WHOLESALE EDITION - Nov 2013

FNMA HomeStyle Steps to Success

Step One- Program Education

Register for classes at M&T University

Review Program Product Pages and M&T Agency Underwriting and Eligibility Standards on M&T website

Identify Marketing Needs

Step Two- Educate your Business Partners and Consumers

Educate Realtors on how the product works and what the process is

Educate Consumers on the renovation process using the Renovation Loan Step-By-Step Guide

Contract should be contingent upon loan approval

Seller should allow access to the property for the inspectors, contractors, and/or consultant who will be estimating the remodeling of the

property

Encourage the borrower to write up a wish list of repairs to discuss with contractor before meeting at property

Set expectations- Renovation loans take between 45-60 days to close

Step Three- Originate the loan and Submit to M&T Bank

Take the loan application once the borrower has all their contractor bids. Remember to use the Maximum Mortgage Worksheet to

calculate the loan amount.

Register the loan with M&T Bank through our website www.mtbwholesale.com. Email nationalwholesale@mtb.com the GFE, the GFE

Cost Breakdown and Intent to Proceed (Forms 300.04c), and Max Mortgage Worksheet. You can email these documents to your AE or

SSR prior to disclosure to the borrower and our Registration Dept. to ensure compliance.

To expedite the delivery of the TIL to the borrower, include their email address so the borrower can acknowledge receipt electronically.

Remember, no fees should be collected prior to the M&T Bank disclosure of the TIL, this includes the FHA Consultant and Appraisal

Management Company.

If the loan is a Standard HomeStyle loan, contact an FHA Consultant to provide the Specification of Repairs. If the consultant identifies

additional repairs to be performed, have the contractor add this work to their bid. All final numbers should match. If the renovation

costs change, make sure the HomeStyle Max Mortgage Worksheet is updated and a Change of Circumstance is completed and sent to

AlbanyConditions@mtb.com within 24 hrs of receiving the information.

Order the appraisal through Streetlinks or Solidifi

www.solidifi.com use referral code MTBROKER

www.streetlinks.com/brokersignup/MandT_Bank

File may be submitted to M&T once the appraisal report is completed. Use the attached Renovation Checklist (Form 2019) and provide

information for all bulleted items (♦) under the Ready/Not Ready column.

Email the file to Albanywholesale@mtb.com. There is a max of 20 MB per email so you may have to break down the loan file into several

separate emails. Reference the borrower’s name and loan number on the subject line of each email.

Findings must be run through DO and finalized to M&T East Coast.

Step Four- Clearing Conditions & Preparing for Close

Conditions will be emailed to the broker and listed on our website.

Please send all conditions at one time to AlbanyConditions@mtb.com

Once the loan is approved, the rate can no longer be locked online. To lock in or extend a rate, email NationalWholesale@mtb.com

When the file has been cleared for close, M&T will ask you to schedule the loan for closing by emailing AlbanyClosings@mtb.com. The

Closing Dept. requires 72 hours scheduling notice once the file is cleared to close and the actual closing is subject to TILA directives.

Once the file is scheduled, email the completed M&T Bank Closing Scheduling Form with the borrower’s Hazard Insurance Dec page and

paid in full receipt to our closing dept.

Step Five- Renovation begins for the borrower

The borrower will receive a Welcome Kit and call from M&T Bank within 5 days of closing.

The project must begin within 30 days of close and must be completed within 6 month of their close date.

The borrower will work with the M&T Draw Dept for progress inspections and draw disbursements. Funds will be disbursed as a 2-party

check made payable to both the borrower and contractor- mailed to the borrower.

What Type of HomeStyle Loan does my Borrower Need?

M&T HomeStyle- Standard M&T HomeStyle- Streamline

Repair Amounts

No Minimum; max reno costs can be as much as 50% of the as-completed value (this amt. represents the cost of repairs only (contractor estimates for labor/material) and should NOT include any contingency reserves, fees etc. Line C-1a of the

HomeStyle MMWS cannot exceed 50% of the as-

completed appraised value)

No minimum; maximum rehabilitation amount is $35,000 including any contingency reserves, fees, etc. as well as cash paid out of pocket. (Line C2 of the HomeStyle MMW cannot exceed $35,000), and Line C-1a cannot exceed 50% of the as-

completed appraised value)

Repair Types

Structural and non-structural. Non-structural.

Landscaping or site amenities. Landscaping or site amenities.

No outbuildings. No outbuildings.

Plan Review / Specification of Repairs

All work must be performed by a Qualified contractor (must be licensed if applicable).

All work must be performed by a Qualified contractor (must be licensed if applicable).

Plans and specs, if applicable, must be prepared by a qualified, licensed general contractor, renovation consultant or architect.

Plans and specs, if applicable, must be prepared by a qualified, licensed or general contractor, renovation consultant or architect.

For renovation amounts of $35,000 or greater, a plan reviewer is required. A plan reviewer is defined as a HUD consultant, a renovation consultant or architect with equivalent experience.

Contingency Reserve

10% minimum required. 10% minimum required.

If Consultant quotes > 15%, the higher amount must be used.

15% required if utilities not on or if property is vacant.

Unused contingency funds must be applied to reduce the balance of the mortgage unless the contingency reserve was provided from the borrower’s own funds.

Unused contingency funds must be applied to reduce the balance of the mortgage unless the contingency reserve was provided from the borrower’s own funds.

Draw Disbursements

Appraiser / Consultant inspects property and identifies the percentage of work complete to date. (Appraiser may inspect for repairs < = $35,000)

Appraiser inspects property and identifies the percentage of work complete to date.

Maximum 5 draws. Maximum 2 draws.

10% holdback on each disbursement. 10% holdback on each disbursement.

Checks cut in contractor and borrower’s names.

No draws are permitted without an inspection

Checks cut in contractor and borrower’s names

No draws are permitted without an inspection

Inspections and Title Updates

Inspections are required prior to each disbursement.

Inspections are required prior to each disbursement.

Two bringdowns performed: one at 50% of renovation dollars advanced and one at final draw

Two bringdowns performed: one at 50% of renovation dollars advanced and one at final draw

Mortgage Payment Reserve

Up to 6 months of PITI can be financed, if the home is not habitable during renovation.

Borrower must move into property within 30 days of closing. Mortgage payments may not be escrowed.

Project Conversions

Not allowed Not allowed

Partially Completed Projects

M&T will consider disaster-area properties that need finish funds or those that require raising of foundations to increase elevation due to flood zone

Not allowed

Consultant Fees (Required on the Standard HomeStyle product) The easiest way to find a qualified consultant is to use the same list provided by HUD for the FHA 203k program. Finding a Consultant (if applicable):

• Go to HUD’s website at www.hud.gov. • Go to the Search option (top right corner), search for Inspector. • Pick the option for 203(k) Consultant. • Select the appropriate state.

It is highly recommended that a Consultant is used when originating a HomeStyle mortgage to ensure the work write-up and estimates are adequate The Consultant must inspect the property and may also act as a home inspector for the borrower. Consultant, Architectural and Engineering fees are not restricted as long as they are customary and reasonable for the type of repairs. Consultants typically charge the borrower based on the amount of renovation work being performed.

Consultant Fee Estimates:

<$7,500 $400 $7,501-$15,000 $500 $15,001-$30,000 $600 $30,001-$50,000 $700

$50,001-$75,000 $800 $75,001-$100,000 $900 $100,001+ $1,000

NOTE: If the borrower wishes to have the Consultant complete a feasibility study prior to submitting a sales contract to a seller, an additional fee may apply.

Best Practices to Follow When Originating a Renovation Loan:

1. Contractor estimates must be on business letterhead, be legible, and include all labor and material required to complete

the job. Borrowers and contractors will have to sign and date.

2. For each contractor, in addition to the estimate, we require:

a. Homeowner/Contractor Agreement

b. Contractor License covering the type of work being performed ( if applicable)

c. General Liability Insurance (a minimum of 1 million dollars)

d. Contractor Resume fully completed with 3 residential references

e. For a Standard HomeStyle loan, the contractor should also sign the Recap page of the Specification of Repairs

3. Self- Help is not permitted

4. Be aware of the contingency reserve requirements. Unused contingency funds must be applied to reduce the balance of the

mortgage unless the contingency reserve was provided from the borrower’s own funds.

5. FNMA does not allow up-front money to be disbursed on the HomeStyle program.

6. A 10% holdback will be retained on each disbursement

7. The FNMA HomeStyle limits the amount of repairs to 50% of the future appraised value. (This amt. represents the cost of

repairs only (contractor estimates for labor/material) and should NOT include any contingency reserves, fees etc.

(Line C-1a of the HomeStyle MMWS cannot exceed 50% of the as-completed appraised value)

8. Condo’s and PUD’s must be FNMA eligible and repairs may only be performed on the interior of a condo unit

9. Complete the HomeStyle Max Mortgage Worksheet prior to completing the GFE.

a. Be sure to include all necessary fees: Inspection Fees, Consultant Fee, Permit Fee, Draw Administration Fee $500,

and Architectural and Engineering Fees

b. The amount of Rehab and the contingency reserve do NOT belong as line items on the GFE, they should only

appear on the Max Mortgage Worksheet.

GFE Fees Box 1 • M&T Origination charge $800.00 • Include your broker compensation • Draw Admin. charge $500.00 (Line C1i of the HomeStyle MMWS) • The cost of title bringdowns are absorbed by M&T. As a result, the cost of the bringdowns must NOT be quoted on the GFE or the Max Mortgage Worksheet. Box 2 • Buydown funds or loan discount points • Interest rate related credit to borrower in Box 2, Block 2

Box 3 • HomeStyle Inspection Fees (Line C1e of the MMWS)* • Appraisal Fee • Flood Certification $8.00 • Building Permits (Line C1g of the MMWS)* • Tax Service Fee $75.00 Box 4 • Title Insurance • Judgment Search • Title Exam Fee • Abstract Title Search • Settlement Agent/Closing Attorney • Closing Protection Letter • Title Insurance Binder

Box 5 • Owner’s Title Insurance Box 6 • Consultant Fees, if applicable (Line C1d of the MMWS) • Architectural and Engineering Fees (Line C1c of the MMWS) • Plan Review Fee • Survey • Pest/Well/Septic/Water Purity • Mtg Payments escrowed if uninhabitable. (Line C1h of the MMWS)

Note: Contingency Reserve and Repair Costs do not show as a line item on the GFE

Forms

General M&T Forms:

GFE Cost Breakdown and Intent to Proceed [Form 300.03c]

Renovation Checklist [Form 2019]

Anti-Steering Disclosure [Form 1801 or from your LOS]

GFE Acceptance Certification [Form 300.04b]

Loan Submission Contact Information [search by name]

Broker Certification of Fees Collected [Form 3111]

M&T Fee Sheet [Form 2739] HomeStyle Specific Forms:

HomeStyle Maximum Mortgage Worksheet [Form 2609]

Homeowner Contractor Agreement [Form 2101]

Rehab Permit Certification [Form 8000]

HomeStyle Borrowers Acknowledgement [Form 2600]

HomeStyle Renovation Consumer Tips [Form 2602]

Documents each contractor will provide: o Cost Estimates for each contractor on their letterhead. Must be signed and dated by borrower and contractor. o Contractor License (as required per state and local requirements) o Contractor Liability Insurance o Contractor Resume [Form 2605]

Documents the Consultant would provide on a Standard HomeStyle loan

o Specification of Repairs/Work Write-Up [Fully Executed/All Pages] o Draw Request [HUD9746-A]

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RENOVATION LOAN CHECKLIST

REQUIRED DOCUMENTS FOR ALL FILES

LEFT SIDE OF FILE

1 ♦ FHA Transmittal [HUD92900-LT] *or* Uniform Transmittal [FNMA HomeStyle/Sonyma Rebuild - FNMA1008]

2 LDP/GSA Print Out [ALL LOANS: Borrowers/Sellers/LO/Realtor/Broker Company/Appraiser]

3 Core Logic/Loan Safe

4 ♦ AUS Findings [DU/LP]

5 Final Application [FNMA1003] and HUD Addendum to Application [HUD92900-A] (M&T to Issue)

6 ♦ Cover Letter for Mail and Telephone Applications [NYS Only]

7 ♦ Initial fully executed and signed Application [FNMA1003]

8 ♦ Initial fully executed and signed HUD Addendum to Application [HUD92900-A]

9 ♦ Credit Report [Dated within 90 days of submission to Underwriting]

10 Credit Explanations / Supporting Credit Documentation

11 ♦ Divorce Decree / Separation Agreement [if applicable]

12 ♦ Bankruptcy Papers [if applicable]

13 VOM/VOR/Canceled Checks/12mHELOC History

14 VOE

15 "Other" type of Income Docs

16 ♦ Paystubs [covering 30 day period]

17 ♦ W-2 Statements [most recent 2 years]

18 ♦ Federal Tax Returns [Signed/Dated; Only Required for 2 Years for Self-Employed & Rental Properties]

19 Tax Return Transcripts [ID Check Direct/M&T Function]

20 ♦ Bank Statements [most recent months/all pages/sufficient cash to close/explain & document all large deposits]

21 ♦ Sales Contract w/All Addendums [Fully executed/Initialed]

22 FHA Amendatory Clause/RE Cert [a/k/a All Parties Agreement]

23 ♦ HUD REO ONLY: Property Condition Report

24 ♦ HUD REO ONLY: Lead Paint Addendum/Assessment Report

25 FHA Conditional Commitment [HUD92800.5b] - Completed by Underwriter

26 AVM Reconciliation

27 Property Inspections [Pest/Final Compliance Inspection, etc.]

28 ♦ Appraisal [Kirchmeyer or Streetlinks Order]

29 ♦ HUD REO ONLY: M&M Appraisal

30 ♦ Foreclosure Deed [for Property Flipping]

31 FHA Connection: Appraisal Logging [M&T to issue]

32 Condo/PUD Questionnaire

33 FHA New Construction: Builder's Certification of Plans, Specs & Site [HUD92541]

34 Escrow Holdbacks Only: Mortgagors Assurance of Completion [HUD92300]

35 Repair Conditions Documentation [Escrow Holdbacks]

Checklist Pg 1 of 4

Responsible Party

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RENOVATION LOAN CHECKLIST

REQUIRED DOCUMENTS FOR ALL FILES

RIGHT SIDE OF FILE

36 ♦ Loan Submission Contact Sheet [from "How to do Business with M&T Packet"] - Wholesale Transactions Only

37 Wholesale Receipt of Application Acknowledgement & File Tracking Form [Wholesale Transaction Only – Internal Operational Form]

38 ♦ Here's the Story [Retail Transactions Only]

39 Closing Agent Notification Form/Wiring/Closing Info [M&T Closer and Settlement Agent to complete]

40 P1 Checklist [Retail Transactions]

41 Clear to Close Checklist [Retail Transactions]

42 Clear to Close Confirmation [include any Quality Control Reviews]

43 HIGH COST ONLY: PCI Results

44 Broker Fee Sheet [MT4593] - Wholesale Transactions Only

45 Invoices to be Paid at Closing

46 Prelim HUD-1 Settlement Statement

47 Current Payoff Letter

48 Power of Attorney

49 ♦ 4506-T [Fully Executed]

50 Commitment Letter/Approval Certificate (M&T Issued)

51 10 Day Letter or Pend Notices (M&T Issued)

52 ♦ 203K Maximum Mortgage Worksheet [Required on 203(k) Transactions]

53 ♦ Fannie Mae HomeStyle Maximum Mortgage Worksheet [Required on HomStyle Transactions]

54 Rehab Permit Certification [Form 8000]

55 FULL 203K: Consultant Agreement / Consultant Invoice(s)

56 FULL 203K: Consultant Identity of Interest

57 ♦ FULL 203K or FULL HomeStyle: Specification of Repairs/Work Write-Up [Fully Executed/All Pages]

58 M&T Contractor Acceptance Checklist [MT Exh 03-099]

59 FHA 203K Homeowner Contractor Agreement [Form 2420] OR HomeStyle Homeowner Contractor Agreement [Form2101] [Fully Executed/One for each Contractor]

60 ♦ Cost Estimates

61 Contractor License [for each Contractor]

62 Contractor Liability Insurance [for each Contractor]

63 Contractor Resume [for each Contractor]

64 Contractor Research [M&T Issued/Nexis search/Supporting Docs]

65 203K Borrowers Acknowledgment [HUD92700-A] OR HomeStyle Borrowers Acknowledgement [Form 2600]

66 ♦ 203K Borrower Identity of Interest Form [Fully Executed]

67 HomeStyle Renovation Consumer Tips [Form 2602]

68 Draw Request [HUD9746-A]

69 Closing Protection Letter

70 Preliminary Title Policy

71 Flood Certification

72 Hazard Insurance and/or Flood Insurance

Responsible Party

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RENOVATION LOAN CHECKLIST

REQUIRED DOCUMENTS FOR ALL FILES

73 Special Flood Hazard Determination Disclosure

74 Registration/Lock/Extension Confirmations

75 ♦ Authorization to Release Mortgage Information - [Retail Transactions Only]

76 ♦ Broker Certification of Fees Collected Form [MT3111] - Wholesale Transactions Only

77 FHA: Case Number Assignment / Refi Authorization

78 FHA: CAIVRS - All Borrowers

79 ACH Information Form (if applicable) [Retail Transactions Only]

80 ♦ Required Fees Collected/Fee Authorization Form [Retail Transactions Only]

81 ♦

Change of Circumstance/Revised GFE(s) in the order of disclosure [Most recent on top] Retail Transactions - Changed Circumstance Worksheets and Changed Circumstance GFEs are completed by mortgage operations. Wholesale Transactions - The broker is responsible for the completion of the changed circumstance worksheet and changed circumstance GFE for changed circumstances that occur prior to the submission of the loan to M&T. Any changed circumstances GFEs that are issued by the broker between the time of registration and submission must be included in the submission package. M&T is responsible for the completion of the changed circumstance worksheet and changed circumstance GFE for changed circumstances that occur once the loan is in M&T's possession.

82 ♦ Good Faith Estimate Accepted by Registration

83 ♦ Breakdown of Box 1 and 4 of Title Fees [Retail Transactions Only]

84 ♦ Good Faith Estimate Cost Breakdown and Intent to Proceed - [Wholesale Transactions Only]

85 ♦ Good Faith Estimate Acceptance Certification Form

86 ♦ Settlement Service Provider Disclosures

87 ♦ LSS Affiliated Business Arrangement Disclosure [Retail Transaction Only - if applicable]

88 ♦ Broker Fee Agreement [Wholesale Transactions Only]

89 ♦ Anti-Steering Disclosure [Wholesale Transactions Only]

90 Truth In Lending(s) Issued by M&T or Table Funded Broker in order of issuance [Most recent should always be on top]

91 ♦

M&T Servicing Transfer Disclosure [MT2240] Retail Transactions - This document must be submitted with a "ready" package. Wholesale Transactions - This document is issued by M&T Mortgage Operations within 3 business days of receiving the submission package.

92 M&T Right to Receive an Appraisal Disclosure [Wholesale Transactions Only]

93 M&T Lock In Disclosure in CT (Floating/Lock) [Wholesale Transactions Only]

94 ♦ Lock-in or Floating Rate Agreement/Disclosure [Retail Transactions Only]

95 BROKER: Servicing Transfer Disclosure [Table Funded Wholesale Transactions Only]

96 BROKER: Right to Receive an Appraisal Disclosure [Table Funded Wholesale Transactions Only]

97 Photo Id / Social Security Card

98 ECOA Disclosure [Wholesale Transactions Only]

99 Patriot Act Disclosure [Wholesale Transactions Only]

100 Notice to Home Loan Applicant AND FACTA Disclosure [Delivered to borrower by Credit Bureau when M&T orders credit]

101 NYS Credit Report Disclosure

102 Risk Based Pricing Disclosure [Delivered to borrower by Credit Bureau when M&T orders credit]

Responsible Party

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RENOVATION LOAN CHECKLIST

REQUIRED DOCUMENTS FOR ALL FILES

103 ARM Disclosure (if applicable)

104 FHA 2-4 Unit Hotel and Transient Use form [HUD92561]

105 ♦ Borrower(s) Certification and Authorization [MT2096]

106 ♦ FHA: Informed Consumer Choice Disclosure

107 ♦ FHA: Important Notice to Homebuyer [HUD92900-B]

108 FHA: Notice to Homeowner/Assumption

109 ♦ State Specific Requirements [as per MEME guidance]

HOMESTYLE HOMEOWNER/CONTRACTOR AGREEMENT

Owner's Name(s):

Address:

City: State: Zip Code:

Telephone Number: Work: Home:

Contractor’s Name(s): License No:

Address:

City: State: Zip Code:

Telephone Number: Work: Home:

THIS AGREEMENT, made this date, __________________, between the above mentioned Homeowner (Owner) and Contractor, is for the rehabilitation of the property located at _________________________________ ______________________that has been approved for a Fannie Mae HomeStyle rehabilitation mortgage. The Owner(s) shall pay the Contractor the sum of $__________ for completion of the work, including all sales tax due by law, together with such increases or decreases in the contract price as may be approved in writing by the Lender. The work will begin within 30 days of loan closing with the Lender and will be completed by _________________ ____________, unless delayed beyond the Contractor's control. The General Provisions listed below are made a part of this Agreement. The contract documents consist of the architectural exhibits listed in the Rehabilitation Loan Agreement between the Owner(s) and the Lender, or as described below (or on an attached sheet): Owner(s) Signature(s) and Date ___________________________________ _______________

Contractor's Signature and Date __________________________________ _______________

1. Contract Documents: This Agreement includes all general provisions, special provisions and architectural exhibits that were accepted by the lender. Work not covered by this agreement will not be required unless it is required by reasonable inference as being necessary to produce the intended result. By executing this Agreement, the contractor represents that he/she has visited the site and understands local conditions, including state and local building regulations and conditions under which the work is to be performed.

2. Owner: Unless otherwise provided for in the Agreement, the owner will secure and pay for necessary easements, exceptions from zoning requirements, or other actions which must precede the approval of a permit for this project. If owner fails to do so then the contract is void. If the contractor fails to correct defective work or persistently fails to carry out the work in accordance with the agreement or general provisions, the owner may order the contractor in writing to stop such work, or a part of the work, until the cause for the order has been eliminated.

3. Contractor: The contractor will supervise and direct the work and the work of all subcontractors. He/she will use the best skill and attention and will be solely responsible for all construction methods and materials and for coordinating all portions of the work. Unless otherwise specified in the Agreement, the contractor will provide for and/or pay for all labor, materials, equipment, tools, machinery, transportation, and other goods, facilities, and services necessary for the proper execution and completion of the work. The contractor will maintain order and discipline among employees and will not assign anyone unfit for the task. The contractor warrants to the owner that all materials and equipment incorporated are new and that all work will be of good quality and free of defects or faults. The contractor will pay all sales, use and other taxes related to the work and will secure and pay for building permits and/or other permits, fees, inspections and licenses necessary for the completion of the work unless otherwise specified in the Agreement. The contractor will indemnify and hold harmless the owner from and against all claim, damages, losses, expenses, legal fees or other costs arising or resulting from the contractors performance of the work or provisions of this section. The contractor will comply with all rules, regulations, laws, ordinances and orders of any public authority or HUD inspector 9if applicable) bearing on the performance of the work. The contractor is responsible for, and indemnifies the Owner against, acts and omissions of employees, subcontractors and their employees, or others performing the work under this Agreement with the contractor.

The contractor will provide shop drawings, samples, product data or other information provided for in this Agreement, where necessary.

4. Subcontractor: Selected by the contractor, except that the contractor will not employ any subcontractor to whom the owner may have a reasonable objection, nor will the contractor be required by the owner to employ any subcontractor to whom the contractor has a reasonable objection.

5. Work By Owner or Other Contractor: The owner reserves the right to perform work related to the project, but which is not a part of this Agreement, and to award separate contracts in connection with other portions of the project not detailed in this Agreement. All contractors and subcontractors will be afforded reasonable opportunity for the storage of materials and equipment by the owner and by each other. Any costs arising by defective or ill-timed work will be borne by the responsible party.

6. Binding Arbitration: Claims or disputes relating to the Agreement or General Provisions will be resolved by the Construction Industry Arbitration Rules of the American Arbitration Association (AAA) unless both parties mutually agree to other methods. The notice of the demand for arbitration must be filed in writing with the other party to this Agreement and with the AAA and must be made in a reasonable time after the dispute has arisen. The award rendered by the arbitrator(s) will be considered final and judgment may be entered upon it in accordance with applicable law in any court having jurisdiction thereof.

7. Cleanup and Trash Removal: The contractor will keep the owner’s residence free from waste or rubbish resulting from the work. All waste, rubbish, tools, construction materials, and machinery will be removed promptly after completion of the work by the contractor.

8. Time: With respect to the scheduled completion of the work, time is of the essence. If the contractor is delayed at anytime in the progress of the work by change orders, fire, labor disputes, acts of God or other causes beyond the contractor's control, the completion schedule for the work or affected parts of the work may be extended by the same amount of time caused by the delay. The contractor must begin work no later than 30 days after loan dosing and will not cease work for more than 30 consecutive days.

9. Payments and Completion: Payments may be withheld because of. (1) defective work not remedied; (2) failure of contractor to make proper payments to subcontractors, workers, or suppliers; (3) persistent failure to carry out work in accordance with this Agreement or these general conditions, or (4) legal claims. Final payment will be due after complete release of any and all liens arising out of the contract or submission of receipts or other evidence of payment covering all subcontractors or suppliers who could file such a lien. The contractor agrees to indemnify the Owner against such liens and will refund all monies including costs and reasonable attorney's fees paid by the owner in discharging the liens. A 10 percent holdback is required by the lender to assure the work has been properly completed and there are no liens on the property.

10. Protection of Property and Persons: The contractor is responsible for initiating. maintaining, and supervising all necessary or required safety programs. The contractor must comply with all applicable laws, regulations, ordinances, orders or laws of federal, state, county or local governments. The contractor will indemnify the owner for all property loss or damage to the owner caused by his/ her employees or his/her direct or subtier subcontractors.

11. Insurance: The contractor will purchase and maintain such insurance necessary to protect from claims under workers compensation and from any damage to the owner(s) property resulting from the conduct of this contract.

12. Changes in the Contract: The owner may order changes, additions or modifications (using Fannie form 1200) without invalidating the contract. Such changes must be in writing and signed by the owner and accepted by the lender. Not all change order requests may be accepted by the lender, therefore, the contractor proceeds at his/her own risk if work is completed without an accepted change order.

13. Correction of Deficiencies: The contractor must correct promptly any work of his/her own or his/her subcontractors found to be defective or not complying with the terms of the contract.

14. Warranty: The contractor will provide a one-year warranty on all labor and materials used in the rehabilitation of the property. This warranty must extend one year from the date of completion of the contract or longer if prescribed by law unless otherwise specified by other terms of this contract. Disputes will be resolved through the Construction Industry Arbitration Rules of the American Arbitration Association.

I5. Termination: If the owner fails to make a payment under the terms of this Agreement, through no fault of the contractor, the contractor may, upon ten working days written notice to the owner, and if not satisfied, terminate this Agreement. The owner will be responsible for paying the contractor for all work completed. If the contractor fails or neglects to carry out the terms of the contract, the owner, after ten working days written notice to the contractor, may terminate this Agreement.

Owner’s Initials: _____ _____ Contractor’s Initials: _____ _____

HomeStyle Borrower’s Acknowledgment Condition of Property: I/We understand that the property I/we am/are purchasing is not Fannie Mae approved, and FannieMae does not warrant the condition or the value of the property. I/We understand the Fannie Mae plan review (where performed) and the appraisal are performed to determine compliance with the required architectural exhibits and to estimate the value of the property, but neither guarantees the house is free of defects. I/We understand I/we have the option to retain an independent consultant and/or a professional home inspection service to perform an inspection of the property. The cost of this inspection can (or could be) included in the mortgage. Loan Requirements: I/We understand at the time of the loan closing of a Home Improvement Mortgage Loan, for which I/we have applied to my lender, the proceeds designated for the rehabilitation or improvement (including a contingency reserve, mortgage payments, and any other fees where applicable) are to be placed in an interest bearing escrow account. The Rehabilitation Escrow Account is not, nor will it be treated as, an escrow for the paying of real estate taxes, insurance premiums, delinquent notes, ground rents or assessments. I/We hereby request the lender, after the Final Release Notice is issued to:

� pay the net interest income directly to me/us. � apply the net interest income directly to the mortgage principal balance for an equal amount of principal reduction.

I/We understand that the Rehabilitation Escrow Account will cease paying interest to me/us if (1) the loan payments are delinquent for more than 30 days; or (2) the completion date (or an approved extension) has expired. During this period, the interest will be paid down on the mortgage principal. I/We understand that if I/we clear up the delinquent or default status and/or the completion date has not expired or an extension date has been approved, then the interest on the escrow account will begin again to be paid according to the request above. I/We understand that no draws on the escrow account can be made until all permits have been issued by the local or state building departments, where required. I/We further understand I/we can only request moneys for the actual cost of rehabilitation. If any cost savings result on any line item of the Draw Request, the amount saved must be used to prepay the mortgage principal. I/We understand the contractor(s) is responsible to complete the work described in the architectural exhibits in a workmanlike manner. If I/we agree that the work has been properly completed I/we will sign the Draw Request form, thereby accepting the responsibility that the completed work is acceptable and payment is justified. I/We understand there may be, at the sole discretion of the lender, a ten percent (10%) holdback on each Draw Request to assure that the work is properly completed and for lien protection. I/We understand I/we am/are responsible to negotiate any and all agreements with the contractor(s) I/we select, and that Fannie Mae suggests that the agreement with the contractor(s) should include a provision for binding arbitration with the American Arbitration Association on any dispute. I/We understand if I/we change a contractor for any reason, I/we may be obligated under the terms of the original contractor(s) agreement, and I/we should seek legal advice before taking such action. If I/we disagree with the contractor regarding the acceptable completion of the work I/we can request an inspection by the fee inspector to determine if the work has been property completed. If an agreement cannot be made with the contractor, the lender may hold the money until such time as an agreement is reached, or an arbitrator=s decision is rendered. I/We understand that neither the lender nor FannieMae provides any warranty on the completed work on the property. I/we am/are responsible to obtain such warranty(s) from the contractor(s), and the warranty should be stated in the Homeowner-Contractor Agreement. I/we understand I/we am/are responsible to make the mortgage payments during the term of the loan, including the rehabilitation period, to ensure that the property will not go into default. The construction on the home must start within 30 days; if the construction ceases for more than 30 days, the lender may consider the loan in default, or the lender may use the escrow money to have the work completed. If the work stops or is not progressing as it should or if the work does not comply with accepted architectural exhibits, the lender may require additional compliance inspections to protect the security of the loan and I will be responsible to pay for the inspections, and the cost of the inspections may be withheld at the next draw request. I/We understand no changes to the architectural exhibits can be made without written approval by the lender on a letter or on a form (HUD-9746-A) which I submit to the lender. Also, the contingency fund is set up for changes that affect the health, safety, or items of necessity of the occupants of the property. If the contingency reserve is insufficient, I must place additional moneys into the account for payment upon acceptance of the change. A change order will be made to assure that the moneys are available to the contractor upon completion of the changed work. I/We understand if there are unused contingency funds, mortgage payments, inspection fees or other monies in the Rehabilitation Escrow Account after the Final Release is processed, the lender, in compliance with Fannie Mae regulations, must apply these funds to prepay the mortgage principal, provided those items are a part of the mortgage. I/We understand the lender, at lenders sole discretion, may retain the ten percent (10%) holdback from each draw, for a period not to exceed 35 days or the time period required by law to file a lien (whichever is longer), to ensure compliance with state lien waiver laws or other state requirements. Upon completion of the work, I understand I will be provided: (1) the Final Draw Request; (2) the Final Release Notice; (3) an accounting of the final distribution of all funds. This statement must be delivered to you prior to closing the loan. Return one copy to your lender as proof that you have read the entire document. Keep one copy for your records. You, the borrower(s), must be certain that you understand this information. Sign here only after you have read this entire document. Seek professional advice if you are uncertain. x___________________________________________________ x___________________________________________________ Borrower’s Signature and Date Co-Borrower’s Signature and Date I, the lender, certify this information was delivered to the borrower(s) prior to the time of loan closing. x_____________________________________________________________________________

Lender’s Signature and Date FNMA HomeStyle Borrower’s Acknowledgement Borrower: Form 2600 Loan#:

HomeStyle Renovation Consumer Tips

Case Number: __________________________________________________ Date: _______________________

Borrower Names: ______________________________________________________________________________________________

Please review the important tips listed below about Fannie Mae HomeStyle Renovation Mortgages and home improvement projects. For the HomeStyle Renovation Mortgage, you do not receive any cash at the loan closing. The funds provided for renovation are placed in an interest-bearing escrow account (Renovation Escrow Account). The lender may require that a contingency reserve be placed in the Renovation Escrow Account to cover unforeseen repairs or deficiencies during the renovation. If funds remain after the renovation is complete, they can be applied to additional elective repairs or improvements or can be used to reduce the principal balance. If you deposit funds into the account, the funds you deposited can be paid directly back to you at your option.

When selecting a contractor, always review the contractor’s references, licensing, and financial background. Ask the lender for a Contractor Profile form to assist in your review, or locate one at www.efanniemae.com. You are responsible for negotiating any agreements or warranties with the contractor. The lender does not provide any warranty on the contractor’s work. You are responsible for overseeing the renovation and ensuring that it is done as specified in the Construction Contract with the contractor. If work stops for an extended period of time, or there are problems with the work performed that may cause significant delays, you must contact the lender. If you are purchasing a home to renovate it, please note that the lender does not warrant or guarantee the condition of the property being purchased or the renovation. You are responsible for making the mortgage payment each month, even if the renovation is not satisfactorily completed. Funds for the renovation are paid in accordance with a schedule acceptable to you, the contractor, and the lender. Funds are released to the contractor after an inspection of each phase of the renovation. The funds are provided in a check made payable jointly to both you and the contractor. You request these payments on a draw request form submitted to the lender.

Do not approve funds be released to the contractor if you are not happy with the work. Do not accept unsatisfactory work. Do not pay the contractor “up front” out of your own funds before the renovation is satisfactorily completed. The lender may withhold some of the funds from each Draw Request. These funds are paid to the contractor when the work is completed. This helps to protect you from a contractor failing to complete the renovation If you would like to revise the original approved renovation, you must submit a Change Order Request to the lender for approval, and deposit any additional required funds (including contingency reserve) in the Renovation Escrow Account. When the renovation is completed, you and the contractor sign a Completion Certificate. The lender should provide you an accounting for all distribution of funds in the Renovation Escrow Account. I acknowledge that I have read these Consumer Tips and that I understand them.

Borrower’s Signature: ________________________________________________________________ Date: ________________ Co-borrower’s Signature: _____________________________________________________________ Date: ________________ The lender certifies the Borrower(s) has received these Consumer Tips.

Lender’s Signature: __________________________________________________________________ Date: _________________

FNMA HomeStyle Consumer Tips Disclosure Loan # Form 2602/MT4617 Rev. 11/1/01 Borrower

Answer all Questions Below:

1. Are any of your income taxes past due? YES NO

2. Have you or any principals of your company, or your company declared bankruptcy? YES NO

3. Are there any outstanding judgments or legal actions pending against you or the company? YES NO

If any answers were YES, please explain below:

To M&T Bank:

INFORMATION: All information given in this document is true, correct and complete as of the date of this document. I/We authorize you to verify any information given. In addition, I/we authorize you to obtain any

information you feel is necessary or in connection with any review, update, extension or renewal in maintaining an approved status with M&T. Finally, I/we authorize you to give information about me (us) and your

credit experience with me/us to others.

CREDIT REPORTS: I/we understand that you may request a credit report from a credit reporting agency in connection with this document or in connection with any update, extension or renewal of any credit you

extend based upon this document. In addition, I/we understand that, if asked, you will tell me/us if a credit report was requested, and if so, the name and address of the credit reporting agency furnishing the credit

report. To request the information, I/we should write or call the Construction Lending Department; M&T Bank P. O. Box 4009; Buffalo, New York 14240. (800) 724-6461.

KEEPING RESUME: I/we agree that you may keep this resume’ for your file.

_________________________________________ By______________________________________ Name of Applicant Signature and Title

Contractor’s Resume Loan #: Form 2605 Rev. 01-05-2011 Borrower: