the subordinate lien is an equity line of credit, use the line limit to calculate the CLTV

Credit History Minimum two years established credit history is required 3 active trade lines (activity dates less than or equal to 12 months from

current date) with 12 months satisfactory history on each trade. A minimum credit risk score is required. See the LTV/CLTV & Loan

Amount topic for minimum score requirements. Borrower(s) must have a minimum of two credit scores. Follow any additional automated underwriting guidance

Bankruptcy & Foreclosure

Eligible under specific conditions.

Bankruptcy

48 months from discharge or dismissal date with re-establishment of acceptable credit

Foreclosure

84 months must have passed with re-establishment of acceptable credit

Deed-in-Lieu of Foreclosure & Short Sale/Modification

48 months must have passed with re-establishment of acceptable credit

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Refinance (Cash-Out)

Primary Residence only

Loan amount limited to: Current unpaid principal balance, plus Pay off of any junior liens, plus Closing costs and prepaid items, plus Maximum cash-out limit

If the existing first mortgage was originated within 6 months of the application date and was a cash-out transaction, loan must be treated as cash-out

Max cash back in hand to borrower is $250,000

6 month ownership of subject property required for cash-out refinance.

Properties listed for sale within 6 months prior to application are ineligible

Refinance (No Cash-Out) Proceeds used to pay off current first mortgage.

If the existing first mortgage was originated within 6 months of the application date and was a cash-out transaction, loan must be treated as cash-out

Proceeds may be used to pay off junior liens with 12 months seasoning, no draws on home equity lines of credit, unless documentation can be provided to show it was incurred as part of acquisition of home.

The lesser of one percent (1%) or $5,000 incidental cash may be received back by the borrower.

If owned less than 6 months, LTV is based on lesser of the current appraised value or the original purchase price plus the cost of any documented improvements.

Property may not be listed for sale at time of application

Documentation Full Documentation Required – AUS Recommendation Not Applicable

2 months asset statements required

For Self-Employed Borrowers a minimum of 2 years personal and business returns (if applicable), signed by the borrower, including all schedules, K-1s, and statements

A year-to-date profit and loss statement may be required for any self-employed borrower whose application date is more than 120 days after the end of the business’ tax year.

Fully processed 4506-T with Tax Transcripts required for all borrowers, personal and business if applicable

Eligible Funds Down Payment may be from borrower’s own funds or gift

Gifts permitted for Primary Residence only

Required 5% minimum contribution from borrower’s own funds before gift may be used

Retirement accounts calculate at 70% of vested value for down payment/closing costs with proof of liquidation

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Reserves

Loan Amount Months of PITI ≤ $1, 000,000 6 Months Liquid > $1,000,000 12 Months Liquid

Liquid assets are those that are readily available to a borrower after the mortgage closes

Exclusive of 401k/SEP accounts, cash out funds, business assets

Eligible Borrowers US Citizens Permanent Resident Aliens Non-Permanent Aliens (max LTV of 75%)

Occupancy Primary Residence & Second Home

Eligible Property Types 1 – 4 Unit SFD, PUD, & Established Condominium

New condominium projects not eligible

Full Review Only


Maximum of four mortgaged residential properties, regardless of occupancy.

4506-T Wholesale

A completed, signed, dated, and unexpired IRS form 4506-T for all borrowers whose income is used to qualify must be included in file submission authorizing South State to obtain income information for all borrowers.


Correspondent

A completed, signed, dated, and unexpired IRS form 4506-T for all borrowers whose income is used to qualify must be included in file submission.



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Second Home Mortgage payment for current residence and new residence must be

counted against borrower for qualifying. 6 months PITI for reserve requirements.

Investment Property If less than 30% equity in current residence then six months PITI for

existing primary and six months PITI for new property. If equity in current residence is greater than or equal to 30% then up to

75% of rental income may be used to qualify. If less, no rental income may be used.


Escrows for Completion Escrows for completion are not allowed

Appraisal Full Interior-Exterior 1004 / 1073 (Condo) required

Market Conditions Addendum 1004MC required

> $1,000,000 loan amount requires 2 appraisals






Cash-Out Refinance




- 36 - July 1, 2014


Caps

Product Max First

Adjustment

Max Subsequent Adjustment

Max Life Adjustment





Margin 2.25%



Qualifying Ratios Follow Desktop Underwriter (DU) Findings – Not to exceed 43%





Initial fixed rate period greater than 5 years

Note rate or fully indexed rate

Underwriting Loans must be evaluated by Fannie Mae Desktop Underwriter (DU)

South State Program Guideline supersedes DU findings

Accept/Ineligible required – Ineligible findings are acceptable for reasons in alliance with this guideline

For items not addressed in these guides, Fannie Mae Selling and DU Findings are to be utilized


Documents

Section 2 Products - South State Bank 1, 2014 Topic Guidelines (Conforming Fixed Rate) LP Requirements Loans evaluated by Freddie Mac Loan Prospector must meet the following