It is the intent of Member Advantage Mortgage to conduct first mortgage lending according to the rules, regulations, lending guidelines of the NCUA, and the laws of the applicable state that the lending is conducted within.

Member Advantage Mortgage believes it is in full compliance with all of the above rules, regulations and laws.

Member Advantage Mortgage will grant first mortgage loans secured by the member/consumer's principal residence, second home, and/or investment property. Loans on multifamily investment property and small business property are available on a case by case basis.

Acceptable properties include: single family detached or attached housing, single condominium units, single units in a planned-unit-development (PUD), 1-4 family residences, and manufactured homes which were built after November 1978 and are permanently affixed to real estate. We reserve the right to suspend the lending ability on manufactured homes.

Member Advantage Mortgage will not grant first mortgage loans secured by real estate subject to leasehold estates. This includes units within a cooperative project.

New Construction

Member Advantage Mortgage will provide financing for the construction of a residential dwelling up to 95.0% of the appraised value or acquisition cost, whichever is less. Acquisition cost is defined as the cost of improvements plus the present land value or land cost if purchased within the last 12 months. All loans exceeding exceeding 80.0% of the value will require private mortgage insurance coverage (PMI).

The loan will be reviewed and approved using the standard underwriting guidelines and will additionally require:

• A licensed contractor must perform all work. The contractor must be unrelated to the borrower and have a signed contract with the borrower where the contractor is making a reasonable profit from the transaction.
• All loan disbursements will require title insurance company approval and will require sworn statements and waivers of lien are submitted prior to advancement of funds, along with a physical inspection of the subject property.
• All parties, including the builder, must execute a Member Advantage Mortgage Construction Loan Agreement.
• All work must be completed within 180 days of the loan closing, or a rate addendum will be required.
• Members will be required to pay interest only payments during construction along with escrows, as necessary. Full payments will be required starting in the seventh month after loan closing.
• Members are required to maintain builders risk insurance during construction with the standard mortgagee clause:

Member Advantage Mortgage LLC

Geographical Lending Area

It is the current policy of Member Advantage Mortgage to make first mortgages within the 50 states. Member Advantage Mortgage will adhere to each applicable state for rules regulations and licensing requirements. We extend this to each lending area based on the member and the location of the credit union (with respect to their policies).

Maximum Loan Term

It is the policy of Member Advantage Mortgage that the maximum term of any first mortgage loan shall not exceed forty years (40) or 480 months, plus any construction period. Lesser terms shall be allowed, but only in five (5) year increments, i.e. 10, 15, 25 and 30, etc. with the minimum term of 10 years.

Credit Risk

Member Advantage Mortgage understands that a first mortgage program as a degree of credit risk as do all loans, but believes that the credit risk associated with a first mortgage program is less than that associated with many other loan programs offered by the credit unions. Member Advantage Mortgage intends to minimize this credit risk by using well defined underwriting guidelines, utilizing standardized application systems, automated underwriting systems to review, standardize and approve loans. A member of management prior to the denial being sent will review all loan denials.

Asset and Liability Management

Member Advantage Mortgage will balance the maturity and pricing of both the assets and liabilities. All first mortgages originated are intended for sale to the secondary market or a third party. The Mortgage Company will temporarily hold only interim loans such as rehabilitation mortgages and construction loans until such time as they are saleable to the secondary market or third party.

Pricing Policy

It is the policy and practice of Member Advantage Mortgage to price rates periodically based on secondary market rates and indicators. The President or his appointed agent sets rates. In all cases rates are determined to provide credit union members access to competitive mortgage products and assure a reasonable profit for the Mortgage Company.

Rates will be determined using a FNMA/FREDDIE MAC daily price and yield. The margin of yield spread will be determined on the current economic conditions and the policy setforth by the President of the company or his appointed agent. Loans that are available only through a select credit union source may be determined based on other factors such as loan term, credit quality of the borrower, and the credit union's own need for an "investment" loan. Their management team will determine the credit union's lending policy.

Interest rates quoted to the applicant may change between pre-qualification, formal application, loan approval and final preparation of closing documents. Applicants will have the option of a "rate lock" by signing a "Rate Lock Agreement" at any time during the formal application to 1 day prior of document preparation for closing. The Mortgage Company reserves the right to deny a "lock in" to any applicant, at the discretion of the President, or his agent, for any reason.

In order to minimize pipe interest risk, all mortgages in process with a valid rate lock will be monitored and hedged whenever appropriate to minimize rate risk. The President, or his agent, will be responsible for daily secondary market activity.

Loans committed for sale under a contract not to exceed the length of the rate lock. A loan must be able to close, disburse and be delivered to the secondary market or third party within the rate lock period (this includes the right of three day right of recission for refinances). The Mortgage Company will take care to allow adequate time for our staff to deliver the loan within the contract period.

Qualified Personnel and Management

Member Advantage Mortgage understands the importance of both using qualified personnel in the first mortgage-lending program and in maintaining their qualifications. The personnel authorized to originate, process, underwrite and close first mortgage loans will all have participated in a comprehensive first mortgage lending training and have continuing education from internal management and when needed outside resources. The Mortgage Company believes in the mortgage personnel attending related educational programs designed to enhance their overall knowledge of mortgage lending and compliance.

Quality Control on First Mortgage Program

In order to ensure the highest quality of mortgage loans, The Mortgage Company will maintain a periodic review of their first mortgage loans. A Quality Control Firm or qualified staff member will conduct the audit. A separate Quality Control Policy is available for further review.

Equal Credit Best Practices

It is the policy of Member Advantage Mortgage that no borrower client will be denied any first mortgage loan due to discrimination because of race, color, religion, nation of origin, sex, marital status, handicap, or age (provided the applicant has legal capacity to enter into a binding contract), the fact that all or part of the applicant's income drives from any public assistance program or the fact that the applicant has-in good faith-exercised any right under the Consumer Protect Act or any similar state law.

Underwriting Guidelines

It is the policy of Member Advantage to follow specific underwriting guidelines for each first mortgage loan. These guidelines are designed to ensure the compliance with all known secondary market loan sale requirements as well as prudent risk prevention standards These guidelines are discussed in the procedure section of the Member Advantage Mortgage manual, and typically follow FNMA's Desktop Underwriter Automated Loan Review System and Freddie Mac's Loan Prospector Loan Review System. We will be utilizing MGIC's Contract Underwriting Services for our daily underwriting. Exceptions to any underwriting guidelines must be approved by Executive Management and documented in the file. Credit Unions that make exceptions to the underwriting and have decided to maintain and fund the loan internally, must have an approval letter from the underwriter/manager at the credit union in question.

Documentation for First Mortgage Loans

It is the policy of Member Advantage Mortgage to use the uniform documentation currently accepted by the secondary market, in particular the Federal National Mortgage Association (FNMA). All first mortgages will be processed and closed using the documents established for use in producing loans eligible for delivery to these investors. The policies and procedures discussed in the policies and procedures section of the member Advantage Mortgage Manual are designed for use in processing, underwriting and closing conventional loans only.

Revisions to the Policy and Procedures Manual

All future revision to this policy and procedures manual requires approval from the President or his agents. The authorities for changes, which are purely procedural in nature, are delegated to management.

When revisions are required, the affected pages will be revised and the date of the revision installed into the appropriate place on the header. It is the responsibility of the President, or his agent to ascertain that all copies of the policy and procedure manuals contain the revised page(s)