July 24, 2025

Due Diligence Narrative Report

Clayton Contact Information

Overview

Originators

Clayton’s Third Party Review (“TPR”) Scope of Work

Sampling

Sponsor Acquisition Criteria

Loan Grading

TPR Component Review Scope

Credit Review

Property Valuation Review

Regulatory Compliance Review

Data Integrity

Data Capture

Data Compare Results

Clayton Due Diligence Results

Clayton Third Party Reports Delivered

Appendix A: Credit Review Scope

Appendix B: Origination Appraisal Assessment

Appendix C: Regulatory Compliance Review Scope

Chris Turk      Senior Client Service Manager

Joe Ozment    Vice President – Client Services & Securitization

Origination Channel

Broker

Correspondent Bulk

Correspondent Flow with delegated underwriting

Correspondent Flow without delegated underwriting

Retail

Total

Standard and Poor’s, Moody’s, Fitch, Kroll, DBRS & Morningstar

Loan Count

Reviewed by Clayton

Assessed whether the characteristics of the mortgage loans and the borrowers conformed to the Sponsor Acquisition Criteria cited above;

Re-calculated LTV, CLTV, income, liabilities, and debt-to-income ratios (DTI) and compared these against the Sponsor Acquisition Criteria;

Analyzed asset statements in order to determine whether funds to close and reserves were within Sponsor Acquisition Criteria;

Confirmed that credit scores (FICO) and credit histories were within Sponsor Acquisition Criteria;

Evaluated evidence of borrower’s willingness and ability to repay the obligation;

Original Appraisal Assessment (368 loans)

Clayton reviewed the original appraisal provided to determine whether the original appraisal was complete, thorough and the original appraised value was reasonably supported.

For more detail on the original appraisal review scope and desk review definitions, please refer to Appendix B and to the guidelines cited above.

Value Supported Analysis (368 loans)

Clayton applied a cascade methodology to determine if the original appraised value was reasonably supported when compared to an independent third party valuation product. Loans were held to a -10% tolerance utilizing the following waterfall;

CU/LCA Score of 2.5 or below

Desk Review/BPO

Field Review/2055 Drive-by

Second Full Appraisal

Tested for certain applicable federal, state and local high cost and/or anti-predatory laws;

Assessed compliance with state specific consumer protection laws by testing late charge and prepayment penalty provisions;

Truth-in-lending/regulation Z (TILA) testing included the following:

Notice of Right to Cancel (Right of Rescission) adherence if applicable;

TIL Disclosure Timing (3/7/3) and disclosure content;

TIL APR and Finance charge tolerances;

Timeliness of ARM Disclosures (if applicable);

Section 32 APR and Points and Fees Thresholds and prohibited practices;

Section 35 Higher Priced Mortgage Loans thresholds and applicable escrow and appraisal requirements;

Prohibited Acts or Practices including Loan Originator compensation rules, NMLSR ID on documents, financing Credit Insurance, mandatory arbitration clauses, and NegAm Counseling;

Reviewed ATR/QM Ability to Repay (a/k/a Minimum Standards for Transactions): for applications on or after 1/10/2014. Clayton confirmed the loan files contain documentation to evidence the lender considered and verified the borrower’s ability to Repay. This included identifying whether QM loans met agency exemptions or were underwritten in accordance with Appendix Q. Non-QM loans were reviewed to ensure the lender documented that they considered and verified the eight (8) underwriting factors required for ATR compliance in accordance with either their guidelines or the Sponsor Acquisition Criteria;

The ATR/QM Rules allow the lender to exclude up to two discount points from the 3% points and fees evaluation depending on the loan’s undiscounted interest rate in relation to the APOR index rate. The ATR/QM Rule does not set the required rate reduction per discount point.

Prepayment Penalty restrictions.

TRID: on applicable loans, test compliance with the Integrated Mortgage Disclosure rules under the Real Estate Settlement Procedures Act (Regulation X) and the Truth in Lending Act (Regulation Z) defined under the Dodd-Frank Wall Street Reform and Consumer Protection Act as promulgated by the Consumer Financial Protection Bureau.

Real Estate Settlement Procedures Act (RESPA) laws and regulations testing included:

GFE initial disclosure timing and content;

Confirmed the file contains the final HUD1 Settlement Statement;

GFE to HUD1 evaluation for 0% and 10% fee tolerances;

Homeownership Counseling Notice;

Affiliated Business Disclosure if applicable.

OF NOTE: As of October 3, 2015 (“TRID Effective Date”), Clayton commenced testing applicable loans subject to the TRID Effective date against a TRID scope of review that was based on outside counsel’s interpretations of the published regulations as of the TRID Effective Date. Clayton’s scope was commercially reasonable as it relates to a Third Party Review (“TPR”) firm’s role as TPR conducting an independent third-party pre-securitization due diligence review (“Initial TRID Scope”). The Initial TRID Scope was created with guidance from outside counsel.

On, June 15th, SFIG published its RMBS 3.0 TRID Compliance Review Scope ^© documentation, developed under the leadership of members from Third Party Review (“TPR”) firms across the industry and SFIG’s RMBS 3.0 Due Diligence, Data and Disclosure Working Group. The RMBS 3.0 TRID Compliance Review Scope was created with an aim to facilitate a uniform testing and risk identification standard as it would apply to an assignee, as a result of a consistent Truth-In-Lending Act liability interpretation according to the understanding of prevailing legal precedent and informal written guidance and webinars offered by the CFPB, as it applies to the Know Before You Owe / Truth In Lending Act (“TILA) – Real Estate Settlement Procedures Act (“RESPA”) Integrated Disclosure (“TRID”) Rule (78 FR 79730, as amended). RMBS 3.0 TRID Compliance Review Scope may be formally amended by the SFIG RMBS 3.0 Due Diligence, Data and Disclosure Working Group as clarifying regulations may be promulgated on a go forward basis, as well as any binding judicial interpretations of the underlying law.

Clayton applied the enhanced RMBS 3.0 TRID Compliance Review Scope to all the loans in this transaction.

Compliance Review (Business Purpose, Non-Owner Occupied)

Non-Owner Occupied Scope: Most consumer protection laws are designed to afford protection to borrowers who are entering into a loan that will be secured by their residence. For most high cost and higher-priced laws, as well as rescission, the only loans covered by the law are loans secured by the borrower’s (or in the case of rescission a title holder’s) principal residence. Most other consumer protection laws extend to a borrower’s secondary residence, which under TILA and RESPA is a residence that they occupy at least 2 weeks during the year. Further, if the loan is for a business purpose it is often excluded from consumer protection laws regardless of occupancy, including TILA (whereas if it is secured by non-owner occupied but for a personal, family or household purpose it is more likely to be covered).

Cook County High Cost Ordinance

Chicago High Cost Ordinance

Virginia Lender and Broker Act after 6/1/2008

Minnesota §58 on or after 8/1/2008

Sufficiency of coverage

Escrow of insurance payments

Tape data received from lender/client is stored in eCLAS;

Loan Reviewer collects validated loan data in eCLAS;

Each received data point is compared to its counterpart collected data point;

Discrepancies found during comparison are stored.

Field Name

Appraisal Form Type

AUS Grade Audit

Borrower 1 Self Employed Flag

Borrower 1 Total Income

Borrower 2 Last Name

Borrower 2 Self Employed Flag

Cash Reserves

Combined LTV

Credit Report Date

Debt to Income Ratio (Back)

Disbursement Date

Original Appraisal Date

Original Appraised Value

Original LTV

Origination Channel

Origination Date

Property Type

Representative Credit Score for Grading

Sales Price

Total Cash Out

Total Monthly Income

Overall Grade Migration

Initial

Credit Grade Migration

Initial

Property Valuation Grade Migration

Initial

ASF Report

Conditions Report

Non-ATR QM Upload

RA ATR QM Data Fields

Standard Upload

Tape Compare

Valuations Summary

Waived Conditions Summary

Narrative Report

Verified that the characteristics of the mortgage loan and borrower conformed to the Sponsor Acquisition Criteria requirements including:

DTI

LTV/TLTV/HLTV

Credit score

Income and employment

Assets and reserves

Property type and use eligibility; and if the property type was a condominium or cooperative, assessed project adherence

Borrower eligibility, including:

Citizenship status

Non- occupant co-borrower

Transaction eligibility, including:

Maximum loan amount

Loan purpose

Occupancy

Noted any approved exceptions or waivers by the originator and/or aggregator to guidelines; verified that approved exceptions included required, documented compensating factors

As part of the guideline review, Clayton performed a credit analysis during which various documents were examined, including:

Uniform Residential Loan Application reviewed to determine:

Initial loan application was in the loan file and was signed by all borrowers

Final loan application was in the loan file and was complete

Information and debts disclosed on loan application aligned with related documentation in the loan file

Employment analyzed and verified through use of various documents, including:

Income documentation

Verbal and/or written verifications of employments (VVOE, VOE)

CPA letter

Business licenses

Tax transcripts (IRS Form 4506-T)

Other documentation in loan file

Income review included:

Required income documentation for all borrowers was present and within required time period

Documents did not appear to have been altered or inconsistent

IRS Form 4506-T

Signed by all borrowers and processed by the originator

Compared IRS tax transcripts to income documentation and noted any inconsistencies

Income was recalculated and was documented with applicable documentation, including:

Tax returns

Financial statements

Paystubs

W-2s

1099

IRS documents

Bank statements

Lease agreements

Award letters

Other documentation in loan file

Asset review included:

Asset documentation required to verify down payment, closing costs, prepaid items and reserves was present and within required timeframe, including:

Verification of deposits (VOD)

Depository account statements

Stock or security account statements

Gift funds

Settlements statements

Other evidence of conveyance and transfer of funds, if a sale of assets was involved

Other documentation in loan file

Asset documents were reviewed to determine any large deposits and appropriate sourcing of funds

Credit Report review included:

Complete copy of report was in loan file

Report was dated within required timeframe

All borrowers were included in the report

Checked any fraud alerts against related loan file documentation

Verified all disclosed mortgage debt on credit report against the loan application (under the schedule of real estate owned) for accurate debt ratio calculation

Compared liabilities listed on the credit report against the loan application for accurate debt ratio calculation

Captured and utilized appropriate credit score for guideline review

Title policy review included:

Title interest – determined if

Fee simple

Leasehold estate

Appropriate vestee(s) were listed on title policy

Amount of coverage was greater than or equal to the original principal amount of the mortgage

Applicable title endorsements were present

Checked for any encumbrances, encroachments and other title exceptions affecting the lien identified through the title search; verified that each issues was addressed in the transaction

Reviewed the chain of title and duration of ownership by seller or borrower (whichever was applicable)

Captured monthly tax payments in debt ratio calculation

HUD1 (Settlement Statement) review included:

Funds to close identified and analyzed against borrower’s assets

Seller contributions did not exceed maximum allowed

Subject property, seller and borrower aligned with other loan documentation

Disbursements and pay-offs included in debt ratio calculations

Loan purpose confirmed

Hazard/Flood insurance review included:

Verified presence of required hazard insurance and flood insurance (if required)

Confirmed that any required insurance was for the:

Correct borrower

Correct property

Correct lender

Correct loan number

Life of loan, if flood insurance required

Confirmed that any required insurance minimum coverage amount and policy period

Reviewed for evidence that any required insurance policy premium was paid

Confirmed that the mortgagee clause listed the lender’s name and “its successors and assigns”

Confirmed that the payment amount on any required insurance was included in the debt ratio calculation

Mortgage Insurance review included:

Determined if mortgage insurance is required

Captured mortgage insurance name, certificate # and percentage guarantee (when required)

For each mortgage loan, Clayton examined the mortgage or deed of trust for evidence of recordation. In lieu of a copy of the mortgage or deed of trust with recording information, a copy of the mortgage or deed of trust that is stamped “true and certified copy” by the escrow/settlement agent plus recording directions on closing instruction documentation was utilized as evidence for recording.

For each mortgage loan, Clayton utilized the results from an independent, third-party fraud tool along with information in the loan file to identify and address any potential misrepresentations including:

Borrower identity

Social Security inconsistencies

Borrower name variations

Occupancy

Borrower address history

Subject property ownership history

Employment

Licensing – reviewed NMLS data for:

Mortgage lender/originator

Loan officer

OFAC

Verified that the mortgage loan file contained an appraisal report and that it met the following criteria:

Appraisal report used standard GSE forms, appropriate to the property type:

FNMA 1004/FHLMC 70 – Uniform Residential Appraisal Report. Used for 1-unit properties, units in planned unit developments (detached PUDs) and condominium projects that consist solely of detached dwelling (site condominium)

FNMA 1073/FHLMC 465 – Individual Condominium Report. Used to appraise a unit in a condominium project or a condominium unit in a PUD (attached PUD)

FNMA 1025/FHLMC 72 – Small Residential Income Property Appraisal Report. Used for all two-to-four unit residential income properties, including two-to-four unit properties in a PUD

FNMA 2090 – Individual Cooperative Appraisal Report. Used for individual cooperative units

FNMA 2000/FHLMC 1032 – One Unit Residential Appraisal Field Review

FNMA 2000a/FHLMC 1072 – Two to Four Unit Residential Appraisal Field Review

Appraisal report was reasonably complete and included:

Appraisal report form, certification, statement of limiting conditions and scope of work

Accurate identification of the subject property

Accurate identification of the subject loan transaction

Accurate identification of the property type, in both land and improvements

All required attachments including:

Subject front, rear and street photos and valued features

Subject interior photos – kitchen, all baths, main living area, updates/upgrades, deferred maintenance

Photos of all comparable sales and listings

Location map

Exterior sketch of property with dimensions

1004MC Market Conditions Report

Evidence that appraisal report was made “As Is” or provided satisfactory evidence of completion for all material conditions

Appraisal date met supplied Sponsor Acquisition Criteria

If applicable to Sponsor Acquisition Criteria requirements, a second full appraisal was furnished and met Sponsor Acquisition Criteria

Performed a general credibility assessment of the results of the appraisal per Title XI of FIRREA and USPAP based on the following criteria:

Title XI of FIRREA:

If the appraisal was completed by a trainee or licensed appraiser unqualified to independently sign the report, an appropriately licensed appraiser co-signed as a supervisory appraiser and inspected the property

Determined that either the appraiser or supervisory appraiser was appropriately licensed by verifying the appraiser’s license included in the appraisal.

Reviewed for the presence of any “red flags” related to the mortgaged property that may have posed a risk to the property or occupants

USPAP

Confirmed that the appraiser developed and communicated their analysis, opinion, and conclusion to intended users of their services in a manner that is meaningful and not misleading and that the appraisal is signed.

Reviewed and graded the appraisal valuation to the following criteria:

Appraised value was reasonably supported. Utilized the following review in making value supported determination:

Comps used were located reasonably close to the subject property and if not the reason was satisfactorily explained

Comps used were reasonably recent in transaction date and if not the reason was furnished

Comps used were reasonably similar to the subject property and if not an explanation was supplied

Appraised value of the subject was bracketed by the sales prices of the comps and if not the reason was furnished

Adjustments were reviewed and appeared reasonable utilizing the 15% net/25% gross guideline.

Property was complete. However, if the property was not 100% complete, then any unfinished portion had no material impact to the value, safety, soundness, structural integrity, habitability or marketability of the subject property

Appraisal was reviewed for any indication of property or marketability issues. Utilized the following key points in making determination:

Appraisal was made on an “As Is” basis or provides satisfactory evidence of completion of all material conditions

Property usage was reviewed for zoning compliance

Property utilization was reviewed to determine it was “highest and best use”

Neighborhood values were reviewed to determine if declining

Market conditions were reviewed to determine indication of possible marketability issues:

Location

% built up

Growth rate

Demand/supply

Marketing time

Predominant occupancy

Physical condition of the property was reviewed to determine that the property condition was average or better

Style of property was reviewed to determine if unique property

Any health and safety issues were noted and/or remediated

Locational and/or environmental concerns adequately addressed if present

Property Eligibility Criteria – Clayton reviewed the property to determine that the property met the client supplied eligibility requirements. Examples of ineligible property types may include:

3 to 4 unit owner occupied properties

2 to 4 unit second homes

Unwarrantable or limited review condominiums

Manufactured or mobile homes

Condotel units

Unique properties

Working farms, ranches or orchards

Mixed-use properties

Properties subject to existing oil or gas leases

Properties located in Hawaii Lava Zones 1 and 2

Properties exceeding Sponsor Acquisition Criteria requirements for excess acreage

Properties Affected by Disasters Criteria – Clayton reviewed the appraisal date against any FEMA Declared Disaster Areas that were designated for Individual and/or Public Assistance due to a federal government disaster declaration.

If the appraisal date is before the FEMA Effective Date for any of the disasters listed, Clayton will specify whether or not there has been a property inspection since the date listed, the latest inspection date, whether or not new damage has been indicated, and the amount of said damage.

Disclaimer

The individuals performing the aforementioned original appraisal assessment are not persons providing valuations for purposes of the Uniform Standards of Professional Appraisal Practice (“USPAP”) or necessarily licensed as appraisers under Federal or State law, and the services being performed by such persons do not constitute “appraisal reviews” for purposes of USPAP or Federal or State law.

Clayton makes no representation or warranty as to the value of any mortgaged property, notwithstanding that Clayton may have reviewed valuation information for reasonableness

Clayton is not an ‘AMC’ (appraisal management company) and therefore Clayton does not opine on the actual value of the underlying property

Clayton is not a ‘creditor’ within the meaning of ECOA or other lending laws and regulations, and therefore Clayton will not have any communication with or responsibility to any individual consumer concerning property valuation.

Clayton does not check to see if the appraiser is on the Freddie Mac exclusionary list

Desk Review definitions

Clear Capital “CDA” means a written retrospective analysis of an appraisal of residential real property relating to completeness, reasonableness, and relevance. The relevant appraisal shall be provided to Clear Capital by Customer. The CDA will offer an alternative value, if deemed appropriate, based on the analysis of the competitive market as of the effective date of the appraisal provided. The CDA will also provide an analysis of the appraisal provided, including supporting narrative and data to fully support the CDA value and outline deficiencies within the appraisal. The CDA will also contain a Risk Score and Risk Indicators based upon the findings of the analysis for the appraisal provided to Clear Capital by Customer.

ProTeck’s Appraisal Risk Review (ARR) is an enhanced desk review of the original appraisal in the file completed by a licensed appraiser. The ARR validates subject and comparable data and characteristics, confirms the original appraiser’s methodologies, credentials, and commentary to insure compliance with regulatory requirements and industry accepted best practices, and flags all risk factors while also providing a final value reconciliation used to grade the loan.

RESPA and Regulation X: Loan level analysis on the following:

GFE/HUD1: confirm the correct version of the GFE and HUD1 were properly completed under the Regulation X Final Rule that became mandatory on January 1, 2010

Initial Good Faith Estimate, (GFE): timing and content of the initial disclosure

Final GFE: Verification that increases to fees from the initial GFE were disclosed within 3 days of valid changed circumstance documentation within the loan file

Final HUD1 Settlement Statement: verify the loan file contains the final HUD1 and the loan terms on the HUD1 correspond to the actual loan terms from the Note

Final GFE to HUD1 tolerance fee evaluation: confirm the fees charged on the HUD1 do not exceed the Final GFE in the 0% or 10% fee tolerance categories, including a review for a Settlement Service Provider List if the lender excludes fees that the borrower can shop for.

Affiliated Business Disclosure: if the loan file indicates the lender or broker referred the borrower to a known affiliate, confirm the disclosure was provided to the borrower

Homeownership Counseling Notice: for loan applications on or after 1/10/2014, confirm the notice was provided to the borrower within 3 days of application

Truth in Lending Act and Regulation Z – Loan level analysis on the following:

TIL Disclosure: Content of Disclosures – perform an independent recalculation of the finance charges and APR to determine whether the amounts disclosed on the final TIL were within allowable tolerances. Payment schedule accuracy, including under the Mortgage Disclosure Improvement Act for loans applications on or after January 30, 2010. Additional disclosure content with a focus on the consistency of the prepayment penalty disclosure and assumption policy with the note and security instrument.

Mortgage Disclosure Improvement Act, (3/7/3 rule): Confirm the timing of the initial TIL disclosure within 3 days of application, 7 days prior to consummation, and corrected TIL disclosures provided at least 3 days prior to consummation for applications received on or after July 30, 2009 (Section 19)

ARM Disclosure: confirm these disclosures are in the file within 3 days of application, or 3 days of the borrower discussing ARM programs identified within the loan file

Right of Rescission – Review the disclosure form type, disclosure timing, disclosed dates, other material disclosures, and the loan disbursement (Section 23)

High Cost mortgage thresholds for points and fees (Section 32)

High Cost Prohibited Acts and Practices upon request (Section 33)

Higher Priced Mortgage Loan thresholds for APR in relation to the APOR. Including Escrow and appraisal requirements (Section 35)

Prohibited Acts or Practices including testing the Loan Originator compensation rules, NMLSR ID on documents, financing Credit Insurance, mandatory arbitration clauses, and NegAm Counseling (Section 36)

ATR/QM Ability to Repay, aka Minimum Standards for Transactions: for applications on or after 1/10/2014, confirm the loan file contains documentation to evidence the lender considered and verified the borrower has the ability to repay in accordance with the ATR requirements This included identifying whether QM loans met agency exemptions or were underwritten in accordance with Appendix Q. Non QM loans will be reviewed to ensure the lender documented that they considered and verified the 8 underwriting factors as required for ATR compliance. This review also includes evaluating loans against the new TILA prepayment penalty restrictions (Section 43)

TRID: on applicable loans, test compliance with the Integrated Mortgage Disclosure rules under the Real Estate Settlement Procedures Act (Regulation X) and the Truth in Lending Act (Regulation Z) defined under the Dodd-Frank Wall Street Reform and Consumer Protection Act as promulgated by the Consumer Financial Protection Bureau.

FACTA – the Credit Score, Key Factors, and Notice to Home Loan Applicant disclosures

HMDA – Whether the loans is Rate Spread threshold reportable.

Higher-Priced

State/Local High Cost

Vermont

(High Rate, High Point law)

Ohio, including

Cleveland Heights ordinance

Anti-Predatory

Minnesota (Mortgage Originator and Service Licensing Act)

Puerto Rico (Office Regulation 5722)

Texas (Texas Finance Code)

West Virginia (Residential Mortgage Lender, Broker and Servicer Act).

Borrower’s Interest

Consumer Protection

Texas Equity