Adamas (NYMT) DSCR Rental Loan Program Guidelines

Introduction

Program Overview

New York Mortgage Trust, Inc. (NYMT), the Purchaser, seeks to purchase closed residential mortgage loans made pursuant to this Debt Service Coverage Ratio (DSCR) Rental Loan Program Seller Underwriting Guidelines (the Guide or Guidelines). NYMT acts solely as a secondary market purchaser and does not directly originate or service any mortgage loans. NYMT is not considered a "creditor" within the meaning of the Equal Credit Opportunity Act (ECOA) and Regulation B and does not participate in any Seller credit or loan decision.

The primary focus of NYMT's Debt Service Coverage Ratio (DSCR) Rental Loan Program Seller Underwriting Guidelines is to expand lending opportunities to Borrowers with unconventional income documentation or credit history while maintaining the Borrower's ability to repay the mortgage obligation.

This Guide establishes the criteria under which a loan will be eligible for purchase by NYMT. NYMT does not expect Sellers to make any loan simply because it is eligible for purchase by NYMT, nor does NYMT prohibit Sellers from originating loans that fall outside Guidelines. In the event of a guideline exception, all applicable mitigating and compensating factors must be fully documented and will be reviewed and considered prior to NYMT making any purchase decision pursuant to Guideline Exceptions.

NYMT evaluates multiple aspects of each loan prior to purchase, but primarily relies on the Seller's evaluation of the Borrower's ability to repay the loan to predict loan performance. Additional characteristics of the loan are also examined including credit history, assets, and property value. All loans will be comprehensively reviewed. Any loan that does not conform to these Guidelines will be accepted or rejected on a case-by-case basis.

NYMT employs a no-tolerance policy for fraud. Sellers should follow their own established fraud and identity procedures on every loan to detect and prevent fraud pursuant to Fraud Reports and Background Checks. Loans containing fraudulent documentation or information will be declined. Sellers will be terminated immediately if there is any evidence of Seller involvement in mortgage loan misrepresentation or fraudulent activities.

Requirements for Investment Property Transactions

Sellers must document that investment property Borrowers understand certain consumer protection laws applicable to consumer loans will not apply to their business-purpose loan.

General Requirements

NYMT does not originate or directly service mortgage loans and acts solely as a secondary market purchaser. NYMT is not considered a "creditor" within the meaning of ECOA and Regulation B.

NYMT purchases closed mortgage loans that have already been underwritten by the Seller and closed. NYMT does not render credit decisions on any mortgage loan nor does it encourage or compel Sellers to make a particular credit decision on any mortgage loan offered to NYMT for sale or discussed with NYMT in connection with a future potential sale. NYMT relies upon Sellers to prudently underwrite all mortgage loans, make all lending decisions and provide all disclosures to Borrowers required under applicable law.

Guideline Exceptions

NYMT recognizes that not all loans will fit neatly into these Guidelines. Exceptions to the Guidelines will be evaluated on a case-by-case basis. Any exception must have significant compensating and mitigating factors that substantially offset the guideline deviation and must be fully documented. Exception requests may be denied if the exception presents unacceptable risk or if insufficient information is provided to assess the risk presented by the exception.

Application and Submission Requirements

Sellers must ensure that all loans submitted to NYMT for purchase comply with all applicable federal, state and local laws and regulations, including but not limited to the Truth in Lending Act (TILA), Real Estate Settlement Procedures Act (RESPA), Fair Housing Act, Equal Credit Opportunity Act (ECOA), Fair Credit Reporting Act (FCRA), Dodd-Frank Wall Street Reform and Consumer Protection Act, and all applicable state licensing laws and regulations.

Loan Programs

Rental Loan Products

NYMT purchases first mortgages on investment properties under the DSCR Rental Loan Program. Loans must be non-occupant investment property loans where the Borrower will not reside in the property.

Product Matrix

Product Feature	Specifications
Loan Type	First Mortgage
Property Type	Investment Property (Rental)
Occupancy	Non-Owner Occupied
Minimum Loan Amount	$100,000
Maximum Loan Amount	No Maximum (Case-by-case basis for loans over $1,500,000)
Loan Term	10 to 30 years
Amortization	Fully Amortizing (max 30 years)
Interest Rate Type	Fixed or Adjustable
Payment Frequency	Monthly
Minimum DSCR	0.75 (Debt Service Coverage Ratio)

Additional Restrictions

All loans must be business-purpose loans
All loans must include a personal guaranty from individual(s) with at least 25% ownership stake or key principals
Non-recourse loans are available with enhanced requirements
No loans to borrowers in New York State except as specified in Geographic Restrictions section
Loans must be originated and closed by a licensed mortgage lender
All borrowers must be creditworthy as determined by credit score and payment history

Business Purpose Loan Pricing Grid

The pricing grid adjusts based on the loan characteristics including DSCR ratio, credit score, loan amount, and property type. Specific pricing is determined at the time of loan approval and is subject to NYMT's risk assessment.

Borrower/Guarantor Requirements

Guarantor(s) and Personal Guaranty Requirement

All loans must include a personal guaranty from at least one individual guarantor. The guarantor(s) must:

Be at least 18 years of age
Have a qualifying credit score of 620 or higher
Have a history of payment on mortgage obligations (if applicable)
Own at least 25% of the borrowing entity OR be identified as a key principal with significant operational control
Sign the personal guaranty document at closing

Non-Recourse Loans

Non-recourse loans are available under this program with the following additional requirements:

Enhanced DSCR requirement of 1.10 or higher
Significant borrower equity of at least 30% (70% LTV maximum)
Personal guaranty for recourse liability in the event of fraud, misrepresentation, waste, or environmental liabilities
Higher credit score requirement (minimum 680)
Guarantor liquid assets equal to six months of PITIA reserves

Individual Borrower and Guarantor Residency Requirements

US Citizens and Permanent Residents are preferred
Foreign nationals may be considered with enhanced documentation and approval from NYMT
All individual borrowers and guarantors must provide valid government-issued identification
Borrowers must have a current valid address in the United States

Eligible Individual Borrowers and Guarantors

US Citizens
Permanent Residents (Green Card holders)
Valid visa holders (H-1B, L-1, etc.) with evidence of continued status
Foreign nationals with approval from NYMT

Ineligible Individual Borrowers and Guarantors

Individuals with fraud convictions within the last 7 years
Individuals listed on OFAC exclusion lists
Individuals with active federal criminal charges
Individuals who have previously defaulted on an NYMT mortgage
Individuals with felony convictions related to dishonesty or fraud within the last 10 years

Borrowing Entity Requirements

Eligible Borrowing Entity Types

Limited Liability Company (LLC)
Corporation (C-Corp or S-Corp)
Limited Partnership (LP)
General Partnership (GP)
Joint Venture

Ineligible Borrowing Entity Types

Sole Proprietorship (borrower must be an individual)
Non-US entities unless proper documentation is provided
Trusts (property cannot be titled in trust)
Entities with unknown or unclear ownership structures

Borrowing Entity Documentation Requirements

All borrowing entities must provide:

Certified Articles of Incorporation/Organization
Current Operating Agreement or By-Laws (all pages)
Certificate of Good Standing issued within 90 days of closing
Ownership structure documentation showing all members/shareholders with ownership percentages
Corporate Resolution authorizing the loan and designating authorized signers
Stock Certificate or Share Ledger (for corporations)
Certificate of Foreign Qualification if entity is formed in a different state than where business is conducted
Tax ID Number (EIN)
Business bank statements for the last two months
Proof of business registration/license

Fraud and Background Checks

NYMT requires comprehensive fraud and background checks on all borrowers and guarantors. These checks must include:

Credit report review
Criminal background check
OFAC search
Fraud claims database search
Sex Offender Registry check
National Registry of Sanctions (if applicable)

Any positive findings must be addressed and documented. Loans with evidence of fraud will be declined. Borrowers or guarantors with criminal convictions related to dishonesty or fraud will generally be ineligible.

Customer Identification Program

All Sellers must implement a Customer Identification Program (CIP) that complies with federal regulations. CIP procedures must verify and record the identity of each borrower/guarantor through the use of:

Government-issued photo identification
Documentary verification (utility bills, lease agreements, etc.)
Verification against AML lists and OFAC lists

Exclusionary Lists

All borrowers and guarantors must be screened against:

OFAC Specially Designated Nationals (SDN) List
BIS Entity List
HHS OIG Exclusion List
GSA Excluded Parties List System (EPLS)
State licensing board disciplinary lists

Borrower and Guarantor Credit

Credit Report and Qualifying/Representative Credit Score (FICO)

A tri-merge credit report is required for all borrowers and guarantors
The representative credit score is the median score from the three credit bureaus
If credit reports cannot be obtained or are frozen, alternative documentation is required
Credit reports must be dated within 120 days of the mortgage note date
At least two borrowers (if applicable) or one primary borrower and one guarantor must have credit scores

Frozen Credit Bureau Files

If a borrower's or guarantor's credit file is frozen or inaccessible:

Alternative credit documentation may be submitted such as alternative credit tradelines or non-traditional credit references
A letter from the borrower explaining the freeze must be provided
NYMT may require additional compensating factors

Borrower/Guarantor Credit Requirements

Credit Score	Minimum Requirement	Maximum Loan Amount
680+	Eligible	No restriction
660-679	Eligible with compensating factors	$2,000,000
640-659	Eligible with significant compensating factors	$1,500,000
620-639	Eligible only for non-recourse loans	$1,000,000
Below 620	Not eligible	N/A

Maximum delinquency: One 30-day late in the past 12 months
No 60+ day lates in the past 24 months
No 90+ day lates in the past 36 months
Maximum collections: One collection account resolved within the past 12 months
Bankruptcy: Must be discharged for minimum 24 months (Chapter 7) or active with zero delinquencies (Chapter 13)

Assets and Liquidity

Liquidity / Reserves Requirements

Borrowers must document liquid assets equal to the greater of:

1% of the total unpaid principal balance on all mortgages reported on credit (excluding the subject loan)
Six (6) months of PITIA (Principal, Interest, Taxes, Insurance, and Association fees) on the subject property

For purchase transactions, liquidity requirement also includes the down payment amount.

Liquid assets must be seasoned for a minimum of 60 days from the date of mortgage note and documented with bank statements showing the account balance.

Eligible Assets

Cash in checking and savings accounts
Money Market accounts
Certificates of Deposit (CDs)
Money Market Funds
Treasury Bills and Bonds
Stocks and bonds (at 80% of current market value)
Vested retirement accounts (401k, IRA, Roth IRA)
Mutual Funds (at 80% of current market value)
Life insurance cash surrender value
Equity in investment properties
Equity in primary residence

Ineligible Assets

Future earnings or income
Loans or advances from family members
Cash borrowed from any source
Gift funds not properly documented
Assets with restrictions or conditions on withdrawal
Crypto-currencies
Assets not in the Borrower's or Guarantor's name
Accounts with less than 60 days seasoning

Asset Documentation Requirements

All assets must be documented with:

Current bank statements (within 60 days of mortgage note date)
Account statements showing borrower/guarantor name clearly
Clear statement of account balance
Account type clearly identified
For retirement accounts: Current statement showing vested balance
For investment accounts: Current market value statement
For business accounts: Ownership documentation

Large Deposits

Any deposit in a savings account during the 60-day seasoning period of more than 50% of the average monthly balance must be documented and sourced. Acceptable sources include:

Gift funds with proper gift letter
Proceeds from sale of assets
Inheritance
Bonus or commission income
Tax refunds
Insurance proceeds

1031 Exchange Funds

Funds from a 1031 Exchange may be used for down payment or closing costs if:

Proper exchange documentation is provided
The source of the original funds is documented
The funds have been held for the required seasoning period or are considered qualifying proceeds
All applicable exchange rules are followed

Gift Funds

Gift funds may be used for down payment or closing costs with proper documentation.

Eligible Gift Donors

Spouse
Parent or step-parent
Child or step-child
Sibling
Grandparent
Other family member by blood or marriage
Foundation or non-profit organization

Gift Letter Requirements:

Signed letter from the gift donor
States the dollar amount of the gift
Confirms no repayment is expected
Demonstrates the donor's financial ability to give the funds
Gift funds cannot be contingent on the sale of the subject property
Funds must be documented in the donor's bank statement

Borrower Experience

Borrowers should demonstrate experience with investment property ownership and management. Acceptable experience includes:

Current ownership of investment properties
Current or recent management of investment properties
Real estate investment experience within the past five years
Background in real estate industry
Business ownership experience

Due Diligence

Age of Documentation

All required documents must be dated within the specified timeframe prior to the mortgage note date:

Credit reports: 120 days
Bank statements: 60 days
Pay stubs: 60 days
Tax returns: Most recent complete returns (2+ years)
Title commitment/Closing Protection Letter: 90 days
Appraisal: Must be current and dated within 120 days of closing
Lease agreements: Current lease or signed document
Proof of insurance: Current policy
Certificate of Good Standing: 90 days

Subject Property Income

Lease Requirements for Occupied/Leased Properties

All occupied properties must have a current lease agreement that includes:

Property address
Tenant name(s)
Monthly rental payment amount
Lease start and end dates
Term of the lease
Signatures from both landlord and tenant
Copy of tenant's government-issued ID
Copy of signed lease by both parties

Lease Seasoning

Existing leases: Must be in place for minimum six (6) months OR dated at least 30 days prior to closing
New leases: For purchase transactions, lease can be signed upon closing. Lease must be dated at least 30 days prior to closing for refinance transactions.
Lease extensions: Extension documentation must be dated at least 30 days prior to closing

Family Member

Rental to family members is permitted if:

A valid lease agreement exists between the borrower/guarantor and family member
Fair market rent is documented
Lease is arm's length on terms comparable to market rates
No preferential treatment in rent or lease terms

Section 8 Housing

Properties with Section 8 tenants are acceptable if:

Valid Section 8 certificate or lease is provided
Payment documentation from the Housing Authority is included
Tenant portion of rent is documented
HAP (Housing Assistance Payment) is calculated and documented

Qualify Gross Rental Income Calculation for Occupied/Leased and Vacant/Unleased Properties

Qualifying Gross Rental Income Calculation - Refinance Transaction

For refinance transactions with occupied properties:

Use actual rent from the existing lease
Use lower of lease rent or fair market rent
Use rent from Section 8 HAP if applicable
For vacant properties at time of closing, use lesser of: potential rent from market analysis or 75% of appraised rent estimate

Qualifying Gross Rental Income Calculation - Purchase Transaction

For purchase transactions:

If property is currently occupied with valid lease: Use actual lease rent
If property will be leased upon closing: Use lease rent amount documented in signed lease
If property is vacant or lease is pending: Use lower of: market rent or 75% of appraised rent schedule
Use rent from all leases for multi-unit properties

DSCR Calculation

Minimum DSCR

The minimum DSCR requirement is 0.75 for all loans.

DSCR = Annual Gross Rental Income / Annual Debt Service

Where:

Annual Gross Rental Income = Documented rent (excluding tenant-paid utilities if applicable)
Annual Debt Service = Principal + Interest + Property Taxes + Insurance + HOA fees (if applicable), calculated on an annual basis

For non-recourse loans, minimum DSCR requirement increases to 1.10.

Qualifying Interest Rate and Qualifying Monthly Principal and/or Interest Payment

Debt service is calculated using the actual loan interest rate (not a higher qualifying rate)
The actual monthly P&I payment is used in the calculation
ARMs: Use the initial rate for DSCR calculation at origination
The DSCR must be calculated accurately based on property income and all housing expense obligations

Short-Term, Seasonal and Vacation Rentals

Short-term rental income (less than 30-day leases) is only acceptable if:

Property qualifies under applicable local regulations for short-term rental use
Documented history of short-term rental income is provided (minimum 12 months)
Conservative rent calculation based on historical averages is used
80% of documented average is used for qualifying rent
Proof of active rental platform listings (Airbnb, VRBO, etc.)
Bank statements or payment records documenting income

Secondary Financing /Subordinate Debt / Other Encumbrances

Secondary financing is not permitted on investment properties
All existing liens and encumbrances must be paid off at closing with loan proceeds
No subordinate debt except construction financing with lien waiver
All subordinate debt must be clearly documented and disclosed
NYMT must be the first lienholder

Single Borrower/Guarantor Exposure Limit

Individual borrower/guarantor total exposure cannot exceed $10,000,000 in aggregate NYMT lending (across all properties and loans)
Exceptions to exposure limit require NYMT approval

Geographic Restrictions

New York

Loans for properties located in New York State have special restrictions:

Properties outside of New York City (NYC) are not permitted
Properties in NYC are permitted only in the following boroughs: Manhattan and Brooklyn
Condominiums in NYC require additional HOA documentation and condo review
New York properties are subject to enhanced due diligence requirements
Minimum credit score requirement of 660 for New York properties

Florida

Florida properties have the following requirements:

Enhanced insurance requirements due to hurricane risk
Annual homeowner insurance requirement with higher limits
Windstorm coverage is required (windstorm deductible maximum 5%)
Flood insurance is required if property is in FEMA flood zone
Additional proof of occupancy (for tenant-occupied properties)

Other Geographic Restrictions

Properties must be located in the continental United States
Loans for non-US territories (Puerto Rico, US Virgin Islands, Guam) are not eligible
Properties must comply with all applicable state and local regulations regarding investment property rentals

Eligible and Ineligible Properties

Eligible Property Types

Single-family detached homes
Duplexes (2-4 units if financed under same loan)
Townhomes and attached homes (with proper documentation)
Condominiums (single-unit, with HOA approval)
Multi-family properties (5+ units) up to 20 units per appraisal guidance
Mixed-use properties with residential rental component
Land with improvements (commercial/residential combination)

Ineligible Property Types, Vesting Types and Characteristics

Properties that are ineligible include:

Mobile homes or manufactured homes
Properties with less than 400 square feet of livable space
Properties not suitable for residential rental use
Properties in conservation easements or with environmental restrictions
Properties with title vesting in trust (property must be titled in borrowing entity name)
Properties held in joint tenancy by entirety (state specific limitations)
Community property states (limited eligibility)
Cooperative apartments
Properties subject to life estates
Leasehold properties (ground lease must have minimum 30 years remaining)
Airbnb/vacation rentals in jurisdictions where prohibited
Properties with active zoning violations
Condemned or uninhabitable properties
Properties in active foreclosure or receivership (for another mortgagee)

Property Condition/Deferred Maintenance

Property must be in good condition suitable for occupancy
Visible deferred maintenance must not exceed 5% of property value
Critical systems (roof, HVAC, plumbing, electrical) must be functional
Structural integrity must be sound
No evidence of mold, pests, or other hazardous conditions
Property must meet all applicable building codes and safety standards

Property Land Use and Zoning

Property must be zoned for residential rental use
Property must be in compliance with all applicable zoning regulations
No current zoning violations
Properties in areas with restrictive covenants must provide proof of compliance
HOA restrictions (if applicable) must permit rental use

Rural Properties

Rural properties (outside metro areas) may be acceptable with:

Clear documentation of property value and rental market
Updated appraisal appropriate for rural market
Verification of utilities availability (septic systems, well water acceptable)
Access to property via public road or documented easement
Minimum one acre of land

Title Requirements

Effective Title Date

The title commitment or closing protection letter must be dated within 90 days of the mortgage note date and must show NYMT as the proposed insured.

Title insurance requirements:

Owner's policy with full coverage
Lender's policy with full coverage
ALTA title insurance is required
Title must be clear and insurable with no exceptions except standard exceptions

Utility Requirements

Municipal water and sewer preferred
Septic systems are acceptable if:
- System is in good working order (per appraisal)
- Deed restriction or easement allows use
- Local permits and documentation provided
Well water is acceptable if:
- Well is registered with appropriate authority
- Water quality certification available
- Documented history of adequate supply

Private Road Maintenance Agreements

If property access is via private road:

Recorded maintenance agreement must exist
Maintenance agreement must allocate costs to property owner
Agreement must be binding on future owners
Must provide adequate road maintenance

Survey Requirements

A current survey is required for:

All land with purchase transactions
Any property with boundary questions
Survey must be dated within 6 months of closing
Survey must show property improvements and easements
Surveyor must be licensed in the subject state

Multiple Parcel Properties

For loans secured by multiple parcels:

Each parcel must be documented in appraisal and title
All parcels must be cross-collateralized
Each parcel must meet property eligibility requirements
Appraisal must value each parcel separately

Mortgage Payoff

All existing mortgages must be paid off from loan proceeds
Payoff statements required showing current balance and lien holder info
No carryover financing or subject-to financing

Judgments and Liens

No judgment liens or tax liens can exist against the property at closing
All existing liens must be paid off with loan proceeds
Mechanic's liens must be satisfied or bonded prior to closing
HOA liens must be satisfied at closing

Appraisal and Valuation

Appraiser Qualifications

All appraisers must be state-licensed or certified
Appraisers must have experience with investment property valuations
Appraisers must have experience in the subject property market
Appraisers must comply with USPAP (Uniform Standards of Professional Appraisal Practice)
Appraisers must be independent with no financial interest in the transaction outcome

Use of Same Appraiser for Multiple Transactions or Properties

The same appraiser may be used for multiple properties in the same transaction (cross-collateralized loans) if:
- Appraisals are separate and independent
- Each appraisal is prepared individually following USPAP
- No conflicts of interest exist
- Appraiser is qualified for multi-property valuation

Appraisal Requirements

Full appraisal using FNMA/FHLMC standards is required
Appraisal must include "As-Is" value
Appraisal must include rent schedule with comparable rent analysis
Appraisal must show comparable sales within subject market
Appraisal must be dated within 120 days of closing
Appraisal must be completed by licensed/certified appraiser

Additional Appraisal Requirements for Loan Amounts Over $1,500,000

Second independent appraisal is required
Desktop appraisal or Collateral Desktop Analysis (CDA) required
Broker Price Opinion (BPO) not acceptable as second appraisal
Appraisals must be within 10% of each other; if greater variance, third appraisal may be required
Any discrepancies must be reconciled and documented

Multi-Family Appraisal Requirement:

For properties with 5 or more units:

Appraisal must include detailed income analysis
Rent roll schedule required
Operating expense documentation required
Comparable property sales and income approach required
Capitalization rate analysis required

Evidence of Work Completed for Value-Add Properties

For properties undergoing or completed renovations:

Documentation of work performed required
Contractor invoices and paid receipts required
Before and after photos
Detailed scope of work
Revised appraisal reflecting completed improvements
Warranty information for new systems/components

Transfer Appraisals

For properties recently acquired (within 90 days):

Original purchase appraisal required
Transfer appraisal required if purchase price exceeds appraised value by more than 10%
Timing and purpose of purchase must be documented

Transaction Purposes and Property Ownership Seasoning

Purchase

Assignment of Contract/Fees

Purchase contracts that are assigned are permitted if:
- Assignment agreement is documented
- Assignment fees are documented and reasonable
- End buyer is the actual borrower taking title
- No indications of speculative flipping

Adjustments to Purchase Price

Normal closing costs and concessions are permitted
Down payment must be from borrower's own funds or acceptable gift
Seller-paid closing costs are limited to 2% of purchase price
No price adjustments attributable to fraud or misrepresentation

Interested Party Contributions and Sales Concessions

Seller concessions are permitted up to 2% of purchase price
Interested party contributions are not permitted (builder, realtor, lender bonuses)
All concessions must be disclosed in purchase contract
Purchase price must be supported by appraisal after accounting for concessions

Non-Arm's Length Transactions

Loans to borrowers purchasing from related parties (family members, business partners, etc.) are acceptable if:

Fair market value is documented through appraisal
Purchase price equals or is less than appraised value
Arm's length terms are documented
No evidence of equity stripping or artificial value creation
Purpose of transaction is legitimate investment

Property Wholesale Transactions

Property wholesaling is permitted if:

Borrower is purchasing as an end user/investor, not as wholesaler
Purchase contract is in borrower's name
Time between purchase and subsequent sale is reasonable (not speculative)
Property value supports the valuation

Delayed Financing (Acquired < 6 Months with No Debt)

Property acquired less than 6 months prior to loan closing without debt (all-cash purchase) is acceptable if:

Property was purchased by current borrower
Source of purchase funds is documented
Property ownership has been seasoned for minimum 6 months, OR
Original purchase price equals or exceeds current appraised value (no equity injection)

Rate and Term Refinance

A Rate and Term Refinance is a refinance transaction where:

Loan proceeds are used to pay off existing mortgage
No additional funds are advanced to borrower
Loan amount may be higher if closing costs are financed

Rate and Term Refinance Property Ownership Seasoning

Minimum 12 months of property ownership required
Exception: 6 months acceptable if property was purchased as owner-occupied investment and current refinance reflects change to investment purpose

Cash Out Refinance

A Cash Out Refinance is a refinance transaction where:

Loan amount exceeds payoff of existing liens by more than $500
Borrower receives funds at closing
Funds are used for documented purpose

Ineligible Use of Cash Out Proceeds

Cash out proceeds cannot be used for:

Debt consolidation of consumer debt (credit cards, auto loans, personal loans)
Business loans or working capital
Funding other properties
Investment in stocks, bonds, or securities
Down payment on other real estate
Paying off existing NYMT loans
Any purpose indicating cash-out is disguised debt elimination

Eligible uses of cash out proceeds:

Property improvements to the subject property
Repairs and maintenance
Capital expenditures
Documented business purpose if property used for business

Cash Out Refinance Property Ownership Seasoning

Minimum 12 months of property ownership required
For equity cash out: Minimum 24 months of property ownership required
If property was purchased with no debt (all-cash), ownership seasoning requirement is 6 months minimum

Loan to Cost (LTC) Calculation

LTC is used for purchase transactions and is calculated as:

LTC = Loan Amount / Purchase Price + Closing Costs (paid by borrower)

Maximum LTC requirements:

Property Type	Maximum LTC
Single Family	80%
2-4 Unit	80%
5+ Unit Multi-Family	75%
Condo	75%
Value-Add Property	75%

Borrower Equity

Borrowers must have sufficient equity in the subject property:

Minimum equity of 20% (80% LTV maximum for most properties)
Minimum equity of 25% (75% LTC maximum for multi-family)
Non-recourse loans require minimum 30% equity (70% LTV maximum)

Land Contracts

Land contracts and contract-for-deed arrangements are not acceptable forms of title. Borrower must obtain warranty deed transferring full title to the property.

Insurance Coverage

General Insurance Coverage Requirements

All properties must be insured with comprehensive hazard insurance policy
Insurance must be maintained throughout the loan term
NYMT must be named as loss payee
Insurance certificate must be provided prior to closing
Borrower is responsible for maintaining adequate insurance
NYMT reserves right to force-place insurance if lender's coverage lapses

Property Insurance

Property insurance must:

Cover the full replacement cost of the structures
Be a homeowner or rental property insurance policy
Cover loss by fire, theft, vandalism, and other standard perils
Be issued by insurer with A- rating or better (per AM Best)

Cancellation Notice

Insurer must provide 30-day notice of cancellation to NYMT
Borrower must provide replacement coverage prior to cancellation
Non-renewal notice from insurer must be disclosed to NYMT

Deductible

Maximum deductible is 1% of insured value
For coastal/high-risk areas (Florida, etc.), maximum 2% of insured value
Deductible applies per occurrence

Flood Insurance Policy Deductible

If flood insurance required: Maximum $10,000 deductible
Flood insurance must be issued by NFIP or private carrier
Coverage must include dwelling and personal property if applicable

Limits of Insurance

Minimum insurance limits:

Dwelling coverage: 100% of replacement cost
Personal property coverage: As required by insurer
Liability coverage: Minimum $100,000 per occurrence
Loss of rents: 12 months of rental income (if property is rented)

Co-Insurance

Property must be insured to at least 80% of replacement value to avoid co-insurance penalty
Appraisal value is not substituted for replacement cost determination

Rent Loss

For tenant-occupied properties: Rent loss coverage required
Minimum coverage: 12 months of gross rental income
Coverage protects against loss of rental income due to insured perils

Condominium and Attached PUD Insurance Requirements

For condo properties:

Building master insurance policy provided by HOA
Individual unit policy for fixtures and improvements
HOA master policy must name NYMT as loss payee
HOA insurance certificate required before closing
HOA master policy must have limits adequate to rebuild structure

Florida - Additional Insurance Requirements

Florida properties require enhanced coverage:

Windstorm coverage required (coastal areas)
Windstorm deductible maximum 5% of dwelling coverage
Flood insurance required if in FEMA flood zone
Annual policy renewal requirement during loan term
Proof of renewals required from borrower

Insurer Rating Requirements

All insurers must:

Have A- financial rating or better (per AM Best)
Be authorized to do business in state where property located
Be acceptable to NYMT
State insurers of last resort are not acceptable

Flood Insurance

Properties in FEMA flood zones must have flood insurance
Flood insurance must be issued by NFIP or private insurer
Coverage must be adequate to replace dwelling
NYMT must be named as loss payee
Annual renewal documentation required

Payment Terms

Monthly payments required
Payments due on the first day of each month
Interest accrues daily from closing
No pre-computed interest
Payoff demand must be honored within 30 days

Prepayment

No prepayment penalty is permitted
Borrower may prepay principal at any time without penalty
Full prepayment may be made at any time
Voluntary prepayment does not accelerate loan maturity

Blanket Loans / Cross-Collateralized Loans

Blanket loans securing multiple properties may be offered under this program with the following requirements:

Liquidity Requirement

Lower of 10% of loan balance and 12 months of PITIA
Liquidity must be seasoned for a minimum of three (3) months for purchase transactions

Other Requirements

All loans for cross-collateralized properties must be made to the same sponsor and sold to NYMT
All properties will be cross collateralized and cross defaulted
Escrow for taxes and insurance is required
Partial release terms:
- Minimum release premium of 120% of the allocated loan amount for each property based on original As-Is appraised value
No collateral substitutions allowed
Pledge of equity is required
A minimum net worth of 25% of the loan amount is required
Rent roll is required

Appraisal and Valuation Requirements

See Appraisal and Valuation for details.

Commercial Liability Insurance Requirement:

A minimum of $300,000 commercial liability insurance per property is required.

Legal Documents

NYMT requires Borrower/Guarantor execution of various legal documents prior to or at the time of closing, including, but not limited to (as applicable):

Mortgage Note
Mortgage (Security Instrument, Deed of Trust)
Personal Guaranty
Declaration of Non-Owner Occupancy and Indemnity
Business Purpose Certificate
Hazard Insurance Disclosure
Language Capacity Declaration
Compliance Agreement
Arbitration Agreement
Environmental Indemnity Agreement

Escrow Accounts

Seller must establish an escrow account for payment of real estate taxes, premiums for property insurance and premiums for flood insurance.

Servicing Transfer Instructions and Interim Servicing

All servicing must be released to NYMT.

Servicing Transfer Instructions

NYMT or NYMT's subservicer will provide servicing transfer instructions to the Seller.

Interim Servicing Responsibilities

Loans sold to NYMT require the Seller to subservice the loans for an interim period prior to the servicing transfer. In accordance with the mortgage purchase loan agreement executed between Seller and NYMT, the Seller shall service and administer the mortgage loans on behalf of NYMT from and after the closing date to the designated servicing transfer date, as specified by NYMT.

The interim servicing obligations of the Seller shall include mailing the goodbye letter, responding to servicing related inquiries from the Borrower, as well as escrow disbursements and payment collection during the interim servicing period. The Seller is required to provide loan boarding data, loan file images, and updated payment history information prior to the servicing transfer date.

Loans will transfer to NYMT's subservicer. The transfer process should comply with all RESPA laws and CFPB best practices.

The Seller will be provided ample notification of the servicing transfer date to meet any applicable RESPA notification to the mortgagor.

Transfer Requirements - Data and Image Delivery

The Seller is responsible for providing preliminary and final data to NYMT's subservicer unless other arrangements are agreed by all parties.

Data delivery format: All data reports must be provided in electronic format (Excel or ASCII) whenever possible, sorted in loan number order. The data must be accompanied by a complete code and field definition summary.

Preliminary data should be provided at least 20 days prior to the servicing transfer date and final data is due within three (3) business days after the servicing transfer date in accordance with CFPB servicing transfer guidelines.

Imaged Document Requirements

Images of all loan documents must be provided to NYMT's subservicer within three (3) business days of servicing transfer date.

Mortgagee Clause

NYMT or NYMT's subservicer will provide mortgagee clause to the Seller.

Mortgage Electronic Registration System (MERS)

Mortgage loans closed with MERS are acceptable. Sellers are responsible for the following:

Registration in MERS within seven (7) calendar days of closing or prior to delivery of the closed loan file to NYMT
Loans delivered to NYMT must be registered by the Seller with MERS at time of delivery
The mortgage must follow MERS guidelines and meet MERS requirements

Details about MERS memberships, registering loans and the available connections to MERS are outlined in the MERS Procedures Manual and the MERS Integration Handbook.

Transfer of Beneficial Rights and Servicing

Seller is responsible for initiating a MERS Transfer of Beneficial Rights (TOB) to appropriate NYMT entity within two (2) business days of the closing date.

Seller is also responsible for initiating a MERS Transfer of Servicing Rights (TOS) to appropriate servicing entity no later than the servicing transfer date.

Power of Attorney

Personal guaranty may not be executed by POA
With the exception of a personal guaranty, NYMT permits the mortgage note, the mortgage and other closing documents to be executed by a person acting as an attorney-in-fact pursuant to authority granted by a Borrower under a power of attorney (POA). POA is acceptable when requirements of Fannie Mae Guides are met and:
- POA is in the form of a specific, special, military or limited POA. Blanket POA is permitted if it pertains to real property transactions
- POA is no more than 90 days old on the mortgage note date
- POA contains an expiration date
- POA is recorded
- POA is used only to execute the final loan documents
- Mortgagor's name in the POA appears exactly as it was stated to appear on all closing documents
- All signatures effectuated through the POA should sign the Borrower name and include the POA signature underneath with the following verbiage "as attorney in fact." (John Doe by Mary Doe, as attorney in fact)
- No interested party to the transaction (such as property seller, agent/broker, loan officer, realtor, etc.) acts as POA
- POA must not be notarized by a notary public that is related to the Borrower or attorney-in-fact
- POA must be acceptable to the title insurer
If title is vested in a corporation, corporate resolution is acceptable for execution
POA cannot be used in the following circumstances:
- If the Borrower/Guarantor/Borrowing Entity owner has an identity theft warning on his/her credit report
- If title is taken in a trust

Appendix A: Borrower and Guarantor Requirements

Borrower Level Due Diligence

Document	Purchase	Refinance	Description
Application	X	X	Application must be signed with all applicable fields completed, including declarations if applicable
Background Check	X	X	All Individual Borrower(s)/Guarantor(s)
Credit Report	X	X	For all Individual Borrower(s)/Guarantor(s)
OFAC	X	X	For all Individual Borrower(s)/Guarantor(s), Manager(s), Key Principal(s)
Identification	X	X	Copy of state issued identification or passport
Occupancy Declaration	X	X	Guarantor(s) must sign non-occupancy declaration at closing
Bank Statement	X	X	Most recent statement for any account provided as evidence of sourced and seasoned (60 days) liquidity at least equal to the following: Purchase down payment (if applicable); plus asset reserves equal to 1% of the UPB on all mortgages reported on credit (except for the subject loan); plus six (6) months of subject loan monthly PITIA reserves

Entity Level Due Diligence (If Applicable)

Document	Purchase	Refinance	Description
Articles of Incorporation / Formation	X	X	All pages required
Operating Agreement / Corporate By-Laws	X	X	All pages required with clearly identified ownership interests and includes an authorization to borrow and designated signers
Certificate of Good Standing or "Active Status"	X	X	Must be no more than 90 days from mortgage note date, from the State of entity registration
Stock Certificate / Share Ledger and Corporate Resolution	X	X	All pages required with clearly identified ownership interests (if applicable)
Certificate of Foreign Qualifications	X	X	If Borrowing Entity is formed in a state other than where business is being performed, other sources of validation such as a print out from the Secretary of State may be permitted

Appendix B: Property Requirements

Property Level Due Diligence

Document	Purchase	Refinance	Description
Lease Agreement for subject property	X	X	Existing lease information must be provided for all tenant occupied refinance transactions (if applicable)
Purchase Contract	X		Fully executed purchase and sale agreement executed by all parties
HUD and Warranty Deed	X		Validating transfer of property title and consideration
Title Commitment, Closing Protection Letter and Wire Instructions	X	X	Must be effective within 90 days or less from mortgage note date and reflect NYMT, LLC ISAOA/ATIMA/Fay Servicing, LLC ISAOA/ATIMIA as Proposed Insured
Appraisal or Valuation	X	X	Must have a "As-is" and Rent Schedule (Comparable Rent Schedule)
Desktop Valuation/BPO	X	X	Required on all property loans
2nd Appraisal Report	X	X	Required when the Appraised Value exceeds 10% of the Collateral Desktop Analysis (CDA) or when CDA shows deemed indeterminable or when the loan amount exceeds $1,500,000
Proof of Insurance	X	X	Evidence of insurance required
Condominium Covenants and Restrictions	X	X	Required. Need to check for any deed restrictions (if applicable)
Condominium Questionnaire	X	X	Required. Need to determine if the HOA has any open litigations (if applicable)