To: Regency’s Realtor-Partners

From: Mike Ramini @ Regency Mortgage Corp.

Re: Fannie Mae’s Loan Quality Initiative

Effective Date: June 1, 2010

Effective with new borrower(s) loan applications taken on June 1, 2010 and after, we will now be required, under Fannie Mae’s new Loan Quality Initiative, to make certain that there is no undisclosed debt right up and through the day of closing. This means that a borrower(s) cannot have obtained any new debt from the time of the initial credit report through the day of closing. It is now incumbent upon the originating lender (Regency Mortgage Corp.) to obtain a new credit report prior to closing in order to verify to Fannie Mae that there is no undisclosed debt. It is important to understand, should a new credit report disclose any new debt, we will be required to re-underwrite the loan, which could result in either a delay or even a cancellation of the loan closing. Also, a lower FICO score could result in a price and/or rate adjustment to the borrower’s loan, or worse, a loan approval declination, hence a cancellation of the loan closing.

Even any new credit inquiries must be researched by a third party and verify that these inquiries did not result in any new debt.

This is a significant change that could have a real negative impact on our business if not handled correctly. With your help we can minimize any disruptions to our closings. How? By being very clear upfront with all buyers/borrowers that they absolutely cannot incur any new debt from the time of loan application through the date of closing. It is imperative that they understand the potential consequences of doing so. You might even consider writing it into your purchase contracts to protect your sellers. There is no doubt that closings will be cancelled as a result of these new mandates. Let’s just make sure they don’t belong to us!

Thank you for your business! Mike