Diamond Jumbo
Expanded Guidelines
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Important Notice: Must always meet
more restrictive of Product Profile or
Guidelines. Even if the Expanded
Guidelines indicates something is
allowed, it should be verified by the
Product Profile to ensure acceptablity.
Revised 01/13/2016
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5.19.
INSURANCES
5.19.1. INSURANCE PROVIDER STANDARD
Insurance policies must be underwritten by a “Qualified Insurer” as defined herein:
1. An insurer whose current rating meets the requirements below:
a. For an insurer rated by A. M. Best Company (A.M. Best), a minimum Financial Strength Rating of B/III, or for
a non-U.S. insurer, A/VIII, as reported online at http://www.ambest.com.
b. For an insurer rated by Demotech, Inc., a minimum Financial Strength Rating of A as reported online at
http://www.demotech.com.
c. For an insurer rated by Standard & Poor's, a division of The McGraw-Hill Companies ("Standard & Poor's"), a
minimum Financial Strength Rating of BBB as reported online at http://www.standardandpoors.com.
2. An insurer whose coverage is guaranteed by a reinsurer under all of the following conditions:
a. The reinsurer's current rating meets the requirements below:
i. For a reinsurer rated by A.M. Best, a minimum Financial Strength Rating of B/III, or for a non-U.S.
reinsurer, A/VIII; or
ii. For a reinsurer rated by Standard & Poor's, a minimum Financial Strength Rating of BBB.
b. The reinsurer assumes by endorsement 100 percent of the insurer's liability for any covered loss payable but
unpaid by the insurer for reason of insolvency.
c. The reinsurer assumes by endorsement to give the policyholder, the Seller/Servicer and insurer 90-day
written notice before canceling or otherwise terminating the guarantee.
d. The above endorsements are attached to each property insurance policy accepted by the Seller/Servicer on
account of the endorsements.
3. A state insurance pool created by statutory authority to provide insurance for geographic areas or insurance lines which
suffer from lack of voluntary market availability (such pool may be designated as a property insurance plan, a Fair Access
to Insurance Requirements (FAIR) plan, an underwriting association, a joint underwriting association or an insurance
authority)
4. A non-admitted insurer whose current rating meets the requirements below:
e. For an insurer rated by A. M. Best, a minimum Financial Strength Rating of A, or
f. For an insurer rated by Standard & Poor's, a minimum Financial Strength Rating of AA.-
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5.
An insurer whose coverage is guaranteed by the National Flood Insurance Program (NFIP) under a Standard Flood
Insurance Policy issued pursuant to the National Flood Insurance Act of 1968, as amended.
Insurers rated by more than one rating company need only meet one of the rating requirements.
5.19.2. INSURANCE PREMIUM PA ID THROUGH DATE (10/30/2015)
For all hazard and flood insurances Sellers are responsible for payment of any insurance premiums due within 45 calendar days
following Mortgage Loan purchase.
If evidence of payment is not found in the Mortgage Loan file and the insurance premium is due within the 45 day period,
Diamond Investor will place a condition on the Mortgage Loan. See Funding Review Status in this Guide section. The Seller is
still responsible for any penalties assessed on payments that are due within 45 calendar days of Mortgage Loan purchase.
5.19.3. GENERAL HAZARD POLICY REQUIREMENTS
Hazard insurance coverage must insure all buildings and improvements to the mortgaged property. The Borrower is required to
maintain the policy at the Borrower’s expense for the duration of the Mortgage Loan.
5.19.3.1.
HAZARD INSURANCE COVERAGE TERM (7/30/2015)
Purchase Transactions – the policy must:

Be in effect as of loan disbursement date, and

Extend and be paid for minimum 12 months from the date of closing
Refinance Transactions- New or Existing policy is acceptable provided:
 Be in effect as of loan disbursement date, and
 Expiration date of the policy is clearly stated, and
 Sufficient impounds are collected by the Seller to renew coverage at the due date (if applicable)
 Existing coverage extends a minimum of 45 calendar days beyond the Purchase date
o If the policy will expire within 45 calendar days of Purchase by Diamond Investor, a 30 day binder or
evidence of renewal for one year is required
 Six-month policies are acceptable in Hawaii
5.19.3.2.
HAZARD INSURANCE DECLARATIONS PAGE OR BINDER
Diamond Investor requires a hazard insurance declarations page, certificate of insurance or insurance binder accompanied by
proof of payment. (See Coverage Term)

The full name of the Borrower and property address must be exactly as reflected on the Mortgage
5.19.3.3.
HAZARD INSURANCE POLICY MORTGAGEE CLAUSE
Each hazard insurance policy must have the standard mortgagee clause. The mortgagee clause must provide that the insurance
carrier notify the lender at least ten calendar days before the effective date of any termination, reduction or cancellation of the
policy.
The mortgagee clause must be properly endorsed, necessary notices of transfer must be given, and any other necessary action
be taken as reasonably requested by Diamond Investor in order to protect the interest of as first mortgagee under the terms of
the policy. Diamond Investor or its assigns, must be the first mortgagee under the mortgagee clause.
5.19.3.4.
COMBINED HAZARD INSURANCE POLICIES
Combined insurance policies are not acceptable.
5.19.3.5.
HAZARD INSURANCE COVERAGE AND DEDUCTIBLE AMOUNTS (6/5/2014)
Hazard insurance must be in an amount and form acceptable to the applicable Agency guidelines. For Diamond Investor NonAgency Loan Programs, follow Fannie Mae requirements. In general, coverage must be equal to the lesser of the following:

100% of the insurable value of the improvements (replacement cost) as established by the property insurer; or
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
The unpaid principal balance of the mortgage, as long as it equals the minimum amount (80% of the insurable value of
the improvements) required to compensate for damage or loss on a replacement cost basis. If it does not, then coverage
that does provide the minimum required amount must be obtained.
When a policy provides for a separate wind-loss deductible (either in the policy itself or in a separate endorsement), that
deductible must be no greater than 5% of the face amount of the policy.
The maximum deductible allowed for insurance covering a property (including common elements in a PUD project) is 5% of
the face amount of the policy.
5.19.5. PUD HAZARD INSURANCE (6/5/2014)
PUD hazard insurance must be in an amount and form acceptable to the applicable Agency guidelines. For Diamond Investor
Non-Agency Loan Programs, follow Fannie Mae requirements. In general Requirements for 1-4 unit properties apply to
similar residential properties within a Planned Unit Development (PUD) or a ground lease community.
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If the individual units are covered by insurance purchased by their respective owners or leasehold lessees, the PUD homeowners
association or the fee simple landowner/lessor of the ground lease community must maintain "all risk" coverage for common
areas and property for 100% of their insurable value and provide for loss or damage settlement on a replacement cost basis. The
association or fee simple landowner/lessor must also obtain any additional coverage commonly required by private mortgage
investors for developments similar in construction, location and use, including the following where applicable and available:
 Agreed amount
 Demolition cost
 Increased cost of construction
 Boiler and machinery
The insurer's minimum liability per accident under boiler and machinery coverage must equal the insurable value of the building
housing such boiler or machinery or $2 million, whichever is less.
Diamond Investor will also accept blanket insurance covering all units in the PUD or ground lease community as well as
insurable common areas and property, if called for in the PUD's governing documents or in the lease. Such coverage must meet
the requirements applicable to each PUD or ground lease community unit and those applicable to insurable common areas and
property. Deductibles are allowed under this blanket coverage under the terms and conditions stipulated above.
The PUD's or ground lease community fee simple owners' insurance policy must name the insured in substantially the same
language as follows: Association of the Owners of the Planned Unit Development for the use and benefit of the individual owners
(designated by name, if required by law or the governing documents).
5.19.6. EARTHQUAKE INSURANCE
Earthquake insurance is required for any property located on or in close proximity to a structural fault, or in a special seismic
studies zone. If no mention is made in the appraisal, survey, or title policy regarding earthquake exposure, then insurance should
not be required.
5.19.7. HAZARD INSURANCE CHECKLIST
HAZARD INSURANCE CHECKLIST (7/30/2015)
Sellers must submit proof of insurance meeting the following criteria:
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Insurance was provided by a Qualified Insurer.
Evidence of insurance (one of the following documents must be submitted) in effect on or before loan disbursement date:
a. Declarations Page
b. Certificate of Coverage
c. Evidence of Property Insurance
d. Insurance Binder
Note: An insurance quote or completed application for hazard insurance is not acceptable. Only the actual documentation from the
insurance provider is considered proof of insurance.
Evidence of premium payment:
a. Paid receipt for premium amount reflected on the hazard application, binder, or policy; or
b. HUD-1, Settlement Statement or, for loans with applications dated on or after August 1, 2015,(or as of the effective date
announced by the CFPB) that are subject to TRID requirements, Closing Disclosure, indicating payment of the premium
amount reflected on the policy (or as announced by the CFPB).
Policy number (does not apply to binders).
Accurate Borrower and property information:
a. Name(s) of Borrower(s) agree with Note.
b. Property address agrees with Note and Mortgage (Security Instrument).
c. Mailing address is same as property address except on second homes and investment properties; then, it should agree
with home address shown on Fannie Mae 1003.
Policies insuring personal property such as cars, boats, etc., are not acceptable. However, riders for coverage of personal items within
the dwelling, e.g., furs, jewels, etc., will be accepted.
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Coverage Term:
a. Purchase Transactions: Policy must be in effect on or before loan disbursement date and extend for and be paid for
minimum 12 months from the date of closing.
b. Refinance Transactions: New or existing policy will be accepted provided:
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



Policy is in effect on or before loan disbursement date, and
Expiration date of the policy is clearly stated.
Sufficient impounds are collected by the Seller to renew coverage at the due date (if applicable).
Existing coverage extends a minimum of 45 calendar days beyond the purchase date. If the policy will expire within 45
calendar days, Diamond Investor requires evidence of renewal for one year.
 Evidence of change of mortgagee is provided, if applicable.
Policy is properly countersigned.
Policy must provide for a 30 day written notice of cancellation, reduction in coverage, or other material change to the policy.
5.19.8. MINE SUBSIDENCE INSU RANCE
Mine subsidence insurance is provided to cover a loss suffered when the land on which improvements are located "subsides" due
to the collapse of mining tunnels below the surface.
If mine insurance is required, the policy obtained by the Borrower must equal 80% of the value of the structure comprising a part
of the property or the maximum insurance available. Diamond Investor will accept the following items as evidence of insurance:
 A hazard insurance policy binder that includes mine subsidence insurance.
 If the transaction is a refinance, the original or a photocopy of an existing mine subsidence insurance policy and an
Assignment of Interest Endorsement form.
 A signed Request for Mine Subsidence Insurance Information form and an Assignment of Interest Endorsement form.
A signed Request for Mine Subsidence Insurance Information form, an Assignment of Interest Endorsement form and a town map
which shows the location of the property.
5.19.9. UNINSURABLE HAZARDS –SULFUR CONTAINING WA LLS
If the Seller has knowledge that the mortgaged property is or may be exposed to hazards, hazardous wastes, toxic substances,
radon gas, asbestos-containing materials, urea-formaldehyde insulation, sulfur-containing drywall (also known as
Chinese drywall) not covered by fire and extended coverage insurance or other available insurance, the Seller must advise
Diamond Investor, in such an event, at its sole and absolute discretion, may choose to not purchase the Mortgage Loan. The
Seller must comply with any Agency requirements regarding such hazards. Or, the property inspection must state that the
property was fully gutted down to the bare studs and all items that were installed are new. The only items that could possibly
be re-used are tile and some stone. All other materials must be new.
5.19.10. FLOOD INSURANCE REQUIREMENTS
5.19.10.1.
FLOOD ZONE DETERMINATION (8/20/2014)
Flood insurance must be in an amount and form acceptable to the applicable Agency guidelines. For Diamond Investor NonAgency Loan Programs, follow Fannie Mae requirements. In general Diamond Investor requires that all Mortgage Loans
(Agency and Non-Conforming) submitted for purchase contain, at a minimum, a flood zone determination with life-of-loan
service (also may be referred to as a Third Party Flood Certificate) verifying whether or not the property lies in a Special Flood
Hazard Area (SFHA). The Flood Certificate must reflect the information required on FEMA's current Standard Flood Hazard
Determination Form, including:
 Collateral Property Address
 Flood Zone
 NFIP Map, Panel, Suffix Number
 NFIP Map Date
 NFIP Community Name
 Community Status
 Name Of the flood certification Vendor
 Vendor's Certificate Number
See also Unmapped Properties – Participating Areas.
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5.19.10.2.
SFHA IN NON-PARTICIPATING COMMUNITY NOT ELIGIBLE
Mortgage Loans secured by properties located in a Special Flood Hazard Area (SFHA) and in a Non-Participating Community;
or in a SFHA and in a Coastal Barrier Resource Systems Area are not eligible for purchase by Diamond Investor.
5.19.10.3.
FLOOD INSURANCE TRANSFER DISCLOSURE LANGUAGE
For all Mortgage Loans in an SFHA, Diamond Investor Funding requires specific language (noted below) be added to the
following Borrower disclosures:
 Notice of Special Flood Hazards (NSFH), and
 Servicing Disclosure Statement Notice to 1st lien mortgage loan applicants.
Alternatively, if the language cannot be placed directly into the disclosures noted above, Diamond Investor will accept the
language in a separate disclosure, or as an addendum to the specified disclosures, provided it is acknowledged by the
Borrowers. Required disclosure language:
 Flood Insurance Coverage Subject to Change Disclosure: We may assign, sell, or transfer the servicing of your mortgage
loan. Your new lender/servicer may require more flood insurance coverage than the minimum amount that has been
identified in your Notice of Special Flood Hazards (NSFH). The new lender/servicer may require coverage in an amount
greater than the minimum, and has the right to require flood coverage at least equal to 100% of the insurable value
(also known as replacement cost value) of the building(s) used as collateral to secure the loan or the maximum available
under the National Flood Insurance Program (NFIP) for the particular type of building. You should review your exposure
to flood damage with your insurance provider, as you may wish to increase your coverage above the minimum amount
required at the time of closing your loan versus what subsequently the new lender/servicer may require.
5.19.10.4.
(12/18/2014)
FLOOD INSURANCE POLICY AND COVERAGE REQUIREMENTS
Flood insurance is required if any part of the principal structure is located within an SFHA or if a residential detached structure
on a property securing a Mortgage Loan has any part located in an SFHA. As announced with Fannie Mae SEL 2014-16, and
effective with H. R. 3370, final rule which took effect in March of 2014, flood insurance is not required for any structure which is
part of a residential property but is detached from the primary residential structure and does not serve as a residence.
Flood insurance policies should be in the form of a standard policy issued under the NFIP. The Declaration page of the policy is
acceptable evidence of coverage. Policies that meet NFIP requirements, issued by licensed property and casualty insurance
companies that are authorized to participate in NFIP’s Write Your Own” program are acceptable.
If flood insurance is required, a flood insurance policy or the application signed by the insurance agent for such insurance
reflecting the flood zone as listed on the standard flood hazard determination, along with a paid receipt evidencing the first full
year's premium has been paid in full is required in the closed loan package delivered to Diamond Investor.
Insurance must be placed on a property located in an area where flood insurance is required by the National Flood Insurance Act
of 1968, as amended. The minimum amount of flood insurance coverage for individual insurance must be equal to the lesser of:
 100% of the insurable value of the improvements (with losses to be paid at replacement cost) as determined by the
amount of insurance listed on the hazard policy, or
 NFIP maximum for the particular type of improvements, or
 The unpaid principal balance of the Mortgage Loan
The waiting period must have lapsed prior to the Mortgage Loan being eligible for purchase.
Note: (2014)
 A PUD unit is considered to be its own separate building, which requires its own separate flood insurance coverage
unless covered by a blanket master insurance policy.
5.19.10.5.
PREMIUM PAYMENTS
For purchase transactions, Diamond Investor requires the Seller to provide evidence of premium payment.
On refinance transactions, the Seller is responsible for all insurance premiums due prior to the Mortgage Loan's delivery, or within
45 calendar days of funding. The Seller is responsible for any losses or damages resulting from a bill that is due within 45
calendar days of funding. The Seller is also responsible for any losses or damages that result from providing Diamond Investor
with incorrect premium and due date information
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5.19.10.6.
ESCROW/IMPOUNDS FOR FLOOD INSURANCE (12/30/2015)
Until December 31, 2015, Mortgage Loans with escrow/impound reserves for any other item (including monthly mortgage
insurance or hazard insurance) are required to have escrow/impounds for flood insurance.
New: Effective for loans secured by properties in mandatory flood zones that are closed* on or after January 1, 2016:

Flood insurance premiums must be escrowed, regardless of whether any other funds are escrowed. This requirement
is implemented to meet the provisions of the June 22, 2015, joint Final Rule of the Biggert-Waters Flood Insurance
Reform Act of 2012 (Biggert-Waters).

No Waivers: Escrow/impounds for flood insurance premiums may not be waived, regardless of LTV, on loans secured
by 1-4 unit properties (including PUDs and site condos).Condominium Flood Premiums: If flood insurance in the
required amount is paid by a condominium association, homeowner’s association, or other applicable group as a
common expense no escrow is required.

Evidence of Flood Insurance Escrows: Sellers will be required to provide evidence that flood insurance premiums have
been escrowed prior to loan purchase, regardless of whether any other funds associated with the loan are escrowed
(i.e., taxes, insurance premiums, or any other fees or charges). These requirements will apply to all loans in mandatory
flood zones including, but not limited to, Higher Priced Mortgage Loans (HPML).
*Closed date for this purpose is determined by the disbursement date on the settlement statement.
5.19.10.7.
MAXIMUM FLOOD DEDUCTIBLE (12/18/2014)
The maximum deductible for flood insurance is established by the National Flood Insurance Program (NFIP) and applicable
Agency. For Non-Agency Loans follow Fannie Mae.
5.19.10.8.
FLOOD INSURANCE FOR PUDS
If the mortgage is secured by a unit in a PUD project and any part of the improvements are in a SFHA, THE Seller must provide
evidence that the HOA is maintaining a master or blanket policy of flood insurance and is providing for premiums to be paid as
a common expense.
A separate policy is required for each dwelling unit when a HOA does not have a master or blanket policy covering flood insurance.
The coverage for the individual unit should be based on the coverage requirements listed previously.
5.19.10.9.
PUD COVERAGE AMOUNT
The amount of flood insurance coverage for a PUD project should be at least equal to the less of 100% of the insurable value of
the facilities or the maximum coverage available under the NFIP ($250,000 times the number of units).
5.19.10.12. FLOOD ZONE DISPUTE
If the Borrower questions the flood zone determination, the Seller and Borrower may jointly appeal directly to FEMA. The Seller
cannot require the Borrower to purchase flood insurance until FEMA issues a final opinion on the flood zone determination;
however, Diamond Investor will not purchase the Mortgage Loan until FEMA issues its opinion or a flood insurance policy
has been purchased for the property.
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5.19.10.13. REVISIONS
The flood zone must be included on the declaration page of the flood insurance policy and must match the flood zone on the
flood certificate. Any revision to the flood zone determination must be requested through FEMA by providing documentation,
such as an elevation certificate, to the research department at the flood certification vendor.
5.19.10.14. SERVICER REQUIREMENTS
The servicer can require the Borrower to obtain flood insurance based upon any subsequent determination by FEMA that the
property is located in an area that requires flood insurance coverage.
5.19.10.15. UNMAPPED PROPERTIES – PARTICIPATING AREAS
When a property has not been mapped by FEMA the Mortgage Loan might still be eligible for purchase by Diamond
Investor if:
1. A current Standard Flood Hazard Determination is in the Loan file
2. The flood zone determination indicates Flood Zone “None,” “No NFIP Map”
3. A life-of-loan flood service (also may be referred to as a Third Party Flood Certificate) is documented in the Loan file
Flood insurance may be required later if FEMA maps the property to a Special Flood Hazard Area (SFHA).
6.10.
POWER OF ATTORNEY
6.10.1. POWER OF ATTORNEY ELIGIBILITY (9/30/2015)
In a hardship or emergency situation, Diamond Investor will permit the Mortgage Note, the Mortgage and other closing
documents to be executed be a person acting as an attorney-in-fact pursuant to authority granted by a Borrower under a
Power of Attorney (POA). The POA must be in the form of a specific, special, military or limited Power of Attorney and must be
covered by a title insurance policy in accordance with the Title Insurance Requirements in this Guide and meeting Agency
requirements as well.
If a POA is used, then the original POA must be attached to and delivered to the Document Custodian with the Mortgage Note,
unless it is recorded with the Mortgage. If the original POA is sent for recordation with the Mortgage, a copy of the POA must be
delivered with the Mortgage Note. When the POA is returned from the recording office, either the original or a copy with
recording information must be delivered to the Document Custodian and filed with the original Mortgage Note.
The requirements below apply in addition to any requirements for POAs of the relevant end investor applicable for the
Mortgage Loan (e.g., Fannie, Freddie, FHA, VA, USDA, etc.). See Diamond Investor Program Guides, the Fannie Mae
Correspondent Seller Guide, the Freddie Mac Seller/Servicer Guide, the FHA Single Family Handbook (HUD 4000.1), the VA
Handbook (26-7) or USDA Handbook HB-1-3555 for restrictions and program-level guidance on Power of Attorney eligibility.
6.10.2. GENERAL REQUIREMENTS FOR POWER OF ATTORNE Y (10/30/2015 CLARIFICA TION)
Mortgage Loans are not eligible from Sellers whose business model routinely makes use of Borrower Powers of Attorney (POAs)
in the ordinary course of business, apart from Borrower-driven requests and necessity to use a POA. Seller is responsible for
establishing the identity of the Borrower and ensuring that there is no fraud, Borrower impersonation, or identity theft in
connection with the execution of any Mortgage Loan Documents.
The Power of Attorney (POA) can be used only for closing documents, and must comply with this following:
1.
2.
3.
Ineligible Transaction Types: Power of Attorney is NOT permitted with the following transaction types:

Cash-out refinance

Non-owner occupied transactions

Title taken as trust

Texas (a)(6)

Identity of interest or non-arms-length transactions

Non-Occupant Borrowers: Non-occupant borrowers may not use a POA
POA Type: Must be Specific, Special, Limited or Military.
Subject Property Address: Must specifically identify the subject property address.
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4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
Borrower Must Identify: Must clearly identify that the Borrower is identifying an attorney-in-fact.
General Powers of Attorney are not acceptable.
The attorney-in-fact may not be: the Lender, Control Affiliate of the Lender, employee of the Lender or Lender’s Control
Affiliates, originator, title company, closing agent or Control Affiliate, property seller, appraiser, realtor, a party to the
transaction, a party with a direct or indirect financial interest in the transaction, or any other party deemed ineligible
by Fannie Mae, Freddie Mac, VA, USDA or FHA in their respective Guides and Guidelines.
The Borrower’s name(s) on the POA must match the name(s) on the Note, Deed and other documents signed.
Valid at time of Note: POA must be signed and dated by the Borrower such that it was valid at the time the Note or
Mortgage was executed.
Notarized: POA must be notarized -Notarized signature of grantor (if executed outside the U.S., it must be notarized at
a U.S. Embassy or a military installation).
Stamped: POA must bear the Recorder’s stamp, if previously recorded.
Durable: The POA must be in full force and effect on the closing date, must survive subsequent disability (durable), and
must be revocable only in writing or alternatively gives a specific expiration date which survives the closing date.
Signature Blocks: The Attorney-in-Fact must execute all closing documents at settlement in a manner to match the
typed signature blocks on the Mortgage Loan Documents. If an Attorney-in-Fact is signing closing documents, no less
than the following must be signed as attorney-in-fact:

Note

Deed of Trust/Mortgage (Security Instrument)

TIL

Notice of Right to Cancel and

HUD-1 Settlement Statement or Closing Disclosure as they may apply, subject to any Diamond
Investor or regulatory signing requirements
1003: The original Form 1003 Loan Application must be signed by the Borrower, and not the attorney-in-fact, except
under the conditions described in Fannie Mae Correspondent Seller Guide Part B., Subpart 1, Chapter 1., Documenting
the Loan Application:

A Borrower is on military service with the US armed forces serving outside the US or deployed aboard a US
vessel, as long as the POA:
o
Expressly states an intention to secure a Mortgage Loan on the subject property, or
o
Complies with the requirements in the VA Handbook for POAs, or

Seller is required by Applicable Law to allow such use of POA.

Reminder: A POA may only be used for closing documents.
Insured: The title company must insure that the Seller or assignee is in first lien position without exception to the POA.
Recorded: The original POA must be recorded with the Mortgage (Security Instrument) and a certified copy delivered
with the Note subject to the following:
Diamond Investor will accept a duplicate or conformed copy of the Power of Attorney, together with a

certificate of receipt from the recording office, certifying that such copy represents a true and complete
copy of the original and that such original has been or is currently submitted to be recorded, OR

If the original Power of Attorney or other such instrument has been delivered for recording in the appropriate
public recording office of the jurisdiction in which the Mortgaged Property, the original must follow as a final
document.
Borrower Present at Close: Must meet any applicable Agency requirements for one Borrower to be present at close.
See the Fannie Mae Correspondent Seller Guide, B8-3-03., Signature Requirements for Notes, Signature Requirements, Powers of
Attorney and Guardianship, for signature line instructions.
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8.9.7. BORROWER ABILITY TO REPAY (ATR) (3/26/2015)
For all Mortgage Loans that are subject to the Ability to Repay (ATR) provisions of the Dodd-Frank Act, Sellers must document
that the Borrower’s ability to repay has been determined by the Seller as required by the provisions and any associated
implementing rules that are applicable.
The following must be included in the Mortgage Loan file delivered to Diamond Investor:

An underwriting worksheet or written details documenting income, debt, and debt-to-income ratio calculations, supporting
the data on the 1008, Uniform Underwriting and Transmittal Summary, and must demonstrate the borrower’s Ability to
Repay

The analysis must include support for any debts that are excluded from the debt-to-income ratios unless that debt was
expressly excluded in the AUS findings (if applicable)

See the applicable Program Guide for any additional deferred or excluded debt requirements that apply in addition to
applicable Agency guidelines

Verbal verification of employment as per any Agency or individual Program Guide requirements
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10.
GENERAL MORTGAGE LOA N ELIGIBILITY
10.1.
OVERVIEW TO GENERAL MORTGAGE LOAN ELIGIBILITY SECTION (6/5/2014)
This General Mortgage Loan Eligibility section addresses requirements for broadly applicable underwriting guidelines and
requirements that are not necessarily product or program specific unless indicated as such. Program and product specific
requirements are available in the Program Guides available on the SellerWeb/ Resources link.
10.1.1. Diamond Investor UNDERWRITING PHILOSOPHY (6/5/2014)
AmeriHome’s Correspondent channel purchases closed Mortgage Loans on the secondary market that have already been
underwritten by the Seller and closed with the Borrower. Diamond Investor does not render credit decisions on any Mortgage
Loan nor does it encourage or compel any Seller to make a particular credit decision on any Mortgage Loan offered to Diamond
Investor for sale or discussed with Diamond Investor in connection with a future potential sale. Diamond Investor relies upon
Sellers to prudently underwrite all Mortgage Loans and make all lending decisions and provide all disclosures to Borrowers
required under Applicable Laws, including without limitation notices of action taken with respect to all loan applications
received.
10.1.2. UNDERWRITER RESPONSI BILITY (6/5/2014)
Diamond Investor expects the Seller’s underwriter to weigh all risk factors inherent in the Mortgage Loan file, giving
consideration to the individual transaction and Borrower profile, the level of documentation provided, and the property used to
collateralize the debt. Diamond Investor expects underwriters to use prudent and professional judgment in rendering credit
decisions while complying with Seller’s Agreement with Diamond Investor, the Program Guide and all Applicable Laws.
The Diamond Investor commitment to fairness and equal opportunity in lending practices is clear and unequivocal. Sellers are
expected to be fair and consistent, underwriting a Borrower's creditworthiness based solely on information that is believed to
be indicative of the applicant's willingness and ability to pay the proposed debt without regard to any characteristic or basis
prohibited by Applicable Laws.
Diamond Investor asks that Sellers enable us to provide consistently high service levels by providing us with complete, well
organized, and understandable Mortgage Loan delivery files. The Seller's attention to unusual situations attendant to each
Mortgage Loan delivered will pave the way for a fast, efficient purchase.
10.1.3.1. NON-AGENCY LOANS – UNDERWRITING STANDARDS FOR DETERMINING
MONTHLY DEBT AND INCOME, (3/26/2015)
Unless specifically stated otherwise in the applicable Program Guide, the standards and methods set forth in Appendix Q to 12
CFR 1026 and intended for Qualified Mortgages must be used when calculating borrowers' debt, income and debt-to-income
ratios for Mortgage Loans delivered into Non-Agency Loan Programs, for the parameters and calculations where it is possible to
do so. This is true regardless of whether or not the Mortgage Loans are covered by the CFPB’s “Ability to Repay” (ATR) rule, and
whether or not the Mortgage Loan is (or is intended to be) a Qualified Mortgage (QM). However, where loan features or program
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requirements are inherently non-compliant with QM standards (e.g., loans with an “interest only” amortization feature), it is
understood that the required calculation(s) that are appropriate for the Mortgage Loan may deviate from Appendix Q with
respect to those features or parameters only.
A link to Appendix Q is available on at Sellerweb / Resources / Compliance. Additionally, the Diamond Investor Residual Income
Analysis and HPML Escrow and Appraisal Rule Reference is provided in the Compliance section as a resource for underwriters to
use in determining whether the Non-Agency Mortgage Loan (a) requires a Residual Income Analysis using VA standards in order
to be purchased by Diamond Investor, and (b) is a HPML (Higher Priced Mortgage Loan) and therefore subject to the HPML
Escrow Rule and potentially the HPML Appraisal Rule. See the applicable Non-Agency Program Guide to determine whether
HPML or HPCT (Higher Priced Covered Transaction) loans are permissible in that product or program.
Also see sections 8.9.7. Borrower Ability to Repay
See Product Profile for additional specific requirements for Disaster Inspections/Policy
10.10.
DISASTER POLICY
Disasters, both natural and man-made, may occur at any time and might include: floods, fires, thunderstorms, tornadoes,
hurricanes, earthquakes, landslides, volcanic eruptions, civil unrest, and terrorist attacks and the like. These events can cause
varying degrees of damage and create a potential lending risk.
This Guide section provides guidelines to be followed for properties in;

Federally declared disaster areas (FEMA Disaster Declarations) with designated counties or ZIP Code areas eligible for
individual assistance

Areas where FEMA has not made a disaster declaration, but Diamond Investor or an Agency has determined that there may
be an increased risk of loss due to a disaster

Areas where the Seller has reason to believe that a property might have been damaged in a disaster

Diamond Investor may, at its sole discretion, purchase Mortgage Loans secured by properties that are free of damage
and located in FEMA/Federally declared disaster areas provided that the requirements in this Guide are adhered to
and documented in the Mortgage Loan file.
10.10.1.
SELLER RESPONSIBILIT Y FOR PROPERTY CONDITION
Notwithstanding any other requirements set forth herein regarding Disasters and similar events, Seller represents and warrants
that the property securing the Mortgage Loan is free of damage on the Purchase Date. In addition, any adverse event must be
evaluated in terms of its effect on the subject’s habitability, marketability and value.
Sellers are responsible for determining potential impact to a property located in an area where a disaster is occurring or has
occurred. Irrespective of whether a declaration or Announcement has been made, if a Seller has reason to believe that a
property might have been damaged in a disaster the Seller must take appropriate action to ensure that the property meets
Diamond Investor requirements at the time of purchase by Diamond Investor.
Additionally, if Diamond Investor has a reason to believe that a property might have been damaged in a disaster and has placed a
prior-to-purchase condition on the Mortgage Loan, then the Seller must follow the requirements of the Mortgage Loan
condition.
10.10.2.
MULTIPLE DISASTER EVENTS
Upon the occurrence of multiple events, such as a hurricane followed by a flood, the requirements of this Policy apply to the date
of the most recent event.
10.10.3.
SECTION RESERVED
10.10.4.
EMPLOYMENT RE -VERIFICATION AFTER DISASTER
In the event of widespread property destruction or a large scale disaster, a re-verification of the Borrower’s employment may
be required prior to Mortgage Loan purchase. The Diamond Investor Disaster Announcement will state this requirement if
applicable and a pre-purchase condition for re-verification of employment may be placed on the Mortgage Loan file at the
discretion of Diamond Investor.
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10.10.5.
STATE OF EMERGENCY DEFINITION
FEMA declares a State of Emergency in areas that could potentially be affected by an imminent disaster. A State of Emergency
generally only requires action if it is followed by a FEMA Disaster Declaration, or if Diamond Investor or an Agency issues a
Disaster Announcement.
10.10.6.
DISASTER ASSESSMENT AND DISASTER NOTIFIC ATION ANNOUNCEMENT
Diamond Investor will assess the significance of events in geographic areas impacted by disasters. The assessment will utilize
data provided by FEMA and other data sources regarding impacted areas. As a result of this assessment, Diamond Investor may
define the affected area differently than the FEMA declaration.
In the event of a declared or undeclared disaster requiring action, Diamond Investor will issue a Disaster Announcement
with the following information:

Nature and location of disaster

Disaster incident period

Incident period end date as the later of:
o Incident period end date determined by FEMA and published at FEMA.gov, or
o Incident end date determined by Diamond Investor and published in the Disaster Announcement

Any FEMA declarations of areas eligible for individual assistance

Impacted ZIP Codes or Counties determined by FEMA and Diamond Investor

Any related Agency announcements and/or requirements

Documentation requirements, including
o Additional appraisal or appraisal product requirements
o Re-inspection or Seller Certification requirements
o Employment re-verification requirements, if any

Effective date of any requirements

Last date for requirements (if applicable)
10.10.7.
DECLARED DISASTER AREAS- PROPERTY INSPECTION REQUIREMENTS
10.10.7.1. DECLARED DISASTER AREAS- APPRAISAL COMPLETED ON OR BEFORE DISASTER
(10/30/2015)
If a property is in in a FEMA Declared Disaster Area eligible for individual assistance and the most recent appraisal in the
Mortgage Loan file was completed on or before the incident period end date, then Diamond Investor requires that an
acceptable property inspection meeting the following requirements be completed prior-to-purchase:

A final exterior inspection or appraisal update signed by the original appraiser
o Appraisal Update, form Fannie Mae 1004D, Disaster Inspection, or
o Completion Report, form Freddie Mac 442, or

Property Inspection Report
o Form Fannie Mae 2075, or
o Form Freddie Mac 2070, Streamlined Inspection, or

Seller’s Certification*
*Seller’s Certifications are not allowed for Loans in the Core Jumbo program.
The document provided must address the specific disaster and indicate any apparent damage to subject property.

Inspection reports listed above may not be used to estimate or recertify value
10.10.7.2. DECLARED DISASTER AREAS – PROGRAMS WITHOUT APPRAISALS
(CONVENTIONAL, USDA, VA AND FHA)
If a property is in in a FEMA Declared Disaster Area eligible for individual assistance and the Mortgage Loan transactions would
not generally require an appraisal, then utilize any of the property inspection types above, AND include an interior inspection.
This requirement should be followed for at least 90 calendar days following the incident end date or until otherwise announced
by Diamond Investor.
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10.10.7.3. SELLER DAMAGE CERTIFICATION REQUIREMENTS: POST-DISASTER
(CONVENTIONAL, USDA, AND VA) (10/30/2015)
If a Seller’s certification* is used, then the following are required:

Must be completed after the incident end date.

Must be executed by an employee of the Seller who will not receive direct compensation from the subject transaction

Must be on Seller’s company letterhead or a Certification of Property Condition form

Must state that an acceptable inspection of the property was completed

Diamond Investor Loan number

Street Address

City/State/Zip Code

“This is to confirm that the above referenced has been inspected and I have determined that it was either not damaged
in the recent disaster or has been restored to its pre-disaster condition or better.”

Printed Name and Signature of Seller’s Representative, Title and Date

Photos of the property front, back, street in both directions, house number and any visible damage
o Condos also require lobby and front of building- lobby through window is acceptable if lobby is not accessible
due to security
If the inspector is not able to certify that the property shows no signs of damage then see Requirements in Response to Disaster
Inspection Findings sections below.
* Seller Certifications are not allowed for Loans in the Core Jumbo program.
10.10.7.4. REQUIREMENTS IN RESPONSE TO DISASTER INSPECTION FINDINGS
(CONVENTIONAL, USDA, AND VA)
If the inspection supports that the property is habitable, sound, and the property has not been affected by the disaster, then the
original collateral valuation can be used. Minor (cosmetic) repairs needed may be acceptable at the sole discretion of Diamond
Investor.
If the inspection notes that the property is uninhabitable, unsound, or that the property condition has been affected by the
disaster, then a new, interior and exterior appraisal must be obtained showing that:

All damage has been repaired prior to purchase by Diamond Investor, and

The property is habitable and sound and the property value is supported
10.10.7.5. DECLARED DISASTER AREAS: APPRAISAL COMPLETED AFTER THE INCIDENT
(CONVENTIONAL, VA, USDA)
If the appraisal completed after the incident period end date supports that the property is habitable, sound, and has only minor
cosmetic, non-structural damage that does not impair the safety, structural soundness, habitability or functional use of the
property, then the appraisal and property may be acceptable at the sole discretion of Diamond Investor, without further
inspections or appraisal updates.
If the appraisal completed after the incident period end date reflects any damage that affects health, safety, habitability,
soundness, or structural integrity of the property, then prior to purchase of the associated loan by Diamond Investor the
damage must be repaired and an Appraisal Update Form 1004D, Form 442 Completion Report, or new appraisal must be
completed, including an interior inspection if the damage and issues originally identified impacted the interior of the property.
10.10.7.6. Diamond Investor OR AGENCY DISASTER NOTIFICATION - OUTSIDE FEMA AREAS
(CONVENTIONAL, USDA, AND VA) (8/20/2014)
If the property is not in a FEMA Declared Disaster area, but either Diamond Investor, Fannie Mae, Freddie Mac or the Veterans
Administration have issued a Notification that an appraisal update is required due to a disaster, then one of the following is
required:

A final inspection or appraisal update of the property signed by the original appraiser
o Appraisal Update, form Fannie Mae 1004D, Disaster Inspection, or
o Completion Report, form Freddie Mac 442, or

Property Inspection Report
o Form Fannie Mae 2075, or
o Form Freddie Mac 2070, Streamlined Inspection