Credit Suisse sellers guide (secondary market) August 2006

Correspondent Underwriting Guidelines
August 2006
Version 2.1

Version 2.1 (August 2006) Credit Suisse page 2
Table of Contents Page
Chapter I: 1st and 2nd Liens........................................................................................................5
A. Underwriting Philosophy...........................................................................................5
100 Exceptions........................................................................................................5
200 Predatory Lending Policy..................................................................................5
B. Borrower Eligibility....................................................................................................6
300 Borrower’s Age.................................................................................................6
301 First Time Homebuyer......................................................................................6
302 Residency and Immigration Status...................................................................6
302.1 U.S. Citizens...................................................................................................6
302.2 Permanent Resident Alien..............................................................................6
302.3 Non-Permanent Resident Alien......................................................................7
302.4 Foreign Nationals............................................................................................7
302.5 Diplomatic Immunity........................................................................................8
302.6 Trust Estates...................................................................................................8
302.7 ITIN – Tax ID Number...................................................................................10
303 Co-Borrower, Guarantors or Co-Signers........................................................11
303.1 Non-Occupant Co-borrower..........................................................................11
303.2 Non-purchasing Spouse................................................................................12
304 Non-Arms Length Transactions......................................................................15
304.1 Acceptable Non-Arms Length Transactions.................................................15
304.2 Unacceptable Non-Arms Length Transactions.............................................15
305 Number of Properties Financed......................................................................16
306 Occupancy......................................................................................................16
306.1 Primary Residence........................................................................................16
306.2 Second Home...............................................................................................16
306.3 Investment Property......................................................................................17
C. Transaction/Loan Purpose......................................................................................18
400 Purchase Transactions...................................................................................18
400.1 Lease/Purchase Options...............................................................................18
400.2 Land Contracts and Contract for Deed.........................................................18
400.3 Construction-to-Permanent Loans................................................................19
400.4 Inherited Properties.......................................................................................19
400.5 Subordinate Financing..................................................................................20
401 Refinance........................................................................................................20
401.1 Rate/Term Refinance....................................................................................21
401.2 Cash-Out Refinance......................................................................................21
401.3 Texas Cash-Out Refinance...........................................................................21
402 Seasoning Requirements...............................................................................22
D. Documentation Options..........................................................................................23
500 Age of Documentation....................................................................................23
500.1 Credit Documentation...................................................................................23
500.2 Appraisal Documentation..............................................................................23
501 Acceptable Loan Documentation Types.........................................................23
501.1 Full, Alternative and Lite Documentation Types...........................................24
501.2 Reduced Documentation Types....................................................................27
502 Documentation Table......................................................................................30
503 Fannie Mae Automated Decisions..................................................................31
503.1 Desktop Underwriter Guidelines: Conforming Loans...................................31
503.2 Desktop Underwriter Guidelines: Non-Conforming Loans...........................31
E. Underwriting the Borrower......................................................................................33
600 Credit Standards.............................................................................................33

600.1 Minimum Credit Profile..................................................................................33
600.2 Credit Reports...............................................................................................33
600.3 Credit Scores................................................................................................33
600.4 Alternative Credit History (Alt-A products only).............................................34
600.5 Credit Analysis..............................................................................................34
601 Liabilities.........................................................................................................37
601.1 Housing Expenses........................................................................................37
601.2 Installment Debt............................................................................................38
601.3 Revolving Debt and HELOCs.......................................................................38
601.4 Other Real Estate..........................................................................................39
601.5 Bridge Loans.................................................................................................39
601.6 Business Debt...............................................................................................40
601.7 Other Debts...................................................................................................40
602 Employment and Income................................................................................41
602.1 Employment Income.....................................................................................41
602.2 Self-Employed Income..................................................................................44
602.3 Fixed Income.................................................................................................44
602.4 Other Income................................................................................................45
602.5 Trailing (Relocating) Co-borrower Income....................................................47
602.6 Unacceptable Income....................................................................................47
603 Assets and Sources of Funds.........................................................................48
603.1 Borrower Contributions.................................................................................48
603.2 Depository Accounts.....................................................................................48
603.3 Proceeds from Sale of Real Estate...............................................................48
603.4 Earnest Money Deposit.................................................................................49
603.5 Land Equity...................................................................................................49
603.6 Marketable Securities....................................................................................49
603.7 IRA/Keogh, 401Ks and Other Retirement Accounts.....................................49
603.8 Seller Contributions/Concessions.................................................................50
603.9 Gift Funds......................................................................................................50
603.10 Gift of Equity..................................................................................................51
603.11 Borrowed Funds Secured by an Asset..........................................................51
603.12 Unacceptable Sources of Funds...................................................................51
603.13 Reserves.......................................................................................................52
F. Underwriting the Property.......................................................................................53
700 Property Types...............................................................................................53
700.1 Property Type Eligibility.................................................................................53
700.2 Definition and Requirements.........................................................................54
700.3 Other Property Eligibility Issues....................................................................58
G. Appraisal Standards................................................................................................61
800 Acceptable Appraisal Firms............................................................................61
801 Appraisal Requirements.................................................................................61
802 Required Forms/Disclosures..........................................................................62
803 Required Appraisal Exhibits............................................................................62
H. Mortgage Insurance................................................................................................64
900 Premium Payment Options.............................................................................64
901 Coverage Requirements for Conforming, Alt-A or Prime A Products.............64
Chapter 2: HELOC 1st and 2nd Liens & Stand Alone 2nd Liens (Supplement).....................65
A. Introduction.............................................................................................................65
B. Senior Lien Eligibility...............................................................................................65
C. Underwriting the Borrower......................................................................................65
100 Credit Requirements.......................................................................................65
100.1 Credit Grades for HELOCs...........................................................................65

100.2 Other Requirements......................................................................................66
200 Residual / Disposable Income Requirements.................................................66
D. Underwriting the Property.......................................................................................66
300 Property Type Eligibility..................................................................................66
400 Appraisal Requirements.................................................................................67
400.1 Automated Valuation Models........................................................................67
400.2 Approved AVM Vendors and Products.........................................................68
500 Other Documentation Requirements..............................................................69
500.1 Title Requirements........................................................................................69
500.2 Documentation Related to 1st Lien................................................................69

Chapter I: 1st and 2nd Liens
A. Underwriting Philosophy
Credit Suisse (USA), Inc. (“Credit Suisse”) purchases an array of residential mortgage loans through its wholly owned subsidiary, DLJ Mortgage Capital, Inc. (“DLJMC”). While many of the products are not of a conventional nature, the loans must be sound and prudent for the associated risk. In order to assist our Sellers in determining if the underlying risk of the loan is consistent with the performance expectations for which they are priced, Credit Suisse has created these underwriting and product guidelines. The underwriting guidelines set forth in this Correspondent Underwriting Guideline (the “Guide”) should be met for all Alt-A, Prime A (formerly named Jumbo A), 2nd Lien, and HELOC loans submitted to Credit Suisse. Subprime loans are addressed in a separate stand alone guide.
Credit Suisse will revise and amend the Guide from time to time as necessary. Any revisions become effective on the date stated in the written communication or posted on the Credit Suisse website.
100 Exceptions
Loans that do not meet all the applicable guidelines are not necessarily excluded from purchase by Credit Suisse. Credit Suisse will review exceptions to the guidelines on a case-by-case basis. Underwriting exceptions may be requested on www.credit-suisse.com/connect under “Rate Lock.”
200 Predatory Lending Policy
Credit Suisse believes that all home lenders should adhere to high ethical standards and practices. Accordingly, Credit Suisse neither condones nor knowingly engages in predatory lending or abusive lending practices. Credit Suisse is committed to providing mortgage lending products that are designed to meet a variety of consumers’ financing needs, and takes steps to work with parties who do not participate in predatory lending. Credit Suisse endorses Fannie Mae’s Predatory Lending Policy as specified in the Fannie Mae Selling Guide Part I, Chapter 3, Section 310 (6/30/02). The Seller must do business in a manner which is consistent with this philosophy.

B. Borrower Eligibility
Credit Suisse will purchase mortgages that have been made to natural persons who are citizens and/or legal residents of the United States, including permanent and non-permanent residents. Title to the property must be in the name of the individual borrowers. Inter vivo revocable trusts are also considered eligible borrowers. On an exception basis and in select states, Credit Suisse may also consider a land trust as an eligible borrower.
Other types of legal entities, including corporations, general partnerships, limited partnerships, and real estate syndicates, are not eligible borrowers.
300 Borrower’s Age
Credit Suisse requires that all borrowers must have reached the age at which the mortgage Note can be legally enforced in the jurisdiction where the property is located. There is no maximum age limit for borrowers.
301 First Time Homebuyer
Loans to First Time Homebuyers are available without restrictions on all products except for the Stand Alone 2nd Liens described in Chapter 2.
302 Residency and Immigration Status
Credit Suisse will purchase loans made to United States citizens, Permanent Resident Aliens, Non-Permanent Resident Aliens, Foreign Nationals, and ITIN borrowers. Borrowers must meet underwriting guidelines as set forth in this Guide and on the individual product matrices.
302.1 U.S. Citizens
A United States citizen is a native or naturalized person entitled to all rights and privileges of the United States. Unless otherwise noted, loan product requirements are based on the assumption that the borrower is a U.S. citizen. All loan products may not be available to non-U.S. citizens, or may be available subject to adjustment as set forth in this Guide and on individual product matrices.
302.2 Permanent Resident Alien
Credit Suisse will fund loans made to lawful permanent residents of the United States under the same terms available to United States Citizens, provided the following requirements are met:
• Certification is provided to confirm the existence of the borrower’s Alien Registration Card (also called a “Green Card”) with a 10-year expiration date on the front, and no expiration date on the back. For borrowers who do not yet possess a Green Card, an Alien Registration Receipt Card (I-551), Conditional Residential Alien Card) with an expiration date and a receipt showing that he/she has filed an application (NS Form I-90) for a Form I-55 “green card” are acceptable.
• Borrower has resided in the United States for the past two years.

• Borrower has been employed in the United States for the past two years.
• Where applicable, funds needed for closing must be verified from US assets.
302.3 Non-Permanent Resident Alien
Non-Permanent Resident Aliens are individuals who seek temporary entry to the United States for a specific purpose. Generally referred to as “non-immigrants,” examples of non-permanent resident aliens include foreign officials, students, international representatives, temporary workers and trainees, fiancée of a US citizen, and NATO officials.
A minimum time frame left on the visa is not required. However, if less than six months remains, a letter from the borrower verifying his or her intention to remain in the country and a copy of the approved application for the extension of the visa must be included in the file.
Non-permanent resident aliens are non-U.S. citizens who have no valid evidence of permanent residency but have valid visas and social security numbers. Acceptable visas are as follows:
• H-1, H-2A, H-3 (Temporary Worker)
• L-1 (Intra-Company Transferee)
• E-1 (Treaty Trader)
• G series (G-1, G-2, G-3, G-4) provided it does not include diplomatic immunity, TN NAFTA Worker’s Visa or TC NAFTA Worker’s Visa (Issued to Mexican or Canadian citizens for professional or business purposes under the terms of the North American Free Trade Agreement)
• Any other acceptable evidence of permanent residency issued by the INS
Credit Suisse requires the following:
• Two year verified work history in the United States, regardless of documentation type
• Employment must have a likelihood of continuance
• Two year residency in the United States
• Two year credit history in the United States (alternative credit is acceptable)
• Credit Score requirement or acceptable alternative credit for product chosen must be met (refer to Section 600.4 for alternative credit)
• Foreign documentation must satisfy the same basic standards for authenticity, accuracy, and completeness as does domestic documentation
• Foreign documentation must be translated to English by an acceptable source. Currency must also be translated to US dollars within a reasonable period prior to closing and documented by an acceptable source.
Refer to Product Matrices for eligibility requirements.
302.4 Foreign Nationals
Foreign Nationals are non-U.S. citizens who are not Permanent or Non- Permanent Resident Aliens and do not have full or partial diplomatic immunity. A Foreign National periodically visits the U.S. and uses the home for residency during those visits.

A determination of the Foreign National’s residency status for underwriting purposes may be made based on the circumstances of the individual case, using whatever documentation is deemed appropriate. Visas or other documentation must indicate that a borrower has legally entered the United States. A borrower who does not have a visa, as outlined above for Non-permanent Resident Alien, may be treated as a Non-permanent Resident Alien if work history and employment criteria are met as defined above. A visa is not the sole determinant of residency status for underwriting purposes.
Foreign Nationals must provide the following:
• Residency visa to visit or live in the U.S. for a limited amount of time. Eligible visas are: B-1, B-2, E-1, E-2, G1 through G5, I, J-1, J-2 and K-1.
• Copy of the borrower’s unexpired passport
• Proof of Social Security Number, Tax ID Number or filed Certificate of Foreign Status (IRS form W-8)
• A domestic Residential Mortgage Credit Report or Tri-Merged Credit Report is required. If sufficient credit is not available from this report, a foreign credit report may be obtained. When a Foreign National does not have a credit profile, documented evidence that an attempt was made to obtain a credit report must be contained in the loan file.
• Alternative Credit may be provided in the form of three (3) original bank reference letters from financial institutions in the borrower’s country of origin or one (1) original credit reference letter from a large internationally recognized banking institution.
• Twelve (12) months cancelled checks showing a maximum of 0x60 pay history over the past twelve (12) months for each alternative trade line is also acceptable.
• Alternative credit resources may also include: telephone bills, utility bills, cable television bills, insurance bills (if paid monthly), etc.
• Foreign documentation must satisfy the same basic standards for authenticity, accuracy, and completeness as does domestic documentation.
• Foreign documentation must be translated to English by an acceptable source. Currency must also be translated to US dollars within a reasonable period prior to closing and documented by an acceptable source.
• Escrows for real estate taxes are required, unless prohibited by state law.
• Foreign nationals are not eligible to close in trust.
• Credit Suisse will finance a maximum of one (1) property as the borrower’s second home.
Foreign National borrowers are eligible for Alt-A products only. Refer to Product Matrices for eligibility requirements.
302.5 Diplomatic Immunity
Borrowers who have diplomatic immunity are not eligible for any products offered by Credit Suisse.
302.6 Trust Estates
Trusts are legal instruments created by individuals and are commonly used as an estate planning tool. Trusts may assume many different forms, but these guidelines are limited to inter vivos revocable trusts (a.k.a. family trust, living

trust, or revocable living trust) which can serve as instruments of property ownership.
Additionally, on a case-by-case basis, title may be held in an Illinois Land Trust. The beneficiary must be an individual.
302.6a Underwriting Requirements
The following is required for inter vivos revocable trusts:
• The borrower and co-borrower(s) must qualify as individuals. Multiple individuals and one trust may be co-borrowers on the same loan. No more than one trust, however, may be on an individual loan.
• The trust must have been created by a written document during the lifetime of the individual creating the trust, and must have been effective during their lifetime. If the trust originally fulfilled this criteria but the creator is now deceased, the loan would still be acceptable to Credit Suisse if the trust was executed by the new, or successor, grantor/trustor/settlor.
• The individual establishing the trust must be the primary beneficiary. If the trust is created jointly by more than one person, there may be more than one primary beneficiary provided:
o Income or assets of at least one of the grantor/trustor/settlor will be used to qualify for the loan, and
o Individual occupies the subject property or owns it as an investment property and signs the loan documents.
• The trust document must name one or more trustees to hold legal title and manage the subject property.
o The trustee(s) must include an individual or at least one of the individuals, who created the trust, or
o The trustee(s) must include an institutional trustee that customarily performs trust functions and is empowered to act as trustee under applicable jurisdictional laws (such as the trust department of a commercial bank).
o The trustee(s) must have the authority to mortgage the property in trust for the purpose of securing a loan to the party/parties who is/are the “borrower(s).”
• Eligible properties include: 1-4 unit family residence, condominiums, and PUDs.
• Foreign Nationals are ineligible for closing in trust.
302.6b Copies of Trust
A full copy of the trust is not required. However, the borrower must furnish all relevant portions of the trust, as required by the title company, clearly stipulating:
• The identities of the grantor/trustor/settlor, beneficiaries, and trustee(s);
• Enumerated powers and authority of the trustee(s);
• That the property is held as part of the trust;
• That the trust is revocable; and
• That the trust was established and became operative during the lifetime of the original grantor/trustor/settlor.

302.6c Executing Loan Documents
The following documents are required for borrower execution of loans pledged by an inter vivos trust:
• Inter Vivos Revocable Trust Rider to the Deed of Trust (“DOT”)/Mortgage
• Inter Vivos Trust as Borrower Acknowledgment
• Inter Vivos Trust Signature Page Attachment
Given the diversity of potential parties to a trust (i.e. creator, trustee, beneficiary), the loan documents must be executed by all required parties and in a prescribed manner, per the following outline. (Note: No other documents need to be signed by the trust).
Loan documents for loans pledged by an inter vivos trust cannot be executed through the use of a power of attorney
Document
Signature Requirements
Note
• Each trustee as trustee of the trust, whether individual or corporate
• Each trustor whose income or assets were used to qualify for the loan, as an individual
• Each individual, not a trustee, whose income or assets were used to qualify for the loan
DOT/Mortgage and all other DOT/Mortgage Riders
• Each individual who has an interest in the property
Inter Vivos Revocable Trust Rider to the DOT/Security Agreement
• Each individual who has an interest in the property
• Each trustor whose income or assets were used to qualify for the loan, as an individual (shown as “Settlor” for the second signature block)
Inter Vivos Trust as Borrower Acknowledgement
• Each trustor whose income or assets were used to qualify for the loan, as an individual (shown as “Settlor”)
302.7 ITIN – Tax ID Number
Loans made to borrowers with a valid Individual Taxpayer Identification Number (“ITIN”) are eligible for purchase by Credit Suisse. ITINs are available for certain nonresident and resident aliens, their spouses, and dependents and are used only for federal income tax purposes. The ITIN is a nine (9) digit number, beginning with the number “9” and is formatted like a Social Security Number (NNN-NN-NNNN). Individuals with an ITIN do not have a Social Security Number. The issuance of an ITIN does not: a) entitle the recipient to Social Security benefits or the Earned Income Tax Credit (EITC), b) create an inference regarding the individual’s immigration status, or c) give the individual the right to work in the U.S.

Credit Suisse will purchase ITIN Borrowers’ loans provided the following criteria are met:
• Borrowers must provide evidence that they reside legally in the United States. Typically, the evidence would be in the form of an unexpired VISA.
• No late payments on housing history and no more than 1x30 on any other trade lines in the past twelve (12) months.
• If alternative credit is required, at least four (4) trade lines with a satisfactory twelve (12) month history.
• No secondary financing.
• Loans over 80% LTV require mortgage insurance,
Note: ITIN borrowers are not eligible for Prime A products.
303 Co-Borrower, Guarantors or Co-Signers
Credit Suisse requires the following for co-borrowers:
• Co-borrowers do not have to take title to the property. If income is to be used for qualification purposes, however, the co-borrower(s) must sign the Note at closing with applicable disclosures, but will not be required to sign the Mortgage. In this case, the co-borrower’s credit history, credit score, assets and liabilities must be fully considered in rendering a credit decision.
• Co-borrowers may not be an interested party (e.g. the property seller, the builder, or real estate broker) to the property sales transaction.
• Co-borrowers must sign the Mortgage in order to take title to the property.
• Co-borrower who takes title must sign any document required by law in order to take title.
In addition to the above requirements for a co-borrower, the following restrictions are applicable for different types of co-borrowers:
303.1 Non-Occupant Co-borrower
• Credit Suisse allows non-occupant co-borrowers. The non-occupant co- borrower does not need to be a family member; however, a proven established relationship between the borrowers must be evident.
• The occupant borrower(s) must qualify with maximum total debt-to-income ratios of ten (10) above the maximum ratios for the loan program. For example, if maximum allowable DTI is 50%, the occupant borrowers must qualify with total DTI of 60% or less; while all borrowers combined must qualify at 50% or less. Should the occupant borrower not meet this requirement, the loan will be considered an investment property for eligibility and pricing purposes.
• For LTVs of 80.01% - 95.0%, a down payment is required when there is a non-occupant co-borrower. The owner-occupant must contribute at least 5% of the purchase price from their own funds.
• If the LTV is less than or equal to 80%, the entire down payment may be in the form of a gift.
Note: See Section 603 of this chapter for additional information regarding borrower assets and source of funds.

303.2 Non-purchasing Spouse
A non-purchasing spouse is a borrower’s spouse whose credit and income is not considered for qualifying. A non-purchasing spouse may or may not be currently vested on title.
To perfect a lien under governing state law when a married applicant purchases a property without involving their spouse, Credit Suisse requires the spouse to sign the security instrument or other applicable documentation (e.g. Quit Claim Deed) to confirm they are relinquishing all rights to the property. As required by state jurisdiction, Credit Suisse will accept different state specific documentation provided Credit Suisse is guaranteed a lien position that is superior to that of the non-purchasing spouse. Dependent upon state requirements, the appropriate documentation may also have to be executed for refinances.
303.2a Community Property States
In community property states, as well as in some states with homestead laws such as Illinois, couples must both sign loan documents, even if not on title, to perfect the lien on the property. Currently, community property states are:
• Arizona
• New Mexico
• California
• Texas
• Idaho
• Washington
• Louisiana
• Wisconsin
• Nevada
303.2b Sole and Separate Property
In cases where a married individual obtains a loan as “sole and separate property” in a community property or homestead state, Credit Suisse requirements are as follows:
• The non-borrowing spouse (“Spouse”) MUST execute the security instrument (e.g. Mortgage, Deed of Trust, etc.)
• The following recitation above the Spouse’s signature is required: “The Undersigned enters into the execution of this document solely for the purpose of perfecting Note Holder’s security interest in subject property.”
• The Spouse MUST sign the Notice of Right to Cancel, TIL, and Section 32 disclosures.
• The Spouse does not need to execute the Note.
• If the Spouse executes a Quit Claim Deed, but the borrower and Spouse reside together in the property, the above requirements will not be waived. If the Quit Claim Deed signed by the Spouse was filed as part of a divorce settlement and the divorce decree stipulates that the borrower retains ownership and occupancy, certified copies of the Quit Claim Deed and the divorce decree will be allowed in lieu of the Spouse’s signature on the documents noted above.
303.2c Signature Requirements
The requirements governing which individuals execute specific legal documents depend on 1) title to property, 2) occupancy, and 3) income utilized.

• Every individual whose income is utilized to qualify for the loan must sign the Note and all loan and legal documents.
• Every individual on title must sign the Mortgage (security instrument) and Notice of Right to Cancel, Truth-in-Lending, and Section 32 Disclosures.
• If an individual resides in the property but is not on title and is not qualifying as a borrower, that individual does not need to sign any loan documents UNLESS he/she is the spouse of the borrower. See Section 303.2b above for requirements related to a non-borrowing spouse.

Signature Examples
NOTE
Mortgage, TIL, Section 32 and Right to Cancel
Community Property State
• Lucy owns the property sole and separate
• Husband Ricky is not on title. His income may or may not be used to quality
Lucy only
Ricky must sign note if his income is used for qualification purposes
Ricky and Lucy must execute the Mortgage and Disclosures.
Non-Community Property State
• Lucy owns the property sole and separate
• Husband Ricky is not on title. His income may or may not be used to quality
Lucy only
Ricky must sign note if his income is used for qualification purposes
Lucy must execute the Mortgage and Disclosures.
Credit Suisse prefers but does not require Ricky to execute any documents.
• Jerry and Elaine own the property and are not married
• They are tenants in common with each having 50% interest
• Jerry is the borrower and only his income is used to qualify
Jerry only
Jerry and Elaine must execute the Mortgage and Disclosures.
• Bob, Carol, Ted & Alice all own the property, each couple = HW/JT as to their undivided ½ interest, all as couple = HW/JT as to their undivided ½ interests, all as tenants in common.
• Bob & Carol are the borrowers and are the only occupants. Only their income is used to qualify.
Bob and Carol
Bob, Carol, Ted & Alice must execute the Mortgage and Disclosures as well as be on the title.
• Bob and Carol own the property
• Ted and Alice have no title interest but reside in the property. They will be co- signers on the note but have no ownership interest so their income is used to qualify. All four (4) borrowers reside in the property.
Bob, Carol, Ted and Alice
Bob and Carol must execute the Mortgage and Disclosures.
Credit Suisse prefers but does not require Ted and Alice to execute any documents.
• Lucy and Ricky are married, own and reside in the property, and both are qualifying.
Lucy and Ricky
Lucy and Ricky must execute all documents.
Sole and Separate (CA and AZ)
• Lucy and Ricky are married and Ricky is purchasing and designates the property to be “sole and separate.”
Ricky
Seller will execute a grant deed to Ricky as “a married man as his sole and separate property.”
Ricky
Lucy executes a Quit Claim Deed stating that she, as a “married woman, hereby quit claims to Ricky, a married man, as his sole and separate property.”

304 Non-Arms Length Transactions
A non-arms length transaction is defined as a personal or business relationship between the borrower(s) and/or any parties in the transaction. An arms length transaction occurs when the parties involved are entirely independent of one another. That is, all parties deal with one another as strangers. If a direct relationship exists between any of the parties to a transaction, including the borrower/buyer, seller (if applicable), employer, lender, broker or appraiser, then the transaction will be considered non-arms length.
304.1 Acceptable Non-Arms Length Transactions
Examples of acceptable non-arms length transactions include:
• Family sales or transfers (either with or without consideration)
• Corporate sales or transfers (from business to personal ownership)
• Borrowers employed in the real estate or construction trades who are not involved in the construction, financing, or sale (i.e. listing agent) of the subject property
• Borrower commission earnings on the subject property may not be used as funds for the mortgage transaction. LTV or CLTV need not be adjusted by commissions earned provided the earnings are in line with what is customary for the region.
Loans made to principals or employees of vendors or service providers (such as an appraiser, settlement agent, title company, etc.) cannot have these services directly or indirectly provided by such individuals on their own loan or property. National third party providers must provide all services including but not limited to the appraisal, the settlement, and the title search/commitment.
Credit Suisse loan products are eligible for acceptable non-arms length transactions. However, these transactions may require additional appraisal, income and asset documentation depending upon the Credit Suisse underwriter’s assessment of risk. In the case of a family transfer, a 12-month history of mortgage payments is required to ensure the loan is not a foreclosure bail-out. The down payment must be fully sourced and satisfactorily documented. The appraiser must address the affect the non-arms length transaction has on the market value of the subject property.
304.2 Unacceptable Non-Arms Length Transactions
Examples of unacceptable non-arms length transactions include, but are not limited to:
• Borrower(s) purchasing a property from a builder who, in turn, is purchasing the borrowers’ existing residence
• Refinance of a builder spec home where the builder is still the titled owner or the builder has a vested ownership interest in the property (i.e. owns the company that is titled owner of the subject property)
• Employer to employee sales or transfers
• Borrowers or co-borrowers employed in the real estate or construction trades who are involved in the construction, financing, or sale (i.e. listing agent) of the subject property

• Transactions that involve a principal or employee of a Credit Suisse Seller or the Seller’s vendor or other service provider (such as an appraiser, settlement agent, title company, etc.) who is involved in the lending process of the subject property. In the case of a Credit Suisse Seller, someone else in the same firm may take the application and process the loan for Credit Suisse consideration; however, caution must be exercised to ensure that the borrower has not had any influence on the loan process or the ultimate underwriting decision.
305 Number of Properties Financed
Credit Suisse will purchase a maximum of twelve (12) loans for a maximum of six (6) properties (two (2) loans per property – 1st and 2nd Lien combinations) made to a single borrower or borrower group. A total of eight (8) loans (1st and 2nd Lien combinations) from four (4) investor properties per borrower may be sold to Credit Suisse.
• Credit Suisse will consider the number of properties owned and the length of time that the properties have been owned. Loans where borrowers demonstrate a rapid acquisition of investment properties in the prior twenty four (24) months will be reviewed for factors to offset the additional risk associated with potentially limited investor experience.
• Credit Suisse reserves the right to limit the number of properties purchased within one building, within one neighborhood, and/or to one borrower.
• The appraisal may not include comparable sales from other properties owned by the borrower(s).
• Multiple loans to one borrower must be delivered concurrently for review by Credit Suisse.
Refer to Product Matrices for additional product specific limitations.
306 Occupancy
Occupancy of the property will determine the availability of loan products. There are generally three occupancy types as follows:
306.1 Primary Residence
A primary residence (owner occupied) is a one-to-four family property that is occupied by the borrower as a primary residence. At least one of the borrowers must occupy and take title to the property and execute the note and the mortgage. A property will also be classified as a primary residence if a parent wants to provide housing for a physically handicapped or developmentally disabled adult child who is unable to work.
306.2 Second Home
A second homes is a property suitable for year-round use that may or may not be occupied by the borrower from time-to-time, including vacation and non-vacation homes. A non-vacation home that is regularly occupied by the borrower, in addition to the primary residence, is considered a second home.
Note: 2-4 unit properties are not eligible for second home status.

306.3 Investment Property
An investment property (non-owner occupied) is owned, but not occupied, by the borrower that does not qualify as a second home.

C. Transaction/Loan Purpose
400 Purchase Transactions
Purchase money transactions include the following:
• A loan in which the proceeds are used to finance the purchase of the property.
• A mortgage transaction in which all of the proceeds are used to pay off an outstanding balance on an installment land contract, including any costs the borrower incurred for rehabilitation, renovation, or energy conservation improvements.
• A mortgage created by modifying an interim construction loan or term note into permanent financing if the borrower receives no cash-out from the settlement.
400.1 Lease/Purchase Options
A lease-purchase option is a contract for sale of property in which the purchaser leases the property for a prescribed period of time. During this period, an agreed upon percentage of the rental payment is held by the seller for use as the down payment on the property. Credit Suisse will consider these loans as follows:
• If the original agreement is less than twelve (12) months old at the time of application, the lower of the option price at the time of the contract or the appraised value will be used to calculate the LTV.
• If the original agreement is at least twelve (12) months old at the time of application, the current appraised value will be used to calculate the LTV.
• Copies of the cancelled rent checks are required to verify the length of the contract. The borrower’s rental payment history is required for the length of the contract and will be treated as a prior housing payment history.
• If the agreement specifies that rent credits are to be applied toward the down payment, Credit Suisse will consider this, provided the appraiser documents the fair market rent with a market rent survey (Form 1007 SFR Comparable Rent Schedule). The portion of rent that exceeds the market rent survey will be used to calculate the additional down payment. If a down payment was made, a copy of the cancelled check is required.
400.2 Land Contracts and Contract for Deed
A Land Contract or Contract for Deed is a contract in which the purchaser agrees to pay the seller specified amounts at defined intervals until the total purchase price is paid, at which time the seller transfers interest in the property to the purchaser.
Land contract transactions are acceptable to Credit Suisse within certain parameters:
• If the contract has been in place for less than twelve (12) months at the time of application, the transaction will be considered a purchase. The LTV ratio will be based on the lesser of the purchase price on the contract or the current appraised value.

• If the contract has been in place for twelve (12) months or more at the time of application, the transaction will be considered a refinance. The LTV ratio will be based on the current appraised value.
• The following document(s) are required for these transactions:
o A copy of the notarized land contract
o For a refinance transaction, copies of the most recent twelve (12) months cancelled checks must be provided
o For a cash-out refinance transaction, borrower must document improvements made to the property
o For a purchase transaction, the HUD-I Settlement Statement must show the transaction as a purchase and the borrower may not receive cash back
400.3 Construction-to-Permanent Loans
A construction-to-permanent loan may be handled as either a purchase or refinance. The entire loan file, however, must be consistent in the documentation for the chosen transaction type.
400.3a Purchase Loan Transaction Conditions
Purchase loan transactions must meet the following conditions:
• The borrower may not receive cash back
• The LTV will be based on the lower of the following:
o Appraised value as improved
o Builder contract price plus the cost of the land
o Builder contract price plus the market value of the land if owned for > twelve (12) months
o Construction/acquisition costs (with documentation) plus the cost of the land
400.3b Refinance Loan Transaction Conditions
Refinance loan transactions must meet the following conditions:
• A rate and term transaction must have the LTV based on the appraised value of the property at the time that the permanent loan is closed, regardless of the seasoning.
• The construction loan must be paid off as part of the closing.
• The construction contract is not required for rate/term refinances.
• Cash-out refinances are allowed provided that the acquisition costs are fully documented. The cash-out amount is limited to the dollar amount of amenities that have been paid in excess of the construction contract.
• The cost of construction must be documented by adding the amount shown on the construction contract plus amounts verified by receipts for borrower paid items. The overall cost must be supported by the final appraisal.
400.4 Inherited Properties
For properties acquired by inheritance (out of Probate) and the applicant has clear title, the LTV will be based on the current appraised value. All heirs must be paid through proceeds of the loan at closing. Proof of inheritance must be on file in the form of a will, final decree and or distribution of estate.

400.5 Subordinate Financing
Subordinate financing is allowed and must conform to the following guidelines:
• The CLTV is based on the sum of the unpaid principal balance of the first mortgage, the full line amount of any home equity lines of credit, and the unpaid principal balances of all other subordinate financing.
• The terms of the subordinate lien must be evident in the file.
• A copy of the commitment, if closing simultaneously, or the existing subordinate lien note must be included in the file.
• The subordinated lien must be a valid lien at a current market interest rate.
• The subordinated lien must be recorded and clearly subordinate to the new first mortgage or deed of trust.
• The repayment terms must provide for regular monthly payments of at least the amount of interest due (negative amortization is not acceptable).
• The repayment terms may not be subject to a temporary buydown.
• The subordinate lien may not be subject to wraparound terms.
• Subordinate financing terms must be disclosed to the appraiser.
• If the subordinate financing does not provide for level monthly payments, it may not have a maturity or balloon payment of less than five years.
• If the subordinate financing is subject to variable interest rates, the payments must remain constant for twelve (12)-month periods with maximum interest rate increases of 1% (this does not apply to HELOCs).
If there is a “Seller Carry Back” subordinate lien, the following requirements must be met in all cases:
• Credit Suisse must have a copy of the “seller carry back” note and security instrument in the loan package.
• The Contract of Sale and final HUD-I Settlement Statement must reflect the seller carry back, including both the amount and to whom the carry back is payable.
• The monthly payment must be equal to or greater than the monthly interest due, and the interest rate must be at a reasonable or market rate.
• Interest rates more than 2% below market rate will be treated as sales concessions.
• The minimum carry back term is five (5) years.
• All stated Credit Suisse subordinate lien requirements apply.
• The maximum allowed seller contribution is 2% of the purchase price.
401 Refinance
A refinance is a mortgage transaction on a property for which the borrower already has ownership. The proceeds of the loan closing are used for the repayment of an existing debt that has the same borrower and same security property, unless the property is owned free and clear of any liens. Swing, bridge, or gap loans that are short-term and are expected to be paid off rapidly are not eligible for purchase.
Credit Suisse purchases two types of refinance transactions:
• Rate/Term Refinance
• Cash-Out Refinance

401.1 Rate/Term Refinance
Rate/term refinances may include funds for any or all of the following:
• Payoff of the outstanding principal balance of an existing first mortgage,
• Payoff of the outstanding principal balance of any existing subordinate mortgage subject to the following:
o Only if used in whole to acquire the subject property – if new loan amount is within conforming loan amount limits, or
o Only if the lien is seasoned for at least one year as of the date of the new mortgage – if new loan balance is non-conforming.
• The financing of closing costs (including prepaid expenses), and
• Cash back to the borrower(s) in an amount not exceeding the lesser of 2% of the new mortgage balance or $2,000
Note: Any refinance transaction that does not meet the above definition will be considered a cash-out refinance.
401.2 Cash-Out Refinance
Cash-out refinances may include funds for any or all of the items listed in 301.1, with additional funds for the borrower subject to maximum cash back limitations indicated on the Product Matrices.
401.3 Texas Cash-Out Refinance
For the Alt-A product, Credit Suisse will purchase both fixed-rate mortgages and adjustable-rate mortgages that are originated as Texas Section 50(a)(6) mortgages. The Seller should reference the Fannie Mae Sellers Guide for all underwriting, closing and closing documentation guidelines.
Under Texas law, a new Texas Section 50(a)(6) mortgage is an equity take-out mortgage (a cash-out refinance transaction). An existing Texas Section 50(a)(6) mortgage may be refinanced as either a limited cash-out refinance transaction or a cash-out refinance transaction. However, under the provisions of the Texas Constitution, “once a Section 50(a)(6) mortgage, always a Section 50(a)(6) mortgage.” Therefore, once a borrower obtains a Texas Section 50(a)(6) mortgage (either a first lien or a subordinate lien), any subsequent refinancing of the homestead property will be subject to all of the provisions of Section 50(a)(6) if any of the proceeds are used to pay off the Section 50(a)(6) mortgage. This provision applies even if the borrower does not receive cash-out of the refinance proceeds.
Note, a Seller delivering a Texas Section 50(a)(6) mortgage to Credit Suisse must have a representation and warranty in their Mortgage Loan Purchase Agreement allowing for such loans and must be in compliance with such representation and warranty.
Restrictions in the Texas Constitution impose substantial additional legal risks and uncertainties that a lender does not face when it originates (and services) equity take-out mortgages in other states. For example, if any of the specific requirements that relate to Texas Section 50(a)(6) mortgages—such as limitations on fees charged to the borrower, disclosures to the borrower, matters to be addressed in the closing documents, etc.—are not satisfied, the lien may

be invalid. A Texas Section 50(a)(6) mortgage cannot be closed until after a twelve (12) day “cooling off” period in which the borrower is allowed to change his or her mind about obtaining the mortgage. This “cooling off” period runs from the later of the date of the loan application or the date that the borrower receives the required notice about the extension of credit. The borrower must also be allowed to rescind the loan (without incurring a penalty or charge) within three (3) days after the extension of credit is made.
402 Seasoning Requirements
Credit Suisse does not require a borrower to have owned the subject property for any specified amount of time prior to a refinance. Credit Suisse does, however, provide for seasoning requirements as it relates to the property value in the determination of the LTV/CLTV. The following criteria apply:
• Purchase transactions: The lesser of the purchase price or appraised value will be used to calculate the LTV/CLTV.
• Rate/Term Refinance transactions: The current appraised valued will be used.
• Cash-Out Refinance transactions:
o If the property has been owned < six (6) months, the lesser of the original purchase price plus documented improvements, if applicable (and warranted), and the current appraised value will be used to determine the LTV/CLTV.
• If the property has been owned > six (6) months, the current appraised value may be used to determine LTV/CLTV.
The appraisal should address appreciation in value.

D. Documentation Options
Credit Suisse is an industry leader in providing many loan documentation options to meet borrower needs. The different loan documentation processing options for use with the applicable Credit Suisse Mortgage Products are defined in this section.
500 Age of Documentation
500.1 Credit Documentation
Any documentation verifying credit, employment, income, mortgage/rent payments and/or assets that are used for qualifying the borrower(s) must be dated:
• Within 120 days of the loan closing, or
• For new construction, within 180 days of closing
If the documentation originally provided expires prior to closing, then updated documentation must be obtained prior to the closing.
Refer to Chapter 2 for HELOC requirements.
500.2 Appraisal Documentation
The original appraisal report(s) may not be older than twelve (12) months at loan closing. If the original report will be older than four (4) months at closing, whether the property is proposed, new or existing construction, a recertification of value from the original appraiser must be obtained.
Refer to Chapter 2 for HELOC requirements.
501 Acceptable Loan Documentation Types
The following documentation types are acceptable to Credit Suisse:
• Full Documentation
• Bank Statements/Full Documentation (HELOC only)
• Alternative Documentation
• Lite Documentation
• Bank Statements/Lite Documentation (HELOC only)
• Easy Documentation (HELOC only)
• No Income Verification (NIV/Stated Income)
• No Asset Verification (NAV/Stated Asset)
• No Ratio
• Stated Income/Stated Asset (Stated/Stated)
• No Income, No Asset (NINA)
• No Doc
Each loan must conform to the documentation requirements listed below.
Credit report and appraisal requirements do not change with the documentation types. See 500.1 above and Section G in this chapter for the credit report and appraisal requirements, respectively.

All documents must be legible originals containing no alterations, erasures, or “white-outs.” If the borrower provides documents and requests to have the originals returned, photocopies of the originals must be made by the originator and must be certified as “true and exact copy of the original document” by the originator. An original, signed certification from the originator encompassing all copies in the individual file will be acceptable.
All verification forms must be fully completed and signed by an authorized party to be acceptable.
Verbal Verifications of Employment (VVOE) should be completed within five (5) business days of closing for all documentation types where employment is disclosed. Evidence of the completed VVOE must be included in the file. The VVOE will document the following:
• Date of verification
• Status of borrower’s employment
• Name of employer representative verifying status of the borrower’s employment
• Source utilized to obtain contact information (e.g. directory assistance, phone book, etc.)
• Name and title of employee performing verification
Signed IRS form 4506T is required anytime the borrower provides tax returns to verify employment and income.
501.1 Full, Alternative and Lite Documentation Types
501.1a Full Documentation
Also known as “Full Doc”, these loans require the use of standard forms approved by Fannie Mae/Freddie Mac for verification of income, employment, assets and certain payment histories as follows:
• For purposes of verifying income and employment for salaried borrowers, a written Verification of Employment (VOE) is required and must document the most recent two years of the borrower’s employment.
• For purposes of verifying income for self-employed borrowers, the most recent two years tax returns (including all schedules) are required. These documents must be signed and dated by the borrowers.
• For purposes of verifying assets, a written Verification of Deposit (VOD), completed by the depository institution, should be provided. The VOD should detail holdings and the average balance held in all accounts for the most recent two months.
• In order to verify the borrower’s ability to manage housing debt, ONE of the following may be submitted:
o Verification of Mortgage (VOM) covering the most recent twelve (12) months history
o Verification of Rent (VOR) verifying most recent twelve (12) months history

o Copies of twelve (12) months cancelled checks (front and back) evidencing total obligation of mortgage or rental debt are required if the mortgagee or landlord is a relative or seller of the property.
o Residential Mortgage Credit Report (RMCR) or tri-merged in- file may be used to verify a mortgage payment history
o A Verbal Verification of Employment (VVOE) completed by the originator
501.1b Bank Statements/Full Documentation (HELOC only)
The Bank Statement/Full Documentation option is available for HELOC products. Twenty four (24) months of bank statements are utilized to support income:
• Income is calculated using the last twenty-four (24) month average of gross deposits from personal bank statements, or for self-employed borrowers, 75% of the last twenty-four (24) month average of gross deposits from business bank statements.
• For personal bank statements, the account must be solely in the name of the borrower(s). If additional names are on the statement, only a percentage of the deposits will be used.
• NSF checks, wire transfers, negative balances and different account transfers must be addressed. Transfers from another account should be deducted from deposits.
• Rental income reflected on bank statements should be “backed out” and calculated following the guidelines for rental income.
Verbal Verification of Employment (VVOE) verifying two (2) years of employment, prepared within five (5) days prior to closing is required. A VVOE should document the following:
• Date of verification
• Status of borrower’s employment
• Name of employer representative verifying employment status
• Name of title of lender’s employee performing verification
• Source utilized to obtain contact information (e.g. directory assistance, phone book, etc.)
• A signed 4506-T will be required on all loans utilizing pay stubs or tax returns to verify income
501.1c Alternative Documentation
Also known as “Alt Doc”, these loans are documented with alternative forms of standard verifications as follows:
• For purposes of verifying income and employment for salaried borrowers, the borrower’s pay stub covering the most recent thirty day period and reflecting year-to-date earnings (including bonus, overtime, tips, incentives, etc); AND
o Most recent two (2) years W-2s
OR
o Most recent two (2) years 1040s

• For purposes of verifying income for self-employed borrowers:
o Most recent two (2) years tax returns (including all schedules) are required. These documents must be signed and dated by the borrowers; OR
o For Schedule C (sole-proprietor) borrowers only, most recent twenty-four (24) months consecutive bank statements.
• For purposes of verifying assets, most recent two (2) months asset statements may be provided.
• In order to verify the borrower’s ability to manage housing debt, ONE of the following may be submitted:
o Verification of Mortgage (VOM) covering the most recent twelve (12) months history
o Verification of Rent (VOR) verifying the most recent twelve (12) months history
o Copies of 12 months cancelled checks (front and back) evidencing total obligation of mortgage or rental debt are required if the mortgagee or landlord is a relative or seller of the property
o Residential Mortgage Credit Report (RMCR) or tri-merged in-file may be used to verify a mortgage payment history
• A Verbal Verification of Employment (VVOE) completed by the originator.
501.1d Lite Documentation
Also known as “Lite Doc,” these loans are documented with alternative forms of verification identical to “Alt Doc” loans (see 501.1c above), except that the documentation period is limited to twelve (12) months.
501.1e Bank Statements Lite Documentation (HELOC only)
These loans are documented with bank statements with verification requirements identical to “Bank Statements/Full Documentation” loans (see 501.1b above), except that the documentation period is limited to twelve (12) months.
501.1f Easy Documentation (HELOC Only)
Easy income documentation, also known as “Easy Doc,” is defined as six months bank statements for W-2, self-employed, and 1099 borrowers.
Easy documentation income is calculated using 100% of average deposits over the most recent and consecutive six (6) months personal bank statements. All pages for each statement must be provided.
• Business demand/savings accounts are not acceptable.
• Bank statements with non-sufficient funds indicators are not eligible.
• All account holders must be borrowers. If funds are co-mingled with non-borrowers, a percentage of the deposits will be used. For example, if the borrower is one of two account holders, 50% of the average deposits will be used.
• Declining balances for the last four (4) months will disqualify borrower for this program.
• NSF checks, wire transfers and negative balances must be addressed
o Transfers from other accounts will be deducted from deposits

o Employment must be stated for two continuous years and will be verified with a Credit Suisse verbal verification
o Assets are verified by one (1) month Bank Statement
o The housing payment history is verified according to full or alternative documentation requirements
501.2 Reduced Documentation Types
Credit Suisse allows the Seller to streamline and/or waive the documentation requirements for processing loans through certain loan programs. Reduced documentation eliminates the need for income, employment, and/or asset verification as applicable under the various processing options.
Reduced Documentation options offered by Credit Suisse are available for those borrowers with complex income scenarios and with appropriate credit scores. These programs are not available under the following circumstances:
• Borrowers with fixed income - social security, pension, etc. are not eligible, except for No Asset Verification (Stated Asset)
• Borrowers who do not have credit/credit scores are not eligible
• Educational benefits (stipends, grants, loans) are not eligible sources of qualifying income
• If information regarding the borrower’s income is found in the file, Credit Suisse reserves the right to utilize that income verification to determine the loan’s eligibility for purchase.
The following Reduced Documentation options are available depending upon the mortgage product:
501.2a No Income Verification (NIV)
For No Income Verification, also known as “NIV,” the borrower’s qualifying ratios are calculated on the basis of the income as stated on the loan application. Income stated must be reasonable for the position.
• Employment must be stated for two (2) continuous years and should be verified with a verbal verification.
• Verification of a borrower’s self-employment for two (2) continuous years may include a copy of the business license, a copy of the yellow pages, or a letter from an accountant.
• Assets are verified according to full or alternative documentation requirements.
• The housing payment history is verified according to full or alternative documentation requirements.
501.2b No Asset Verification (NAV)
For No Asset verification, also known as “NAV,” the borrower’s assets needed for the down payment, closing costs, and reserves are calculated on the basis of the assets as stated on the loan application.

• Employment and income are verified according to full or alternative documentation requirements.
• Employment will be verified with a verbal verification. Verification of a borrower’s self-employment may include a copy of the business license, a copy of the yellow pages or a verbal verification using directory assistance.
501.2c No Ratio
This documentation option requires the borrower to complete the asset and employment sections of the loan application only. However, the application must still be complete with respect to liabilities, schedule of REO and all other required documentation. The borrower’s income must not be disclosed anywhere within the loan application or the credit file. A debt ratio (DTI), therefore, is not calculated and must not be included anywhere within the loan application or credit file. The transaction must be prudent for the borrower.
• Employment must be stated for two continuous years and should be verified with a verbal verification.
• Verification of a borrower’s self-employment for two continuous years may include a copy of the business license, a copy of the yellow pages, or a letter from an accountant.
• Assets are verified according to full or alternative documentation requirements.
501.2d Stated Income/Stated Assets (Stated/Stated)
This option does not require the verification of income or assets. The borrower’s qualifying ratios are calculated on the basis of the income as stated on the loan application. Income stated must be reasonable for the position.
• The borrower’s assets needed for the down payment, closing costs, and reserves are also calculated on the basis of the assets as stated on the loan application.
501.2e No Income/No Asset Disclosure
Also known as “NINA,” this option does not require the calculation of debt ratios (DTI). The borrower’s income and assets should not be disclosed anywhere within the loan application or the credit file. The application must

be complete with respect to liabilities, employment, schedule of REO, and all other required documentation. The credit decision relies heavily on the property appraisal. The transaction must be prudent for the borrower.
501.2f No Doc
This option is similar to the NINA option, as it does not require the calculation of debt ratios (DTI). The borrower’s income, employment and assets should not be disclosed anywhere within the loan application or the credit file. The application must be complete with respect to liabilities, schedule of REO, and all other required documentation. The credit decision relies heavily on the property appraisal. The transaction must be prudent for the borrower.

502 Documentation Table
Document Types
Wage-earner
Self-Employed
VVOE Required
Assets
See Product Matrices for product specific documentation requirements
Full Documentation (Full Doc)
VOE 2 years (not available for Sub-Prime)
Tax returns 2 years
Yes
VOD with 2 months average balance
Bank Statements (Full Doc) (HELOC Only)
Verified employment Bank Statements (24 months) Avg. 100% of Personal Deposits
Verified self-employment Bank Statements (24 months) Avg. 75% of Business Deposits
Yes
VOD with 2 months average balance
Alternative Documentation (Alt Doc)
Pay stub AND 2 years W-2s OR 2 years 1040s
Tax returns 2 years OR Bank statements (24 months) Schedule C filing only (75% of avg. personal deposits)
Yes
Bank statements for most recent (consecutive) 2 months
Lite Documentation (Lite Doc)
Stated employment for 2 yrs Pay stub AND 1 year W-2 OR 1 year 1040
Stated employment for 2 yrs
AND
Most recent year 1040
OR
Bank statements (12 months) Schedule C filing only (75% of avg. personal deposits)
Yes
Bank statement(s) for most recent 30 day period
Bank Statements (Lite Doc) (HELOC Only)
Stated employment 2 yrs Bank Statements (12 months) Avg. 100% of Personal Deposits
Stated self-employment 2 yrs Bank Statements (12 months) Avg. 75% of Business Deposits
Yes
Easy Documentation (Easy Doc) (HELOC Only)
Stated employment 2 yrs Bank Statements (6 months) Avg. 100% of Personal Deposits
Stated self-employment 2 yrs Bank Statements (6 months) Avg. 75% of Business Deposits
Yes
NIV (Stated income)
Stated employment 2 yrs AND Stated monthly income
Stated self-employment 2 yr AND Stated monthly income
Yes
VOD with 2 months average balance OR Bank statements for most recent (consecutive) 2 months
NAV (Stated assets)
VOE 2 yrs OR Pay stub AND 2 years W-2s OR 2 years 1040s
Tax returns 2 years OR Bank statements (24 months) Schedule C filing only (use 75% of average deposits)
Yes
Stated assets
No Ratio
Stated employment 2 yrs AND Income is not disclosed
Stated self-employment 2 yrs AND Income is not disclosed
Yes
VOD with 2 months average balance OR Bank statements for most recent (consecutive) 2 months
Stated/Stated
Stated employment 2 yrs AND Stated monthly income
Stated self-employment 2 yrs AND Stated monthly income
Yes
Stated assets
NINA (No income No assets)
Stated employment 2 yrs AND Income is not disclosed
Stated self-employment 2 yrs AND Income is not disclosed
Yes
Assets are not disclosed
No Doc
Employment not disclosed AND Income is not disclosed
Employment not disclosed AND Income is not disclosed
No
Assets are not disclosed
Signed IRS form 4506T is required anytime tax returns are used to verify employment and income

503 Fannie Mae Automated Decisions
503.1 Desktop Underwriter Guidelines: Conforming Loans
For the purpose of underwriting conforming loan amounts via an automated underwriting system, Credit Suisse currently recognizes Fannie Mae’s Desktop Underwriter (DU) and Freddie Mac’s Loan Prospector (LP). The decision and documentation requirements determined by DU or LP will be accepted provided that the data entered into the DU or LP system is accurate. All Sellers utilizing DU or LP must have received training and have been certified by the appropriate agency. Note: Documentation type codes reflected in the data provided to Credit Suisse by the Seller must be consistent with the documentation contained in the loan file. Credit Suisse may consider the purchase of loans, which were approved utilizing DU or LP, provided the following is the case:
• Underwriters reviewing loan package submissions for which a DU/LP response was indicated will ensure that the file contains the complete DU/LP decision output report, DU/LP generated application and DU/LP generated credit report
• Loans underwritten utilizing DU/LP require the underwriter to review the underwriting response received and its eligibility. Loans receiving a Fannie Mae “Approve/Eligible” decision or Freddie Mac “Accept” or “Accept Plus” response are eligible for purchase by Credit Suisse and will be underwritten by verifying the integrity of the data input into the DU/LP system. Also, the underwriter must verify that all DU/LP required conditions were obtained and properly documented in the file. In those cases when the integrity of the data inputted into DU/LP cannot be verified or when a “Refer/Eligible” response is received, then the loan may still be eligible for delivery to Credit Suisse, but must be underwritten to standard Credit Suisse guidelines. All risk factors identified by DU/LP must also be addressed and/or documented in the loan file.
• Loans underwritten utilizing DU/LP and for which an “Approve (or Accept)/Ineligible” response was received may be underwritten to the “Credit Suisse AU Underwriting Guidelines,” as set forth below (Automated Underwriting Guidelines: Non-Conforming Loans).
• “EA” responses not eligible.
• Appraisal waivers are not eligible.
• Reduced MI is not eligible.
503.2 Desktop Underwriter Guidelines: Non-Conforming Loans
For the purpose of underwriting non-conforming loan amounts via an automated underwriting system, Credit Suisse currently recognizes Fannie Mae’s Desktop Underwriter and Freddie Mac’s Loan Prospector. The decision and documentation requirements as determined by DU or LP will be accepted provided that the data entered into the DU or LP system is accurate. All Sellers utilizing an automated underwriting system must have received the appropriate training and have been certified by the appropriate agency. Additional Credit Suisse processing requirements relating to this section are as follows:

• AU Documentation: All loans must be submitted through Fannie Mae’s Desktop Underwriter (DU) or Freddie Mac’s Loan Prospector (LP). The DU/LP decision output report as well as the credit report and application that was utilized by DU/LP when making its decision must be included in the loan file. The Seller must provide adequate documentation to comply with the DU/LP requirements. Documentation type codes reflected in the data provided to Credit Suisse by the Seller must be consistent with the documentation contained in the loan file.
• Other Requirements:
Requirement
DU
LP
Required AU Decision
Approve/Ineligible
(Ineligible due to loan amount)
Accept or Accept Plus
Minimum FICO Score
Refer to Credit Suisse Product Matrix
Maximum DTI
Maximum Loan Amount
$650,000
$650,000
Appraisal Requirement
Full Appraisal (1004)
Full Appraisal (1004)
Eligible Property Types
1-4 Family, Condo, PUD
1-4 Family, Condo, PUD
Required Mortgage Insurance
See Section H
See Section H
• Appraisal waivers are not eligible.

E. Underwriting the Borrower
Credit Suisse has created guidelines for underwriting borrowers that it believes is prudent and sound for its current mortgage products. In underwriting the borrower, Credit Suisse will consider the borrower’s willingness to repay the debt, the borrower’s ability to repay the debt, and whether the property has sufficient security for the mortgage.
600 Credit Standards
Every loan submitted to Credit Suisse must have the appropriate credit documentation in order to evaluate the borrower’s creditworthiness and their ability and willingness to repay the loan.
600.1 Minimum Credit Profile
Alt-A products only: All borrowers must have a twelve (12)-month credit history documented in their credit report with a minimum of two (2) open trades that have been active for at least twelve (12) months. If the credit report does not meet these minimums, borrowers must meet the alternative credit history requirements shown below.
Prime A products only: All borrowers must have a twenty-four (24)-month credit history documented in their credit report with a minimum of two (2) open trades that have been active for at least twelve (12) months.
Loan amounts > $1 million require a minimum of five (5) open/active trade lines with at least three (3) having a forty-eight (48) month history.
Refer to Product Matrices for requirements related to all other products.
600.2 Credit Reports
The loan file must contain either a Residential Mortgage Credit Report (RMCR) or a tri-merged in-file credit report for each borrower from an independent credit vendor. In addition, the credit report and supplements must:
• For Alt-A products, contain a minimum of one (1) credit score resulting from the three credit repositories run for each borrower. All other products require a minimum of two (2) credit scores resulting from the three credit repositories run for each borrower.
• Include a thorough check and reporting of all available public records for each borrower.
600.3 Credit Scores
Credit or FICO scores are provided by Experian (Fair, Isaac Model Score), Trans Union (Empirica Score), and Equifax (Beacon Score) and will be utilized to help determine the credit risk of the borrowers.
Each borrower’s representative score is determined as follows:
• When two (2) scores are reported, the lower score is utilized.
• When three (3) scores are reported, the middle score is utilized.

o If two of the three scores reported are identical, one of the identical scores is utilized.
• If more than one Credit Score is supplied from the same repository, the first score will be used in all cases.
The representative credit score for the transaction can then be determined as follows:
• Each borrower’s representative score must meet the minimum score requirement for the selected product.
• Full, Alt, Lite, NAV, NIV and Stated/Stated Documentation: The primary income borrower’s representative score will be utilized. The primary income borrower is defined as the borrower who earns > 50% of qualifying income. If no borrower earns > 50% of the total qualifying income, the lowest representative score of all borrowers must be used.
o Note: For primary residences, the primary income borrower must be an occupant. If the occupant does not have > 50% of the total qualifying income, the lowest representative score of all borrowers will be utilized.
• No Ratio and NINA Documentation: The lowest representative score of all borrowers will be utilized.
600.4 Alternative Credit History (Alt-A products only)
If a borrower does not have at least one FICO score, resulting from requests to all three repositories (no scores), and/or does not meet the minimum credit profile (stated above), alternative credit histories may be utilized. In these cases, a minimum of three (3) alternative trade lines must be verified directly with the creditor, or with twelve (12) months consecutive canceled checks, showing a maximum of 0 x 60 payment history over the past twelve (12) months for each alternative trade line.
Alternative trade lines include: rent (as evidenced by a management VOR or twelve (12) months cancelled checks), telephone bills, gas and/or electric utility bills, cable television bills, auto insurance bills (if paid monthly), etc.
600.5 Credit Analysis
The following factors are among those taken into consideration by Credit Suisse in order to determine a borrower’s credit worthiness:
600.5a Housing Payment History
The housing payment history is based on the borrower’s current payments for his/her present residence. This may be owned or rented housing.
Allowances for mortgage and/or housing late payments are product specific.

600.5b Mortgage History
For borrowers who currently own their residence or investment properties, twelve (12) consecutive months of mortgage payment history is required. Acceptable verification of the most recent twelve (12) months payment history includes:
• A twelve (12) month rating stated on an RMCR or merged in-file credit report. The most recent twelve (12) months reported at the time of approval will be evaluated.
• A standard Verification of Mortgage (VOM) form completed by the holder of the mortgage.
• Copies (front & back) of twelve (12) consecutive months’ canceled mortgage payment checks.
• If a mortgage is held by a non-traditional third party, copies of canceled checks are required.
Note: Credit Suisse will consider all mortgage debt (owner occupied, investment, and second homes) in evaluating allowances for late payments.
600.5c Rental History
For borrowers that currently rent their residence, twelve (12) consecutive months of rental payment history is required. Acceptable rental verification would be any one of the following:
• A standard Verification of Rent (VOR) (Fannie Mae form or equivalent) completed by a representative of a professional management company.
• A rental letter written by the non-related landlord or the landlord’s agent which must include the rental payment status, payment amount, length of rental, and the name, address and telephone number of the landlord.
• Copies (front & back) of twelve (12) consecutive months’ canceled rent payment checks or bank statements. Canceled checks are the only acceptable form of rental verification where the landlord is the borrower’s relative, a private party or a party to the transaction.
• Direct rental verification provided by the credit bureau.
600.5d Payment Shock / No Housing Payment History
One of the strongest indicators of a borrower’s ability to pay is their past record of handling housing expenses. The current level of housing expense should be compared to the proposed obligation. This figure along with other indicative factors should be analyzed to determine the likelihood of the borrower to repay.
Borrowers that currently live rent free or with family members, including first time homebuyers, and do not have a recent twelve (12) month payment history will be considered as long as they have the appropriate additional and/or alternative credit history to verify their ability to meet their payment obligations.

600.5e Consumer Credit
Consumer credit is based on any revolving and/or installment debt payment histories. All revolving and consumer installment trade line payment histories, as rated on the borrower’s credit report, will be accepted as already factored into the borrower’s credit score for rating purposes.
600.5f Judgments and Liens, Collections, Charge-offs on Title
All judgments and liens appearing as a matter of record on title must be paid off and discharged prior to, or at closing.
600.5g Non-title Judgments and Liens, Collections, Charge-offs
All federal and/or state tax liens must be paid in full prior to or at closing, even if they are not listed on title. For Alt-A products, other judgments or liens not appearing on title and collection accounts or charge-offs may not be required to be paid off unless the borrower has shown a history of such derogatory credit or the accounts exceed $1,000 individually or in aggregate.
Refer to Product Matrices for product specific requirements.
600.5h Medical Collections and Charge-offs
Unless affecting title, the payoff of medical collection accounts and medical charge-offs will generally not be required.
Refer to Product Matrices for product specific requirements.
600.5i Bankruptcy
An applicant who has experienced a Chapter 7 or Chapter 13 bankruptcy will be considered for Credit Suisse financing. Bankruptcies must be discharged and proof of the discharge is required. The age of the bankruptcy will be calculated from the date of the Discharge.
Refer to the Product Matrices for product specific requirements.
600.5j Foreclosure/Deed in Lieu/120 day NOD
An applicant who has been named a defendant in a foreclosure proceeding (foreclosure notification, filing or completion) or who gave a deed in lieu of foreclosure on a previously owned property will be considered for Credit Suisse financing. A mortgage with a previous 120 day NOD must meet the same seasoning requirement as a previous foreclosure.
The seasoning of a foreclosure will be based on the completion date, which is calculated from the month and year of settlement, release, redemption or completion of sales.
Obligations associated with time share units is considered installment debt; thus a time share unit delinquency or foreclosure is not considered to be a mortgage delinquency or foreclosure.

600.5k Consumer Credit Counseling (CCC)
Alt-A, Prime A, and Second Liens Products
The following criteria apply for borrowers who are currently enrolled or who have participated in a CCC plan:
• For borrowers currently enrolled in CCC, a letter of explanation from the borrower and the counseling agreement are required to identify applicable debts.
• Borrowers who have entered CCC within the past twelve (12) months are not eligible.
• Borrowers who have entered CCC more than twelve (12) months prior to the application date, but less than twenty-four (24) months, are eligible for Full, Alt or Lite documentation types only.
• Borrowers not currently enrolled in CCC or who entered CCC over two (2) years prior to the application date are not restricted in any way. However, their CCC history should be considered as a layer of risk when determining the overall risk associated with a particular loan.
HELOC Products
The following criteria apply for borrowers who have participated in a CCC plan:
• Borrowers currently enrolled in CCC are not eligible.
• Plan has been paid as agreed and proof of completion is required. The CCC Plan must have been completed for at least three (3) years with re-established trades. The age of the CCC Plan will be calculated from the date of completion.
• Re-established trades must meet the minimum credit profile: borrower must have a twenty-four (24)-month credit history with a minimum of four (4) open trades (revolving or installment), open and active in the last twelve (12) months.
601 Liabilities
The debt-to-income (DTI) ratio is based on the total of the monthly liabilities divided by the calculated gross monthly income. The maximum allowable DTI ratios are stated on the Product Matrices. Liabilities include all housing expenses, revolving debts, installment debts, real estate loans, rent, stock pledges, alimony, child support, and other consistent and recurring expenses.
601.1 Housing Expenses
Housing expense consists of the amount the borrower will be paying to live in his or her primary residence after loan closing. In most cases this would include:
• Principal and interest – with qualifying interest rate determined as follows:

Type of Mortgage
Use
Fixed-rate, fully-amortizing
Note rate
Adjustable-rate, fully-amortizing with an initial adjustment period of more than one year
Note rate
Adjustable-rate, fully-amortizing with an initial adjustment period of one year
Maximum rate in effect following the first adjustment
6-month LIBOR uncapped Adjustable Rate
Greater of Note rate plus 2% or FIAR plus 2%
Interest Only loans
Determine the qualifying rate and use the interest portion only
• Property taxes (expressed monthly and including all special tax assessments)
• Hazard insurance
• Flood insurance
• Mortgage insurance
• Association dues or maintenance fees
• Principal and interest payments on junior liens/senior liens, as applicable
In some instances, however, the housing payment may not be the PITI of the subject property. In those cases where the subject loan is for a second home or investment property, the primary residence housing expense is used to calculate the housing ratio.
601.2 Installment Debt
Consumer installment debt accounts are loans that have fixed payment amounts and terms. Installment debts appearing on the credit report or those verified directly with the creditor are to be included in the calculation of the total debt-to- income ratio.
If the payment shown on the credit report is disputed, evidence of a lower payment may be obtained via direct verification with the creditor, or with acceptable documentation provided by the borrower.
If the scheduled payment is not shown, the high credit is divided by the listed term to determine the payment. Alternatively, a credit supplement may be obtained to verify the payment.
Installment debts, where the term of debt will be ten (10) months or less at closing, will not be considered in the debt-to-income ratio. It is also acceptable to “pay down” the debt enough to cause the term to be ten months or less.
Auto lease payments are included in the debt-to-income ratio regardless of the remaining months indicated on the credit report.
601.3 Revolving Debt and HELOCs
601.3a Revolving Debt

Revolving debt accounts have variable payments and no fixed term. The payment listed on the credit report is used to calculate the total debt-to- income ratio.
• If no payment is listed, 3% of the balance listed must be used to calculate the debt ratio unless statements can be provided to show a lower payment. Alternatively, a credit supplement may be obtained to verify the payment.
• Revolving debt payments are included in the debt-to-income ratio regardless of the remaining months indicated on the credit report. Revolving debt may be paid off to qualify, but may not be paid down to qualify.
601.3b HELOCs
Home Equity Lines of Credit (HELOC) accounts have variable payments.
• For qualification purposes and inclusion in the debt-to-income ratio, the monthly payment on an existing HELOC should be calculated using 0.75% of the total line amount for any HELOC still in the draw period. If the draw period has expired, the monthly payment should be calculated using the higher of the stated monthly payment or 0.75% of the outstanding balance on the line. The HELOC may be excluded from the debt ratio calculation if the balance is zero and the line is frozen to future advances.
• HELOC payments must be included in the debt ratio calculation regardless of the remaining number of months in the term. HELOCs may be paid off in order to qualify, but they may not be paid down unless the draw period has expired.
601.4 Other Real Estate
Real estate debt for investment properties that is not offset by calculations of net rental income will be counted as monthly debt.
If a property is owned free and clear, the current real estate taxes, hazard insurance premiums and HOA fees must be included in the applicant’s monthly expenses. The applicant must supply a copy of the homeowners insurance policy declaration page to evidence the property is free and clear.
If a property is vacant and there is no verifiable income or history, the full principal, interest, taxes, hazard insurance, mortgage insurance and homeowners association dues will be counted as part of the total monthly debt. If a signed lease is available, income per the lease may be utilized.
601.5 Bridge Loans
Bridge loans are used by borrowers if their current residence will not be sold before the subject loan’s closing and funds from the sale are needed. The bridge loan debt will not be counted in the borrower’s total debt-to-income ratio if it is to be used towards the down payment and/or settlement charges for the purchase of the subject property and ALL of the following criteria are met:

• A valid, unexpired multiple listing agreement with a licensed Realtor on the prior residence with a remaining term of at least three months must be submitted.
• The borrower’s prior residence must currently be under agreement to be sold.
• A copy of the sales contract must be submitted with the borrower’s loan application.
In the case of employer-assisted transactions where the employer pledges to pay or reimburse the applicant for payments on the bridge loan, the above two items should be met. If these are not met, the underwriter must analyze the terms of the employer’s agreement to determine whether the bridge loan payment may be excluded from the applicant’s total monthly debt.
601.6 Business Debt
Business debt which has been personally guaranteed by the borrower must be included in the total debts for qualifying purposes. The business debt may be excluded from the borrower’s obligation if all of the following criteria are met:
• The account does not have a history of delinquent payments.
• Six (6) months canceled checks are required to show that the obligation is paid from company funds.
• Cash flow analysis of the business verifies payment of the obligation by the business.
601.7 Other Debts
There are several other debts that may not appear on a standard credit report, but should be included in the total debts for qualification. These debts may include the following:
• Secured Loans through payroll deductions
• Co-Signed Obligations
• Alimony and Child Support
• Student Loans, unless deferred for at least twelve (12) months
• Wage Garnishments
Documentation to verify these debts should be obtained. If the payments are to be excluded, documentation to support the exclusion must be in the file. When the account in question has a history of delinquency, the full monthly obligation must be considered as part of the borrower’s individual recurring monthly obligations.

602 Employment and Income
For loans where the income and/or employment are being verified, the Seller must carefully evaluate each borrower’s employment and income stability and continuity. Income may come from many different sources, although salary and wage income is the easiest to determine and verify. Income from most other sources can be considered as qualifying income as long as it is properly documented.
Income Sources
Employment
Self- employed
Fixed
Other
Bonus
●
Overtime
●
Commission
●
Family Employers
●
Clergy
●
Car Allowance
●
Second Jobs
●
Military Pay
●
Subsidized Income
●
Raises
●
Sole Proprietor
●
Partnership
●
Corporation
●
"S" Corporation
●
Retirement Income
●
Social Security Income
●
VA Income Benefits
●
Non-Taxable Income
●
Foster Care Income
●
Rental Income
●
Installment Sales and Land Contracts
●
Alimony, Child support and Maintenance
●
Note Receivable Income
●
Interest and Dividends
●
Trust Income
●
Unemployment and State or Agency Benefits
●
Foreign Source
●
602.1 Employment Income
Stable monthly income may be income from primary and secondary employment, including base earnings plus recognizable secondary income, such as bonuses, commissions, overtime, or additional part-time employment. Required

Credit Suisse sellers guide (secondary market) August 2006

Credit Suisse sellers guide (secondary market) August 2006

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Credit Suisse sellers guide (secondary market) August 2006