Everything You Wanted to Know to Secure 100% and

HIGHER Financing for Your Clients in a Declining

Market but Were Afraid to Ask —

Including 2nd Homes & Investment Properties!!!

FHA LOANS

WHAT IS FHA?WHAT IS FHA?Federal Housing Administration (division of HUD)Federal Housing Administration (division of HUD)

Any and all changes are legislated-no major changes can Any and all changes are legislated-no major changes can

be made without going through Congressbe made without going through Congress

Insures/endorses loans – does not purchase themInsures/endorses loans – does not purchase them

Pays lender if borrower defaultsPays lender if borrower defaults

WHO CAN DO FHA WHO CAN DO FHA LOANS?LOANS?

Only originators with FHA – Approved Only originators with FHA – Approved

CompanyCompany

Approval is difficult Approval is difficult

1.1. Must have audited financial statementsMust have audited financial statements

2.2. Quality Control PlanQuality Control Plan

3.3. Store Front OperationStore Front Operation

IT’S THE IT’S THE GOVERNMENT!GOVERNMENT!

They are so busy they are not even answering They are so busy they are not even answering

the phone in their lender – approval departmentthe phone in their lender – approval department

60 days behind on opening their mail60 days behind on opening their mail

Pays for itself – doesn’t use taxpayer moneyPays for itself – doesn’t use taxpayer money

Funded through the Mortgage Insurance Funded through the Mortgage Insurance

Premiums Premiums

(1.5% up front, .5% per month)(1.5% up front, .5% per month)

FHA MORTGAGE LIMITSFHA MORTGAGE LIMITS Walton County - $362,790Walton County - $362,790 Okaloosa County - $312,500Okaloosa County - $312,500 Bay County - $396,250Bay County - $396,250 Higher limits for 2-4 family residences Higher limits for 2-4 family residences

(Great rates - buyer must occupy one (Great rates - buyer must occupy one of them!)of them!)

REASONS NOT TO USE REASONS NOT TO USE FHA FOR A BUYERFHA FOR A BUYER

FHA loans are for FHA loans are for owner-occupied, owner-occupied, primary residences primary residences onlyonly

Buyer must occupy Buyer must occupy the property the property within 60 days of within 60 days of closing and use for closing and use for primary home for primary home for at least a year at least a year

Highly enforcedHighly enforced

MORE REASONS NOT TO MORE REASONS NOT TO USE FHAUSE FHA

Full-doc loan – have to verify income for 2 Full-doc loan – have to verify income for 2

years years

Files are much thicker due to additional Files are much thicker due to additional

documentation requireddocumentation required

Always has mortgage insurance for at least 5 Always has mortgage insurance for at least 5

years even with 20% or more downyears even with 20% or more down

FHA IS FILLED WITH FHA IS FILLED WITH

GOVERNMENT RULES, GOVERNMENT RULES,

EXCEPTIONS, AND EXCEPTIONS, AND

EXCEPTIONS TO THE EXCEPTIONS TO THE

EXCEPTIONSEXCEPTIONS

FHA IS OFTEN THE FHA IS OFTEN THE BESTBEST FOR YOUR CLIENTFOR YOUR CLIENT

Assumable loan – new borrower has to Assumable loan – new borrower has to qualifyqualify

Geared for borrowers with little to no Geared for borrowers with little to no moneymoney

No prepayment penaltyNo prepayment penalty Better rates, especially for higher LTV’sBetter rates, especially for higher LTV’s Very little risk-based pricingVery little risk-based pricing Lower monthly MI for higher LTV’sLower monthly MI for higher LTV’s No hit for declining market!No hit for declining market!

FHA APPRAISALS AND FHA APPRAISALS AND UNDERWRITINGUNDERWRITING

Processing has been Processing has been streamlinedstreamlined

Automated underwritingAutomated underwriting Appraisal requirements Appraisal requirements

have been greatly have been greatly relaxedrelaxed

Some minor repairs no Some minor repairs no longer require automatic longer require automatic repair in order to closerepair in order to close

FHA AND CREDITFHA AND CREDIT Far more lenient than FNMA or FHLMC and Far more lenient than FNMA or FHLMC and

MI companiesMI companies 500 minimum score if financing above 90%500 minimum score if financing above 90% No minimum if less than 90% (although almost No minimum if less than 90% (although almost

impossible to find investors taking credit impossible to find investors taking credit scores less 580!)scores less 580!)

Rate is not increased for lower credit score – Rate is not increased for lower credit score – everybody is equal everybody is equal Can use alternative credit – 3 trade lines, one Can use alternative credit – 3 trade lines, one

of which is housing relatedof which is housing related Can do an FHA loan 2 Years after a Chapter 7 Can do an FHA loan 2 Years after a Chapter 7

BankruptcyBankruptcy (1 year under extenuating circumstances)(1 year under extenuating circumstances) In many cases, collections are not required to In many cases, collections are not required to

be paid off prior to closingbe paid off prior to closing

HOT FEATURES OF FHAHOT FEATURES OF FHA

3% down payment3% down payment Source of funds – 6% seller concessionsSource of funds – 6% seller concessions All funds can be gifted All funds can be gifted No reserve requirements No reserve requirements 22ndnd loan from immediate family okay loan from immediate family okay Cookie jar or mattress money okay!Cookie jar or mattress money okay! Can use down payment assistance Can use down payment assistance

(seller can help with this) to get 100% (seller can help with this) to get 100% financingfinancing

EVEN HOTTER EVEN HOTTER FEATURESFEATURES

Non-occupant co-borrowers can be used Non-occupant co-borrowers can be used Neither income nor assets from the occupying Neither income nor assets from the occupying

borrower are required if non-occupant co-borrower borrower are required if non-occupant co-borrower usedused

95% cash-out refinance even in declining market 95% cash-out refinance even in declining market (must be owner-occupied for the prior 12 months to (must be owner-occupied for the prior 12 months to do this)do this)

No income limitsNo income limits With lower credit scores, in some cases payment is With lower credit scores, in some cases payment is

lower than Fannie or Freddie even with over 20% lower than Fannie or Freddie even with over 20% downdown

Seller not *required* to pay any of the closing fees Seller not *required* to pay any of the closing fees anymore!anymore!

NEW RULES – JULY 14, NEW RULES – JULY 14, 20082008

Risk based MI, but not ratesRisk based MI, but not rates FHA Secure is expanded – will no FHA Secure is expanded – will no

longer have to be delinquent to qualifylonger have to be delinquent to qualify

POSSIBLE CHANGES, POSSIBLE CHANGES, DEPENDING ON DEPENDING ON LEGISLATIONLEGISLATION

New loan limits are set to New loan limits are set to expire on expire on

December 31, 2008December 31, 2008 Back to how it was before Back to how it was before FHA Secure expires FHA Secure expires

December 31, 2008December 31, 2008 FHA Modernization Act (HR1872) – passed FHA Modernization Act (HR1872) – passed the house 9/18/07 – up to 100% financing the house 9/18/07 – up to 100% financing availableavailable

Senate Bill – passed 98.5% max financing and Senate Bill – passed 98.5% max financing and increase loan limits permanently increase loan limits permanently

QUESTIONQUESTIONS?S?

VA LOANS

WHAT IS VA?WHAT IS VA?

The Department of Veterans The Department of Veterans

AffairsAffairs

Government regulated and Government regulated and

endorsed endorsed

Government guarantees Government guarantees

portion of loanportion of loan

WHO CAN DO VA WHO CAN DO VA LOANS?LOANS?

Only originators with Only originators with

VA –Approved CompanyVA –Approved Company

VA MORTGAGE LIMITSVA MORTGAGE LIMITS

$417,000 for 2008 $417,000 for 2008

($625,000 for Hawaii, Alaska, Guam & Virgin ($625,000 for Hawaii, Alaska, Guam & Virgin

Islands)Islands)

Only U.S. properties, it’s territories or Only U.S. properties, it’s territories or

possessionspossessions

WHO QUALIFIES FOR WHO QUALIFIES FOR VA?VA?

Retired U.S. Retired U.S. Veterans with Veterans with Certificate of Certificate of EligibilityEligibility

Active Duty with Active Duty with proof of military proof of military serviceservice

Unmarried surviving Unmarried surviving spouse of veteran spouse of veteran deceased from deceased from service-related service-related deathdeath

VA UNDERWRITINGVA UNDERWRITING

Automated Automated UnderwritingUnderwriting

Flexible Manual Flexible Manual UnderwritingUnderwriting

Speedy process because most information Speedy process because most information for for

eligibility can be obtained onlineeligibility can be obtained online

VA & CREDITVA & CREDIT Rates are typically lower Rates are typically lower

No minimum score requirement for eligible No minimum score requirement for eligible

veteransveterans

Most lenders/investors will require a minimum 580 Most lenders/investors will require a minimum 580

Rate does not increase/decrease because of credit Rate does not increase/decrease because of credit

scorescore

Can be approved for VA 2 years after Chapter 7 Can be approved for VA 2 years after Chapter 7

Bankruptcy (1 year in extenuating circumstances)Bankruptcy (1 year in extenuating circumstances)

REASONS TO NOT USE REASONS TO NOT USE VAVA

VA loans are owner-VA loans are owner-occupied only occupied only

Buyer must occupy the Buyer must occupy the property within 60 days of property within 60 days of closing and use for primary closing and use for primary homehome

Remarried spouse of Remarried spouse of deceased veteran is not deceased veteran is not eligibleeligible

Full-doc loan requirementsFull-doc loan requirements

HOT FEATURES OF VA HOT FEATURES OF VA LOANSLOANS

Negotiable interest ratesNegotiable interest rates All funds can be gifted All funds can be gifted No Monthly MINo Monthly MI No down payment unless required by lenderNo down payment unless required by lender Reduced fees if put 5% downReduced fees if put 5% down Able to finance funding fees into the mortgageAble to finance funding fees into the mortgage May use non-veteran 2May use non-veteran 2ndnd party income to help party income to help

qualify (only the veteran’s portion is secured)qualify (only the veteran’s portion is secured)

QUESTIONQUESTIONS?S?

RURAL DEVELOPME

NT

WHAT IS RURAL WHAT IS RURAL DEVELOMENT?DEVELOMENT?

Census-basedCensus-based

US Department of AgricultureUS Department of Agriculture

Guaranteed against loss by USDAGuaranteed against loss by USDA

Pays lender if borrower defaultsPays lender if borrower defaults

WHO CAN DO USDA WHO CAN DO USDA LOANS?LOANS?

Approved lender with HUD, VA, Approved lender with HUD, VA,

Fannie Mae or Freddie MacFannie Mae or Freddie Mac

State Housing Agency State Housing Agency

Farm Credit ServiceFarm Credit Service

IT’S THE GOVERNMENT, IT’S THE GOVERNMENT, TOO!TOO!

Pays for itself – doesn’t use taxpayer Pays for itself – doesn’t use taxpayer

moneymoney

Funded through the 2% Funding Fee Funded through the 2% Funding Fee

(which can be financed into the (which can be financed into the

loan!)loan!)

LOAN PURPOSELOAN PURPOSE Purchase new Purchase new

constructionconstruction

Purchase existing homePurchase existing home

Refinance (only if Refinance (only if currently have a direct currently have a direct Rural-Development Rural-Development Loan)Loan)

Purchase Mobile Home Purchase Mobile Home (very limited; difficult)(very limited; difficult)

REASONS TO NOT USE REASONS TO NOT USE RURAL DEVELOPMENT FOR A RURAL DEVELOPMENT FOR A

BUYERBUYER

Geographical LimitationsGeographical Limitations Maximum Income limitationsMaximum Income limitations Can’t buy house with in-Can’t buy house with in-

ground poolground pool Owner-occupied only Owner-occupied only

INCOME INCOME QUALIFICATIONSQUALIFICATIONS

Household adjusted annual income Household adjusted annual income cap uses ALL occupants whether on cap uses ALL occupants whether on the loan or not, that are 18 and overthe loan or not, that are 18 and over

Counts gross income, overtime, Counts gross income, overtime, commission, bonuses, net self-commission, bonuses, net self-employment income, Social Security, employment income, Social Security, Child Support, unemployment, etc.Child Support, unemployment, etc.

Based on family size & county where Based on family size & county where property is locatedproperty is located

http://eligibility.sc.egov.usdahttp://eligibility.sc.egov.usda.gov.gov

ADJUSTMENTS TO ADJUSTMENTS TO INCOMEINCOME

$480/Year per minor or full-$480/Year per minor or full-time student time student

Verified child care Verified child care expensesexpenses

$400/Year if borrower or $400/Year if borrower or co-borrower is over 62 or co-borrower is over 62 or disableddisabled

CountiCountieses

1- 1- persopersonn

2- 2- persopersonn

3- 3- perspersonon

4- 4- perspersonon

5- 5- perspersonon

6- 6- perspersonon

7- 7- perspersonon

8- 8- persopersonn

All Florida & All Florida & Virgin Island Virgin Island Counties Counties EXCEPT those EXCEPT those listed below*listed below*

49,549,55050

56,656,60000

63,763,70000

70,770,75050

76,476,40000

82,082,05050

87,787,75050

93,493,40000

Clay, Duval, Clay, Duval, Nassau and Nassau and

St. JohnsSt. Johns

51,451,40000

58,758,75050

66,166,10000

73,473,45050

79,379,35050

85,285,20000

91,191,10000

96,996,95050

CollierCollier 56,256,20000

64,264,25050

72,272,25050

80,380,30000

86,786,70000

93,193,15050

99,599,55050

106,106,000000

Palm BeachPalm Beach 55,755,70000

63,663,65050

71,671,60000

79,979,95050

85,985,90000

92,392,30000

98,698,65050

105,105,000000

Gadsen, Gadsen, Jefferson and Jefferson and LeonLeon

50,050,00000

57,157,15050

64,364,30000

71,471,45050

77,177,15050

82,982,90000

88,688,60000

94,394,30000

OkaloosaOkaloosa 50,850,85050

58,158,10000

65,465,40000

72,672,65050

78,478,45050

84,284,25050

90,190,10000

95,995,90000

* Broward, Pinellas and Monroe are NOT eligible

GEOGRAPHICAL GEOGRAPHICAL QUALIFICATIONSQUALIFICATIONS

ALL of Walton CountyALL of Walton County Destin Destin NicevilleNiceville ValparaisoValparaiso CrestviewCrestview West of Hurlburt in Okaloosa CountyWest of Hurlburt in Okaloosa County ALL of Santa Rosa CountyALL of Santa Rosa County

GEOGRAPHICAL GEOGRAPHICAL LIMITATIONSLIMITATIONS

FT. WALTON BEACH FT. WALTON BEACH &&

SHALIMAR SHALIMAR DO NOTDO NOT

QUALIFY*QUALIFY*(But we have a program that (But we have a program that

does!)does!)

BENEFITS TO BUYERSBENEFITS TO BUYERS

Can finance 102% of appraised value, Can finance 102% of appraised value, without getting cash back at closing (can without getting cash back at closing (can get EMD, but no more)get EMD, but no more)

No Mortgage InsuranceNo Mortgage Insurance 30-Year fixed rate with very competitive 30-Year fixed rate with very competitive

ratesrates No loan limits (DTI/income limitations)No loan limits (DTI/income limitations) Closing costs can be financedClosing costs can be financed Unlimited gift or seller contributionsUnlimited gift or seller contributions No reserves requiredNo reserves required

Sales Price: Sales Price: Appraisal: Appraisal: Seller Seller Paying:Paying:EMD:EMD:Closing/PrepClosing/Prepaidsaids2% Funding 2% Funding Fee:Fee:

$100,000$110,000$0 Closing Costs$500$3,000/$2,000$2,000

Can Finance: $107,000 and get $500 EMD back

Sales Price:Sales Price:Appraisal:Appraisal:Seller Paying:Seller Paying:EMD:EMD:2% Funding 2% Funding Fee:Fee:

$100,000$100,000$105,000$105,000ALL ALL

Closing/Ppds.Closing/Ppds.$500$500$2,000$2,000

Can Finance: $102,000 and get $500 EMD back

QUALIFYINGQUALIFYING Debt to Income Ratios = 29/41Debt to Income Ratios = 29/41 Debt to Income Ratios = 31/43 Debt to Income Ratios = 31/43

(for homes built after January, 2001)(for homes built after January, 2001) Can go higher on DTI w/compensating Can go higher on DTI w/compensating

factors: factors: 660+ Credit Score660+ Credit Score Zero or little payment shockZero or little payment shock 2+ years continuous employment at same job2+ years continuous employment at same job

Rental/Housing history for 12 months Rental/Housing history for 12 months required if credit score 619 or less required if credit score 619 or less (cancelled checks)(cancelled checks)

OTHER CRITERIAOTHER CRITERIA Do not own a dwelling currently Do not own a dwelling currently

Lack sufficient resources to secure Lack sufficient resources to secure conventional creditconventional credit

US Citizen, Permanent Resident, Resident US Citizen, Permanent Resident, Resident Alien, or Qualified AlienAlien, or Qualified Alien

Have legal capacity to enter contractHave legal capacity to enter contract

Primary Residences OnlyPrimary Residences Only

PROPERTY ELIGIBLITYPROPERTY ELIGIBLITY

Must have access from a street, road Must have access from a street, road

or drivewayor driveway

Site value less than or equal to 30% of Site value less than or equal to 30% of

total valuetotal value

Leasehold estates (where applicable)Leasehold estates (where applicable)

OTHER PROPERTY OTHER PROPERTY REQUIREMENTSREQUIREMENTS

If on a well & septic, must be If on a well & septic, must be

tested and meet county tested and meet county

requirementsrequirements Pest inspection required – Pest inspection required –

deficiencies must be deficiencies must be

correctedcorrected Escrow for repairs under Escrow for repairs under

certain limited circumstances certain limited circumstances

and will be 150% of costand will be 150% of cost

New construction – New construction –

must have warrantymust have warranty

FUNDS AVAILABLEFUNDS AVAILABLE RD Has annual amount of funds RD Has annual amount of funds (ends Sept. of current year)(ends Sept. of current year)

Funds must be reserved by the Funds must be reserved by the lender lender

but can’t be until there is a but can’t be until there is a contractcontract

Reservation is valid for 60 daysReservation is valid for 60 days

Have been known to run out Have been known to run out before before

end of fiscal year (not recently)end of fiscal year (not recently)

QUESTIONQUESTIONS?S?

FLORIDA FLORIDA KEYS to HOME KEYS to HOME

PROGRAMPROGRAM

WHAT IS THE KEYS TO WHAT IS THE KEYS TO HOME PROGRAM?HOME PROGRAM?

Serves diverse population of low- to Serves diverse population of low- to moderate-income borrowers and moderate-income borrowers and communitiescommunities

Entire state of Florida is eligible - no Entire state of Florida is eligible - no geographic restrictions placedgeographic restrictions placed

Not a bond programNot a bond program No 1No 1stst time buyer requirement time buyer requirement No recapture tax required to be repaidNo recapture tax required to be repaid Limited Forms/thinner fileLimited Forms/thinner file Purchase of primary home onlyPurchase of primary home only

WHAT TYPE OF WHAT TYPE OF FINANCING IS AVAILABLE?FINANCING IS AVAILABLE? 11stst/2/2ndnd combo (2 loans), but only one payment is combo (2 loans), but only one payment is

mademade 11stst up to 97% is combined with 2 up to 97% is combined with 2ndnd up to 7% up to 7% for a total of 104% total financing – based on for a total of 104% total financing – based on

contract price, not appraised valuecontract price, not appraised value Can go 105% if financing the MICan go 105% if financing the MI 30-year or 40-year fixed or 5/1 or 7/1 ARM30-year or 40-year fixed or 5/1 or 7/1 ARM Will have mortgage insurance on the 1Will have mortgage insurance on the 1stst

mortgage mortgage 22ndnd mortgage is 20-year fixed rate at 7% mortgage is 20-year fixed rate at 7% Can use 2Can use 2ndnd to pay closing costs & pre-paids or to pay closing costs & pre-paids or

reduce amount of the first so mortgage insurance reduce amount of the first so mortgage insurance is less monthlyis less monthly

CREDIT/CREDIT/DEBT TO INCOME RATIODEBT TO INCOME RATIO

600 score required 600 score required for 97% 1for 97% 1stst mortgage mortgage

Subject to approval Subject to approval by Mortgage by Mortgage Insurance company Insurance company

640 required for 2-640 required for 2-unit property. unit property. (Home-buyer (Home-buyer counseling required counseling required for 2-unit purchase)for 2-unit purchase)

INCOME INCOME REQUIREMENTSREQUIREMENTS

Determined by Determined by county in which the county in which the property is locatedproperty is located

Only counts income Only counts income for person(s) on the for person(s) on the loan, not the entire loan, not the entire householdhousehold

No non-occupant co-No non-occupant co-borrowers/co-signers borrowers/co-signers allowedallowed

RESERVES/RESERVES/SELLER CONTRIBUTIONSSELLER CONTRIBUTIONS

No minimum reserve No minimum reserve requirementrequirement

3% seller contributions 3% seller contributions allowedallowed

Buyer can get in with no Buyer can get in with no cash contribution as 2cash contribution as 2ndnd can can be used for pre-paids & be used for pre-paids & closing costsclosing costs

QUESTIONQUESTIONS?S?

IS 100% IS 100%

FINANCING FINANCING

REALLYREALLY

AVAILABLE FOR AVAILABLE FOR

2ND HOME & 2ND HOME &

INVESTMENT INVESTMENT

PURCHASES?PURCHASES?

YES!!!

CO-CO-

COLLATERALIZED COLLATERALIZED

LOANSLOANS

WHAT IS A WHAT IS A CO-COLLATERALIZED CO-COLLATERALIZED

LOAN?LOAN?

A loan where the Lien A loan where the Lien (note) is on more than (note) is on more than

one propertyone property

HOW DOES IT WORK?HOW DOES IT WORK? Borrower uses “lendable equity” in Borrower uses “lendable equity” in

another property in lieu of down payment another property in lieu of down payment on purchase of subject propertyon purchase of subject property

Lendable equity equals value of additional Lendable equity equals value of additional property property

xx 75% less total of all liens (mortgages (1 75% less total of all liens (mortgages (1stst and 2and 2ndnd) and equity lines)) and equity lines)

Additional property would have a “soft” Additional property would have a “soft” 22ndnd, or even 3, or even 3rdrd, mortgage on it, mortgage on it

EXAMPLEEXAMPLE

Purchasing 2Purchasing 2ndnd home at $200,000 home at $200,000 Max total LTV for both properties Max total LTV for both properties

would be 75%would be 75% Lendable Equity is: Lendable Equity is:

$600,000 $600,000 xx 75% - $350,000 = 75% - $350,000 = $100,000 to use in lieu of down $100,000 to use in lieu of down

paymentpayment

This would work!This would work!

HOW MUCH CAN I HOW MUCH CAN I REALLYREALLY BORROW?BORROW?

The total value of all properties (value + sales price) The total value of all properties (value + sales price) xx 75% 75%

Purchase price is $200,000 & value of additional property Purchase price is $200,000 & value of additional property is $600,000. Current loan on additional property is is $600,000. Current loan on additional property is $350,000 and want to borrow 100% ($200,000) of sales $350,000 and want to borrow 100% ($200,000) of sales price.price.

Total owed on both after closing would be $550,000 with Total owed on both after closing would be $550,000 with total value of $800,000 (value + purchase price)total value of $800,000 (value + purchase price)

$800,000 x 75% = $600,000 max loan amount$800,000 x 75% = $600,000 max loan amount

This is more than the new loan + current lien, so it works! This is more than the new loan + current lien, so it works!

HOW CAN I SELL ONE HOW CAN I SELL ONE PROPERTY & NOT THE PROPERTY & NOT THE

OTHER?OTHER?

Partial release clausePartial release clause – –

must pay mortgage must pay mortgage down to where loan down to where loan to value on remaining to value on remaining property is 75%property is 75%

QUESTIONQUESTIONS?S?

PLEDGED ASSET PLEDGED ASSET LOANSLOANS

(PAL)

WHAT IS A PAL & WHAT WHAT IS A PAL & WHAT ARE THE BENEFITS? ARE THE BENEFITS?

Allows up to 100% financing of the subject Allows up to 100% financing of the subject

propertyproperty Pledge eligible assets and eliminate the need Pledge eligible assets and eliminate the need

to liquidate assets in order to obtain cash for to liquidate assets in order to obtain cash for

down paymentdown payment Avoid capital gains associated with a Avoid capital gains associated with a

liquidation liquidation Maintain a more liquid positionMaintain a more liquid position Continue to benefit from any future earned Continue to benefit from any future earned

interest, appreciation or dividendsinterest, appreciation or dividends

WHAT ARE ELIGIBLE WHAT ARE ELIGIBLE ASSETS?ASSETS?

Stocks listed on NYSE, AMEX or NASDAQ Stocks listed on NYSE, AMEX or NASDAQ with share price of $5 or higherwith share price of $5 or higher US Dollar– denominated mutual funds US Dollar– denominated mutual funds Interest-paying corporate debt Interest-paying corporate debt (Moody’s or S&P rated)(Moody’s or S&P rated) Municipal zero coupon debt Municipal zero coupon debt (Moody’s or S&P rated)(Moody’s or S&P rated) Bills, notes or bonds guaranteed by US Bills, notes or bonds guaranteed by US

GovernmentGovernment Debt securities issued by Government Debt securities issued by Government

Sponsored Sponsored Enterprises or Agencies of the US Enterprises or Agencies of the US

GovernmentGovernment Mortgage pass-through certificates issued by Mortgage pass-through certificates issued by FNMA, FHLMC or GNMAFNMA, FHLMC or GNMA CD’s CD’s Money Market FundsMoney Market Funds Cash AccountsCash Accounts

WHAT ARE NOT WHAT ARE NOT CONSIDERED TO BE CONSIDERED TO BE ELIGIBLE ASSETS?ELIGIBLE ASSETS?

OptionsOptions

WarrantsWarrants

Stocks purchased on Stocks purchased on marginmargin

IRA or 401(k) planIRA or 401(k) plan

Shares held in an account Shares held in an account less than 30 daysless than 30 days

We will now go over We will now go over the handouts given the handouts given

to show examples on to show examples on the Pledged Asset the Pledged Asset

LoanLoan

HOW DOES MY CLIENTHOW DOES MY CLIENT DO THIS? DO THIS?

Client provides proof of the assetClient provides proof of the asset Completes Pledged Asset Worksheet & Completes Pledged Asset Worksheet &

agreementagreement Gives contact information for the asset Gives contact information for the asset

(broker)(broker) Copy of monthly statement is sent to Copy of monthly statement is sent to

the investorthe investor

QUESTIONQUESTIONS?S?