LAST UPDATED: September 20, 2016

ShopTalk TranscriptsThis document is continuously updated.

• September 6, 2016 - CMLS• September 20, 2016 - Home Trust Classic

September 20, 2016

Tyler Trompetter (Home Trust)Guideline refresh and updates

Lender Presentation

tyler.Trompetter@hometrust.ca 604-561-5806 direct

September 20, 2016

Who is Home Trust?

•  Proudly serving Canadians for over 25 years

•  Largest independent trust company in Canada

•  Leading lender in alternative lending

•  Over 900 employees across Canada

•  Publicly traded company listed on the TSX

•  National lender

•  Branches in Calgary, Vancouver, Winnipeg, Montreal, Halifax, and Toronto (head office)

September 20, 2016Classic - Alternative Lending

Today’sFocus:Alterna3ve“B”Lending

Asset/con)ngencylendingVSCovenantlendingPropertyisthekeycomponenttothedeal:•  Primeloca3onandmarketablecondi3onü

•  Appraisal–approvedappraisersü

•  Approvedlendingareasü

Classic – Alternative Lending

•  Log Homes X •  Mobile Homes X •  ALR X •  Condos/Townhouses older then 1990 X •  Lease Land X

•  Two HT Mantras: Ø “ Never lend on something we couldn’t sell quickly if

we needed too” Ø “We like unique clients, not unique properties”

September 20, 2016

When Does my Deal go B?

Client doesn’t fit “A / Prime” guidelines Prime à Alternative

The Two reasons you’re likely to call Tyler:

1) Credit Issues 2)Income/Serviceability

•  FIND A SOLUTION WITH ALTERNATIVE LENDING!

Classic - Alternative Lending

Classic Mortgage •  Up to 80% LTV - Purchase; 90% with bundle •  Up to 80% LTV - Refinance; 85% with bundle

•  No Sliding Scale •  Max mtg size $7.5M •  Rentals OK •  BFS, no T1s or NOAs •  All income types •  Look at all credit types

September 20, 2016

Classic - Alternative Lending

Alternative Client Profile

Bruised Credit

•  Life changing events: illness, job loss, divorce

•  Discharged bankruptcy

•  Clients working through Consumer Proposals

•  CRA Debt

Classic - Alternative Lending

Alternative Client Profile

Self-employed applicant •  Stated + Commission income

Ø No T1s needed Ø No NOAs Ø Financials not necessary Ø Alternative documentation

•  What we require: Ø Know your client Ø Know your client’s business

September 20, 2016B-20 – Alternative Lending

Conforming Non-Conforming

Introducing….

two new Residential Mortgage “terms”

• A conforming mortgage will have a TDS ≤ 44%. Exceptions may be approved up to 48%

• Note: if the client chooses a term < 5 years, the 5 year Bank of Canada rate will be used in the debt service calculations

• Non Conforming Mortgage < 65% No TDS Limit

• Only looking for means of affordability (Liquid assets, rental portfolio, future earnings, etc..)

Great for: • High net worth individuals showing no income

Applicants unable to satisfy documentation requirements

In Short: Above 65% GDS/TDS must be < 44% (up to 48% on exception) 65% or less, under non conforming program – no limit to GDS/TDS

September 20, 2016

Deal Examples

September 20, 2016Big Ticket Refi for Bob the Builder:

Scenario: Applicants looking to pay out current 1st, private 2nd, and some consumer debt accrued while had completely renovating home.

Challenge: BFS clients looking for $1.3M with a combined reported inc. of $72k (GDS/TDS: +100/+100). Home Value $2.4M (54% LTV)

Main app: Owns a coffee shop, pays herself $65k/year, financials show retained earnings of approx $12-$18k over the past two years

Co app: “Retired” builder, reported income $7k over past two years.

HT Solution: Wrote a “Non-Conforming” $1.3M loan, no sliding scale;1 year @ 4.25% w/ 1% fee split, 2 year 4.39% w/ 50bps fee ***Client took the 2 year***

How HT Made it work:

Focus was initially on Main app + Coffee shop owner, however, co app was the key. After going through further KYC with broker we learned:

Co app was builder of 30 years, shifted focus from private home building to renovating + flipping o/o properties. Their previous home was bought in West Van for $1.6M in 2013, they spent $500k in renovations completely gutting home, sold in 2015 for $3.7M. After expenses clients netted $1.5M. We simply got the sale contract, order to pay, and statement of adjustments showing funds client netted and considered this as his income.

Property Affordability

September 20, 2016Kin’s Market Kale Hustler BFS Purchase:

Scenario: Applicant looking to purchase new o/o residence in surrey, DP coming from sale proceeds of previous condo. PP - $900kRequested mtg – 80% LTV ($720k)

Challenge: BFS applicant with less than two years history, T1’s for 2015 yet to be filed, little/no reported income to work off of.

Main app: Owned a Kin’s Market Franchise, purchased it 18 months ago, in grocery business as manager for 7 years; +720 beacon

Co app: Stay at home mom, two young children to look after

HT Solution: Offered our Ace Plus program, 1 year @ 3.39% w/ 50bps fee2 year @ 3.39% w/ no fee ***Client took two year***3 year @ 3.39% w/ no fee

How HT Made income work:

Conditioned for:Business ownership (Business license) Business bank statements (6 months were provided)

Bank statements showed monthly deposits in the neighborhood of $50k/month, we comfortably stated $120,000 for main applicant, ratios in line.

Property Affordability

September 20, 2016Johnny and Jill Banko:

Scenario: Clients inherit money from family member; had 35% down to place on detached Abbotsford home.

Challenge: Between the two applicants, three separate bankruptcies on their bureaus. No active trade lines, no re-established. Both currently on disability. Issues with ratios.

Main app: 1 x banko, Disability Co app: 2 x banko, disability

HT Solution: Offered Classic Mortgage Financing (and booked deal!): 1 year @ 5.25% with 1% fee split

Lending Rationale:

Beautiful Abbotsford home65% LTV Disability income – OK!Suite income in basement – fully utilized!$100k in liquid assets after purchase – Affordability

September 6, 2016

Sach Desai (CMLS)

Guideline refresh and updates

Lender Presentation

sach.Desai@cmls.ca 604-687-2118 direct

September 6, 2016

•Each does weekly updates…very informative and organized

•buy downs are allowed to a maximum of 15 bps on any term. There is a buy down calculator on the CMLS Broker Site:

http://www.cmls.ca/brokers CMLS Broker Site

•CMLS is a renewal model lender (optional): ie. they pay 100 bps for a 5 year fixed up front, then 50 bps on renewal.

•CMLS has strong rental offset policies: 100% aback for high ratio insureds for BC rental suites, 80% off set for everything else

September 6, 2016

•FLEX Down is available, but at 90% LTV. Client can use borrowed funds for entire down payment. Can also use gifted funds from non-family sources.

•Before submitting a deal, make sure it fits CMLS guidelines…email Sach (or Marko) a description of your file to make sure it fits. Otherwise, you will be removed from CMLS if your funding ratios fall below 50%

September 6, 2016

•a case by case type of underwriting approach.

CMLS has a “B” Type lending guideline, “AVEO”:

•3 key products: (i) Full Docs (ii) Light Docs (iii) BFS Stated Income

•45/50 GDS/TDS

•don’t worry about funding ratios for AVEO submissions…CMLS wants to see applications

•go to CMLSs page in the ARC and see some case studies for recently approved AVEO deals.

September 6, 2016

•For complete guideline information, visit the CMLS Broker Site or the ARC

September 6, 2016• Recent CMLS info sheets:

9 KEY BENEFITS

The above was prepared by Sach Desai for information and training purposes only and is subject to change at any time without prior notice. CMLS Financial underwriting reserves the right to deviate from the above at its sole discretion when deemed necessary.

9 Net Rent Worksheet (~80% offset equivalent) for non-subject rentals o Even if only 1 property in the portfolio, even if new rental o Extra due diligence at 95% LTV to ensure the file is not too reliant on rent

9 80% offset for secondary suite on conventional Genworth backend insured

o 100% add-back for high-ratio (680+ beacon, otherwise 50% add-back) 9 Flex Down Payment is allowable at BEST rates for first time home buyers

o Borrow the full down payment! 90.1-95% LTV Only. o Gifts OK even from non-family (friend, employer, aunt/uncle etc)

9 Collateral Transfer available!

o If High-Ratio, must have existing insurance & use low-fee legal program 9 Fair IRD Calculation: We effectively use broker rate to broker rate

9 Renewal Model or Full Upfront Model (you choose deal to deal)

9 AVEO Non-Prime: Visit www.AVEOmortgages.com/brokers for more info

o Beacon as low as 550, up to 80% LTV o Rates as low as 3.79% + 1% Fee (risk adjusted up from there) o Stated income, and now Rentals okay too!

9 TRUE Extend / Increase and Blend available without penalty.

9 Auto appraisals on most conventional deals

Understanding AVEO by CMLS: Non-Prime Solutions AVEO by CMLS is a Non-Prime offering to get your clients through a challenging period in life, offering them mortgage financing options while they rebuild their credit and income strength, as stepping stone with the end goal of getting them back into A financing. 1. AVEO Full Doc

x Rates start at 3.79% + 1% fee (up to 0.75% to broker) x Up to 80% LTV, with a min 550 beacon x Up to 65% LTV with min 500 beacon x Owner Occupied or Rental Properties x Traditional income documents required x 0 beacon okay with sufficient alternative credit

2. AVEO ALT/Lite Doc (BFS or Commission)

x Rates start at 4.24% + 1% fee (up to 0.75% to broker) x Up to 80% LTV, min 620 beacon x Up to 65% LTV, min 550 beacon x Owner Occupied or Rental Properties x Alternative income documents permitted

1. Proof of business ownership 2. NOA or Letter from CA confirming no outstanding income taxes 3. Alternative proof of income via bank statements and third party documentation

3. AVEO BFS Stated Income

x Rates start at 4.49% + 1% fee (up to 0.75% to broker) x Up to 65% LTV, min 550 beacon x Owner Occupied or Rental Properties x Proof of BFS and Self-Declared income x Proof of no taxes owing

AVEO Key Value Features

x 45/50 GDS-TDS x BK discharged less than 2 years x Previous mortgage arrears or foreclosures are okay (assuming no financial loss to FI) x Payout of property tax arrears x Payout of income tax arrears x Payout of existing Consumer Proposals x Ability to count trades that were opened during a Bankruptcy as re-established credit

What is NOT Acceptable on AVEO?

x Marginal properties that are in poor or fair condition x Applicants who have filed for BK/CP more than once x Applicants with many major derogatory trade lines after BK/CP

o Note: Some derogs after BK/CP may be accepted with sufficient rationale. How to submit to AVEO in Expert?

x On Expert, “Lender” field: Choose AVEO by CMLS (second one down from the top). x This option will not affect your CMLS efficiency ratios

NOTE: The above is a product summary produced by Sach Desai for information and training purposes only. Subject to change at any time without prior notice. Other conditions and guidelines may apply depending on the specific deal and borrower profiles. E & OE.

September 6, 2016• Recent CMLS info sheets:

AVEO by CMLS: Case Studies AVEO by CMLS is a Non-Prime offering to get your clients through a challenging period in life, offering them mortgage financing options while they rebuild their credit and income strength, as stepping stone with the end goal of getting them back into A financing.

Loan Purpose Challenges AVEO Solution

Purchase of new property after selling existing

x Beacon scores of 589 and 547

x Client was in accident 2 years ago and could not work. While waiting for Long Term Disability, their payments got behind

x Rural location

x Requires extended TDS ratio

x Loan Amount of $171K

x 80% LTV

x Location: Aggasiz, BC

x 28/48 GDS/TDS

x Interest Rate: 4.99%

Refinance to consolidate debts

x Beacon scores of 580 and 646.

x Poor credit due to late payments, current R2 ratings and over limit.

x Need to use both incomes to qualify.

x Need 30 year amortization

x Loan Amount of $487K

x 64% LTV

x Location: Port Coquitlam, BC

x 28/28 GDS/TDS

x Interest Rate: 4.24%

Purchase of new property after selling existing

x Beacon Score at 549

x Poor Credit due to tenants regularly being in arrears.

x Some current past due payments, recent major derogs and borrower filed for credit counselling.

x Client earns Pension income

x Loan Amount of $110K

x 44% LTV

x Location: Hope, BC

x 32/32 GDS/TDS

x Interest Rate: 4.99%

Refinance to consolidate debts, income qualified

x Client has credit issues

x Credit Counselling was recently paid in full December 2015

x Loan Amount: $350K

x 80% LTV

x Location: Langley, BC

x Interest Rate: 4.24%

x Using re-established credit from existing tradelines.

NOTE: The above shows sample case studies from actual approvals. Produced by Sach Desai for information and training purposes only. Subject to change at any time without prior notice. Other conditions and guidelines may apply depending on the specific deal and borrower profiles. E & OE.

September 6, 2016• Recent CMLS info sheets: