Doing Business with Gateway Correspondent Lending Client Guide Chapter 1

Transcription

1 Doing Business with Gateway Correspondent Lending Client Guide Chapter Gateway Mortgage Group, LLC. Rev. 8/27/14

2 TABLE OF CONTENTS Chapter 1 Doing Business with Gateway Correspondent Lending General Purpose of this Guide Gateway Business Hours and Holiday Schedule The Gateway Correspondent Team Correspondent Division Manager Correspondent Operations and Underwriting Correspondent Sales Team Correspondent Support Contacts Registration and Lock Desk General Questions Correspondent Loan Servicing Other Helpful Information Wire Transfer Mortgagee Clause MERS ID Number FHA ID Number VA ID Number USDA ID Number Correspondent Website Mailing Addresses The information provided herein is for business and professional use only and should not be considered an advertisement to extend credit or a commitment to purchase loans. All loans are subject to program guidelines and final underwriting approval. This information is subject to change at any time without notice. Gateway Mortgage Group is a registered service mark of Gateway Mortgage Group, LLC. NMLS

3 Doing Business with Gateway Correspondent Lending General Gateway is delighted that you have become our business partner! This Chapter contains general information you will need in order to transact business with Gateway s Correspondent Division. Please direct questions to the Correspondent Division associates at their direct numbers and addresses shown below. Purpose of this Guide The purpose of this Gateway Correspondent Client Guide ( Guide ) is to provide Gateway s approved Correspondent clients ( Clients ) with policy and procedure requirements to follow when doing business with us. The Guide is a critical component of the Contract Documents governing our relationship. Exceptions to the requirements of this Guide, the Correspondent Loan Purchase and Sale Agreement ( Agreement ) or any other Contract Documents (as defined in the Agreement) must be granted in writing by an authorized officer of Gateway. This Guide contains information that is confidential and is the property of Gateway s Correspondent Channel. It may not be copied, published, or used, in whole or part, for any purpose other than as expressly authorized by Gateway. Gateway Business Hours and Holiday Schedule Gateway s Correspondent Division business hours are between 8:30 a.m. and 5:00 p.m. (CT), Monday through Friday. Gateway is closed on the following holidays: New Year s Day Memorial Day Independence Day Labor Day Thanksgiving Day Friday after Thanksgiving Christmas Day It is important that the contents of this Guide be shared with all pertinent parties within your organization to ensure compliance with Gateway s guidelines when registering, underwriting, or delivering loans to Gateway for purchase. As new products, policies, or procedures are introduced, or existing policies and procedures are revised, you will receive a Correspondent Client Announcement as initial notification of the change. The contents of the announcements will be incorporated into the Guide. Additionally, the Gateway Correspondent Website is a vital component of doing business with Gateway. It is located at 3

4 The Gateway Correspondent Team Correspondent Division Manager Scott Henley Senior Vice President, Correspondent Production Manager 4201 North State Highway 161, Suite 100 Irving, Texas , ext. 168 main direct mobile Correspondent Operations and Underwriting Linda Garloch Correspondent Operations Manager direct Debi Hunter Correspondent Underwriting Manager direct Donell McMullen Correspondent Client Liaison direct toll free Gary Lemley Correspondent Client Liaison direct toll free Michele Chapman Correspondent Client Liaison direct toll free Compliance and Credit Lamar Brown Manager of Counterparty Administration direct 4

5 The Gateway Correspondent Team Correspondent Sales Team Scott Henley Senior Vice President National Correspondent Production Manager direct mobile Greg Komar Regional Sales Manager direct mobile Jared Edmonds Regional Sales Manager direct mobile Jace Cowan Regional Sales Manager mobile 5

6 The Gateway Correspondent Team Registration and Lock Desk Lock Desk Personnel Toll free :30 a.m. to 5:00 p.m. CT Online Locking First posting to 8:00 p.m. CT General Questions Questions regarding post-delivery operational issues, including suspense conditions, reconciliations, and website technical assistance, should be directed to: Donell McMullen Correspondent Client Liaison direct toll free Gary Lemley Correspondent Client Liaison direct toll free Please questions regarding underwriting policies, guidelines and scenarios to s will be responded by the end of the following business day. Always include your Gateway Client ID and Loan # in all communications! Correspondent Loan Servicing Correspondent Liaison for Servicing Issues (Clients and Borrowers) Toll free

7 Other Helpful Information Wire Transfer Wire transfer instructions for remitting any monies due Gateway are as follows: Arvest Bank, Tulsa OK ABA Credit: Gateway Mortgage Group, LLC Gateway Loan Number: (insert Gateway loan number) Borrower Name (insert borrower name) Attn: Correspondent Accounting Purpose: (Specify) Please state the purpose of the wired funds (e.g., mortgage payment, funding reconciliation, pair off fees, repurchase proceeds). For proper credit, the wire must also reference the borrower s name and account number. Mortgage Clause As of the purchase date, the mortgagee clause for all types of insurance policies (hazard, flood, MI, title) must read: Gateway Mortgage Group, LLC ISAOA ATIMA 6910 East 14th Street Tulsa, OK Identification Numbers MERS: FHA ID: VA ID: USDA ID: MI Master Policy ID s CMG/Arch: Essent: Genworth: B HV MGIC: National MI: PMI: MPN Radian: MP United Guaranty:

8 Correspondent Website Website Gateway Mortgage Group, LLC s business to business website, www. GatewayCorrespondent.com, offers our correspondent clients the ability to perform the following functions on-line: access product, pricing and pipeline information register and/or lock a loan with immediate confirmation view and print lock confirmations view loan status import the Fannie Mae 3.2 loan file to Gateway upload and deliver imaged files and documents print approvals and view purchase advices access the Correspondent Client Guide Access to the functions listed above can be granted by contacting your Regional Sales Manager. 8

9 Mailing Addresses Please refer to this chart for specific mailing addresses for overnight and regular U.S. Mail. Original Notes Type of Documentation Files for Underwriting, and/or Purchase Review and Funding (Note: Preferred delivery method is via imaging upload. See Delivery Chapter for instructions.) Suspense Items for Loan Purchase Review (Note: Preferred delivery method is image upload) Miscellaneous Correspondence relating to Sales and Marketing Fees Due Gateway (if not net funded, e.g. DO Payments, Late Doc fees, Extended Lock Payments, EPO/EPD fees, repurchase proceeds) (Note: Preferred delivery method is by wire. See also Wiring Instructions in this Chapter.) Final Documents Title Policies Recorded Security Instruments Recorded Subordination Agreements Submissions, if applicable Tax Bills Hazard Insurance Policies, Flood Insurance Policies, Mortgage Insurance Certificates/Invoices Mortgage Payments (Note: Preferred delivery method is by wire. See also Wire Transfer in this Chapter.) Mortgage Payoffs (Note: Preferred delivery method is by wire. See also Wire Transfer in this Chapter.) Client Approval/Recertification Documents Mailing Address Gateway Mortgage Group, LLC Attn: Correspondent Note Custodian 6910 East 14th Street Tulsa, Oklahoma Gateway Mortgage Group, LLC Attn: Correspondent File Set-Up 4201 N State Highway 161, Suite 100 Irving, Texas Gateway Mortgage Group, LLC Attn: Correspondent Suspense Team 4201 N State Highway 161, Suite 100 Irving, Texas Gateway Mortgage Group, LLC Attn: Correspondent Sales 4201 N State Highway 161, Suite 100 Irving, Texas Gateway Mortgage Group LLC Attn: Correspondent Accounting 6910 East 14th Street Tulsa, Oklahoma Gateway Mortgage Group, LLC Attn: Correspondent Final Documents 6910 East 14th Street Tulsa, Oklahoma Corrpostdocs@GatewayLoan.com Gateway Mortgage Group, LLC Attn: Tax Department 6910 East 14th Street Tulsa, Oklahoma Gateway Mortgage Group, LLC Attn: Insurance Department 6910 East 14th Street Tulsa, Oklahoma Gateway Mortgage Group, LLC Attn: Payment Processing PO Box Tulsa, Oklahoma Gateway Mortgage Group, LLC Attn: Payoffs 6910 East 14th Street Tulsa, Oklahoma Gateway Mortgage Group, LLC Attn: Correspondent Client Administration 4201 N State Highway 161, Suite 100 Irving, Texas

10 Eligible Mortgage Loans Client Guide Chapter Gateway Mortgage Group, LLC. Rev. 8/12/2014

11 TABLE OF CONTENTS Chapter 2 Approved Products and Services Eligible Property and Lien Status Geographic Restrictions Florida By Product Eligibility Restrictions Age of Loan / Prior Rejects Overlays Property Type Restrictions Loan Type / Feature Restrictions Borrower Type Restrictions Third Party Originations Warehouse Lines of Credit and Wire Instructions General Wire Instruction and Warehouse Line Verification Form The information provided herein is for business and professional use only and should not be considered an advertisement to extend credit or a commitment to purchase loans. All loans are subject to program guidelines and final underwriting approval. This information is subject to change at any time without notice. Gateway Mortgage Group is a registered service mark of Gateway Mortgage Group, LLC. NMLS

12 Eligible Mortgage Loans General Qualified Mortgage Loan Clients will receive an approval letter specifying the products, and services for which they are eligible. Clients should contact their Regional Sales Manager or Client Liaison should their business needs change after their initial approval. All loans must fully comply with all requirements of Fannie Mae, FHA, ONAP Section 184, VA, and USDA, as applicable, unless otherwise specified below, in the applicable Product Description, or the Gateway Correspondent Overlay Matrix. For any loan that is subject to 12 CFR Section , Gateway will only purchase the loan if (i) it meets the definition of a Qualified Mortgage as set forth in 12 CFR Section (e) (2) Loan and (ii) complies with the Ability To Repay Standards, and all necessary evidence to demonstrate such compliance with 12 C.F.R. Part (e) and 12 C.F.R. Part (c) is included in the loan file transferred to Gateway. Loans that are not subject to 12 CFR Section will only be purchased if they meet all applicable agency and program guidelines. Any breach of these requirements shall be deemed to materially and adversely affect the value of the loan and shall require a repurchase of the affected loan. Loans that are not subject to 12 CFR Section will only be purchased if they meet all applicable agency and program guidelines. Any breach of these requirements shall be deemed to materially and adversely affect the value of the loan and shall require a repurchase of the affected loan. Eligible Property and Lien Status General All loans must be secured by a first lien mortgage on a one-to-four family residential dwelling located in: Alabama Indiana Nebraska South Dakota Arizona Iowa Nevada Tennessee Arkansas Kansas New Jersey Texas California Louisiana New Mexico Utah Colorado Maryland North Carolina Virginia Delaware Michigan Oklahoma West Virginia Florida * Mississippi Pennsylvania Wisconsin Illinois Missouri South Carolina Wyoming * See Geographic Restrictions section regarding Florida. Refer to the individual Product Descriptions for further product specific geographic lending restrictions. Gateway must approve and activate each state before Clients can register loans secured by properties in any given state. Clients must contact their Regional Sales Manager or Client Liaison to request approval for additional states. 12

13 General (cont.) Gateway relies upon the Client s representations and warranties that all loans are enforceable in accordance with the terms of Gateway s Correspondent Loan Purchase and Sale Agreement ( Agreement ) and comply with all applicable federal, state and local laws. Clients must be aware of, and in compliance with, all terms, representations and warranties contained in the Agreement. Clients are responsible for adhering to all federal, state and local laws and/or regulatory lending guidelines, as well as licensing requirements. Geographic Restrictions Florida The following property types are not eligible in Florida: Condominium units (entire state) All property types located in Broward, Martin, Miami-Dade, Monroe or Palm Beach counties By Product See these Product Descriptions for additional product level geographic restrictions: Texas A6 Equity Loan FHA HUD Section 184 USDA Rural Development Eligibility Restrictions Age of Loan / Prior Rejects Overlays The following loans are not eligible: Loans closed more than 60 days prior to delivery to Gateway. Loans previously rejected by or repurchased from Gateway. Loans previously rejected by or required to be repurchased from or indemnified by Freddie Mac, Fannie Mae, FHA, ONAP, VA or USDA. Loans previously rejected by or required to be repurchased from a private investor, unless such prior rejection / repurchase is fully and specifically disclosed to Gateway in the loan file and Gateway determines the loan is eligible for purchase regardless of the prior investor s determination. Refer to the Correspondent Overlay Matrix for Gateway restrictions and overlays to Fannie Mae, FHA, ONAP Section 184, VA and USDA eligibility, underwriting and documentation requirements regarding: Continued on next page 13

14 Eligibility Restrictions (cont.) Property Type Restrictions See Overlay Matrix. Loan Type Feature/ Restrictions The following loan types, characteristics and/or features are not eligible: Temporary Interest Rate Buydowns Conventional Loans with Down Payment Assistance Programs. Government loans originated under Bond Programs or with non-gateway approved governmental or tribal DPA programs. See the FHA and Section 184 Product Descriptions for links to the current applicable list of approved DPA programs. Section 32, high cost loans (as defined by the Agencies or applicable federal or state regulation) Loan types or loans with features that do not conform in all respects to Fannie Mae, FHA, ONAP Section 184, VA or USDA Guidelines (as applicable for the loan type) Borrower Type Restrictions The following borrower types are not eligible: Borrowers and households with more than 4 financed properties serviced by Gateway, regardless of occupancy or purpose of subject loan Borrowers who are financing a non-owner occupied or second home are limited to 4 financed properties. Borrowers who are financing primary residences may have unlimited financed properties not serviced by Gateway Borrowers with no social security number (ITIN only) Borrower types that do not conform in all respects to Fannie Mae, FHA, ONAP Section 184, VA or USDA Guidelines (as applicable for the loan type) Life Estates Third Party Originations Gateway does not purchase loans originated through third party originators ( TPOs ). Client level exceptions may be considered only for higher net worth Clients with a TPO program established for at least 3 years; strong TPO controls must be demonstrated. Contact your Sales Manager for consideration. 14

15 Warehouse Lines of Credit and Wire Instructions General These requirements apply to Clients utilizing warehouse lines: Clients may borrow money to fund the origination of mortgage loans from a warehouse lender of their choice. Loans funded by Clients corporate or personal funds, and/or lines of credit not obtained through a warehouse lender, are not eligible for sale. Gateway requires bailee letters be submitted with the original Note from warehouse lenders. Note: Clients who are financial institutions (banks, savings & loans, credit unions) or who are wholly owned subsidiaries of a financial institution are NOT required to attach bailee letters to the original Note. However, these exempt clients must provide correct wiring instructions with each Note. Gateway has the option to decline to purchase mortgage loans funded through any warehouse lender which creates additional risk or unreasonable workload in connection with purchasing a mortgage loan Examples of line of credit requirements that might cause Gateway to decline to purchase mortgage loans are: The warehouse lender will not release its security interest in the mortgage loan or note upon transmittal of the purchase proceeds. The warehouse lender requires Gateway to enter into agreements other than a typical collateral bailee agreement. Please refer to Chapter 4 of this Guide for additional information and requirements for warehouse lenders. Wire Instructions and Warehouse Line Verification Form Gateway will obtain the Client s application and Wire Instructions and Authorization to Verify Warehouse Line form during the new client approval and/or annual re-certification process. At the time of loan purchase, the warehouse lender information must match the data previously submitted by the Client during the initial approval and/or recertification process. Gateway will validate the wire authorization with the warehouse lender for each loan purchased. Gateway will require the Client to complete a new Wire Instructions and Authorization to Verify Warehouse Line form when the wire authorization information does not match the data in our records. Wire Instructions must include a physical address for the destination institution. The updated information must be provided to and validated by Gateway prior to the funding of the loan. Please refer to Chapter 4 of this Guide for additional information and requirements for warehouse lenders and wire instructions. 15

16 Loan Registration and Lock Policies Client Guide Chapter Gateway Mortgage Group, LLC. 8/12/2014

17 TABLE OF CONTENTS Chapter 3 Daily Rates and Price Notification Loan Registration and Lock Procedures General Escrow Waivers Confirmations Lock Policies General Extended Lock Program Single Loan Mandatory Re-Locks, Expirations, Extensions and Renegotiations Re-Locks and Expired Locks Extension Fees Renegotiations Program Changes Fallout Policy Automatic Extensions on Delivered Loans General The information provided herein is for business and professional use only and should not be considered an advertisement to extend credit or a commitment to purchase loans. All loans are subject to program guidelines and final underwriting approval. This information is subject to change at any time without notice. Gateway Mortgage Group is a registered service mark of Gateway Mortgage Group, LLC. NMLS

18 Daily Rates and Price Notification General Clients are notified of daily rates and prices as follows: Rate sheets will be distributed daily via . Rates and prices are valid until 8:00 p.m. CT. There is no overnight protection available. Locks must be completed online at Pricing will be available from the time the first rate sheet is posted until 8:00 p.m. CT. Lock desk personnel can be reached until 5:00 p.m. CT at or Price Adjustments and SRP schedules can be found on the website. Final price quoted on all Lock Confirmations includes adjustments and SRP. Volatile market conditions may dictate that prices change more than once per day. Gateway will notify Clients of price changes when possible; however, there are circumstances when the Secondary Marketing department must temporarily close the Lock Desk until revised pricing is available. Loan Registration and Lock Procedures General Clients must register and/or lock loans electronically on Gateway s correspondent website at Additionally, the following loan registration and lock policies apply: All loans must be registered prior to submission for prior underwriting or exception consideration (not available on all loan programs/products); and All loans must have a registered lock no later than one (1) business day prior to delivery Clients must the Lock Desk at Corrlock@GatewayLoan.com for any post-lock changes. 18

19 Loan Registration and Lock Procedures (cont.) Escrow Waivers Policies and procedures regarding escrow waivers are: Escrow waiver price adjustments may vary according to loan terms and state. See the SRP Schedule for specific escrow waiver price adjustments. If partial escrows are being waived, the full escrow waiver fee adjustment applies. If flood insurance is required, a partial escrow waiver is not permitted. If an escrow waiver is requested within ninety (90) days after Gateway purchases a loan, the Client will be billed for the escrow waiver fee price adjustment. Confirmations Follow these policies and procedures for confirmations: A Lock Confirmation will be generated once a valid lock is entered. If a Lock Confirmation is not received, please contact the Lock Desk at Corrlock@ GatewayLoan.com. It is the Client s responsibility to review each Lock Confirmation for accuracy. If the Client notes any discrepancies, they should contact the Lock Desk immediately. In the event of a discrepancy between the price stated on the Lock Confirmation and the price as calculated using the published rate sheet as of the day and time of the lock, the published rate sheet will prevail. 19

20 Loan Policies General Gateway s general lock policies are as follows: Lock periods are available for 12, 21, 30, 45 and 60 day terms. Lock confirmations are tied to the property address. If the property address changes, a new lock is required at current market pricing. If the property changes back to any previous address locked with the borrower, the pricing will be subject to worse case. Locks with weekend or holiday expiration dates will expire on the first business day following the stated expiration date. If the loan amount changes by more than 10% of the original principal balance, the difference between the final loan amount and the loan amount on the lock will be subject to the worse of current market or original lock date pricing. Clients should review product descriptions and guidelines before locking a loan to ensure the loan meets Gateway s policies. Acceptance of a lock by Gateway does not guarantee loan eligibility. Clients must ensure the rate and pricing selected does not exceed any applicable agency, state or federal high cost, or similarly restricted pricing limits. Gateway does not perform any points and fee testing prior to accepting locks. Best efforts delivery is expected on all locked loans. Clients must make every effort to close the loan according to the terms of the Lock. If the borrower changes the type of loan requested so that the terms of the loan no longer agree with the terms of the Lock, the Client must notify the Lock Desk and the loan will be re-priced. Loan delivery is mandatory on closed loans that are locked with Gateway.»It» is an event of default, under the Correspondent Loan Purchase and Sale Agreement, if a loan subject to a best efforts lock closes but is not delivered to Gateway. In the event of such a default, notwithstanding the remedies outlined in the Agreement, Gateway may charge the Client a pair off penalty. The pair off penalty will not be less than the quoted loan price on the expiration date of the Lock less the Lock price, with a minimum penalty of one eighth of one percent (0.125%) of the loan principal. If a locked loan is withdrawn, an audit may be completed to verify that the borrower has withdrawn the loan. Extended Lock Program Extended locks are available for 30 and 15 year Conventional, FHA, and VA loans, with a maximum loan amount of $417,000. Product codes are: CF30EL, CF15EL, F30EL, F15EL, V30EL, and V15EL. 20

21 Extended Lock Program (cont.) A float down option is available and it must be exercised prior to closing. The client may choose from the 21, 30, 45, or 60 day lock periods at float down. If the float-down is exercised, the lock expiration date will be the sooner of the lock term selected at floatdown or the original lock expiration date. Lock extensions after the float-down are subject to Gateway s extension policy. Loan level price adjustments (LLPA) are based on the original lock date or the date the float-down is exercised. An extended lock requires an upfront lock fee to be submitted within 5 business days from the original lock date. The upfront lock fee is 1.00% of the total loan amount at the time the loan is locked. The lock fee will be refunded on the date the loan is purchased by Gateway. Lock fees for denied loans will be refunded, provided the reason for denial is not caused by failure to provide requested documentation. A copy of the executed Correspondent Extended Rate Lock agreement and a check for the lock fee must be sent by express mail, for tracking purposes, to: Gateway Mortgage Group, LLC Attn: Judy Strain c/o Accounting 4201 N. State Highway 161, Suite 100 Irving, TX Extended Lock Period Options: Lock Period Extended Lock Adjustment 90 days 60 Day Base to Rate 120 days 60 Day Base to Rate 150 days 60 Day Base to Rate 180 days 60 Day Base to Rate Single Loan Mandatory Eligibility: Clients must be prior-approved by Gateway Mortgage Group to execute mandatory locks. Clients who are interested in obtaining mandatory approval should contact their Regional Sales Manager for eligibility requirements. Mandatory Commitment Periods: 7 and 14 day locks only. Lock Extensions: if Clients exercise a lock extension before the current expiration date, the following options are available:»extension» Cost 7 Days: Days: Days:.500 Mandatory locks may be extended up to 3 times for a maximum of 30 days. 21

22 Single Loan Mandatory (Contd.) Automatic Extensions on Delivered Loans: If the file is delivered on or prior to the Lock Expiration Date, Clients have up to ten (10) calendar days after the Lock Expiration Date for the loan to be reviewed and purchased. If the loan is not purchased within ten (10) calendar days from the Lock Expiration Date, the loan will automatically be extended seven (7) calendar days and assessed a 0.175% extension fee. This automatic extension and fee assessment will repeat every seven (7) calendar days up to a maximum of 30 days from the original Lock Expiration Date. If all suspense conditions are not cured and the loan is not purchased within thirty (30) calendar days from the original Lock Expiration date, Gateway has the option of continuing to extend the loan as indicated above or deciding that the loan is no longer eligible for purchase and returning the loan file to the Client. Loan Substitutions: If a client is unable to deliver a loan that was committed under a mandatory lock, Gateway will allow the client to substitute a similar loan in its place at no penalty. Substituted loans must be the same product code, note rate, and loan amount (within 2%) as the original loan. Pair-off Fees: Clients are charged a mark-to-market pair-off fee if the Client fails to deliver loans locked under a mandatory commitment. Pair-off fees are assessed to a Client as of a pair-off assessment date that is determined by: The date the Client notifies Gateway of an election to not deliver a loan, or The date the Client notifies Gateway of an election to make a substitution (the pair-off will be applied to the difference, if any, between the original lock amount and the substituted loan amount), or The close of business of a lock expiration date (delivery date) if the loan is not delivered, or When Gateway determines that a loan delivered by the Client is not eligible for purchase. Pair-off Calculation and the Payment of Pair-off Fees: Amount paired-off or shortfall amount x.125% + any positive difference between the posted percentage price on the assessment date and the price that would have been paid pursuant to the lock confirmation = Pair-off Fee Example 1: $200,000 loan locked at , current market at $200,000 x.125% = $ Pair-off Fee Example 2: $200,000 loan locked at , current market at $200,000 x.125% % positive market movement = $2, Pair-off Fee 22

23 Re-Locks, Expirations, Extensions and Renegotiations Re-Locks and Expired Locks Re-locks and expired rate lock policies and procedures are: If the original lock term expired within the last 30 days, a one-time Re-lock may be granted under the following terms: Re-lock term Re-lock fee Re-lock Price 1-7 days 0.300% Worse of: Current 12 day price-or-original Price minus re-lock fee 8-15 days 0.425% Worse of: Current 21 day price-or-original Price minus re-lock fee days 0.625% Worse of: Current 30 day price-or-original Price minus re-lock fee The loan must meet guidelines in place at the time of the re-lock. If the original lock has been expired for more than thirty (30) days, the loan is re locked at current market pricing. Loan cannot have closed prior to the re-lock date. If a loan has been expired for more than forty five (45) days, the loan will automatically be canceled from Gateway s pipeline. All exceptions to pricing policies are negotiated on a case-by-case basis. 23

24 Re-Locks, Expirations, Extensions and Renegotiations (cont.) Extension Fees The extension of an existing lock must be completed prior to expiration. A loan may be extended up to three (3) times for a maximum of thirty (30) days total. After the third extension or extensions exceeding thirty (30) days, the loan is subject to worse case pricing. See below for extension terms and fees: Extension Term Extension Fee 1-3 days 0.075% 4-7 days 0.175% 8-15 days 0.250% days 0.500% Notes: The loan must meet guidelines in place at the time of the extension Policies are subject to change without notice. Renegotiations Lock renegotiations are evaluated on a case-by-case basis. Please contact the Lock Desk for consideration of a specific case. Program Changes Please utilize the following table if a program change is necessary during an existing lock period: Original Program New Program RateSheet Fixed > 15 Years Fixed > 15 Years Original Fixed <= 15 Years Fixed <= 15 Years Original Fixed > 15 Years Fixed <= 15 Years Worse Case Fixed <= 15 Years Fixed > 15 Years Worse Case ARM Other ARM Product Original ARM Fixed Worse Case Fixed ARM Worse Case 24

25 Fallout General Gateway s ability to offer competitive pricing is directly affected by our Clients ability to manage their fallout ratios at an acceptable level. Fallout occurs when a loan is not delivered for purchase. A loan is considered a fallout loan if: the lock expired prior to the loan delivery, the loan was denied, the loan was withdrawn Clients are responsible for notifying the Lock Desk within one (1) business day if a loan falls out due to denial or withdrawal. Gateway reserves the right to charge a pair off fee for any locked loan that is closed but not delivered to Gateway. The pair off fee is calculated by taking the difference in original price and current market and multiplying that figure by the loan amount. The minimum pair off fee is 0.125% of the loan amount 25

26 Automatic Extensions on Delivered Loans General The following applies to delivered loans and extensions: If the file is delivered for purchase on or prior to the Lock Expiration Date, Clients have up to ten (10) calendar days after the Lock Expiration Date for the loan to be reviewed and purchased. If the loan is not purchased within ten (10) calendar days from the Lock Expiration Date, the loan will automatically be extended seven (7) calendar days and assessed a 0.175% extension fee. This automatic extension and fee assessment will repeat every seven (7) calendar days up to a maximum of 30 days from the original Lock Expiration Date. If all suspense conditions are not cured and the loan is not purchased within thirty (30) calendar days from the original Lock Expiration date, Gateway has the option of continuing to extend the loan as indicated above or deciding that the loan is no longer eligible for purchase and returning the loan file to the Client. Return of Mortgage Loans The decision to continue to extend the loan or return the file to the Client will be discussed by the Correspondent Operations Manager and the Regional Sales Manager. If the decision is reached to return the loan to the Client, Gateway will contact the client to make arrangements to return the original note. 26

27 Loan Delivery and Purchase Policies Client Guide Chapter Gateway Mortgage Group, LLC. Rev. 8/12/2014

28 TABLE OF CONTENTS 2014 Gateway Mortgage Group, LLC. Chapter 4 Loan Delivery and Purchase General Calculating Interest Age of Loans / Prior Rejects Electronic and Stamped Signatures Pre-signing Documents Pre-and Post-Purchase Reviews Delivering Loan Packages Purchase Requirements Balance and Payments Amortized Fees Purchase Advice Original Collateral Package Documentation Note Note Endorsement or Allonge Bailee Letter / Wire Instructions Powers of Attorney Closing, Servicing and Compliance Documentation Submission Checklist Rate Lock Confirmation Security Instrument and Riders MERS Title Insurance Closing Protection Letter Surveys Name Affidavit Trusts Payment History First Payment Letter HUD-1 Escrow Waivers Taxes Hazard Insurance Flood Determination Certificate Flood Insurance PMI Government Loans Closing Instructions W-9 Disclosures Right of Rescission HMDA IRS Form 4506-T Good-bye Letter Borrower Contact Sheet

29 TABLE OF CONTENTS Chapter 4 (cont.) Underwriting Documentation Underwriting Methods Underwriting Approval AUS Findings Income Calculation Worksheet Blanket Authorization Overlays Product Descriptions ULDP Fannie Mae LQI Checks Post-Purchase Documentation General Post-Purchase Documents Post-Purchase Actions The information provided herein is for business and professional use only and should not be considered an advertisement to extend credit or a commitment to purchase loans. All loans are subject to program guidelines and final underwriting approval. This information is subject to change at any time without notice. Gateway Mortgage Group is a registered service mark of Gateway Mortgage Group, LLC. NMLS

30 Loan Delivery and Purchase General Clients are required to deliver closed loans by 3 p.m. CST on or prior to the Lock Expiration date. If a complete loan package is not received by 3 p.m. CST on or prior to the Lock Expiration Date, the commitment must be extended or re-locked as outlined in Chapter 3 of this Guide. Completed loan packages must include all documentation obtained or provided by the Client in originating, processing, underwriting, and closing the loan and must evidence compliance with all investor, agency, insurer and regulatory requirements. The loan must close in the name of the Client, or if applicable, their Gateway prior approved d/b/a or affiliate (as those terms are defined by the applicable Investor, Insurer or Agency). No documents are to be drawn in the name of Gateway. All documents must be free of whiteouts, erasures and all borrowers must initial any corrections made. Documents must conform in all respects with FNMA, GNMA, FHA, VA, USDA, ONAP Section 184 or USDA Investor, Insurer, Agency and document custodial requirements, as applicable for the loan product and terms. Gateway relies upon the Client s representations and warranties that all loans are fully negotiable and enforceable and can be serviced in accordance with the terms of Gateway s Correspondent Loan Purchase and Sale Agreement ( Agreement ). Client agrees to indemnify and hold harmless Gateway from any claims, damages or losses suffered or otherwise incurred by Gateway which arise in whole or in part from any breach of the representations and warranties contained in this Guide or the Agreement. Client further agrees that all determinations made by Gateway regarding whether a breach of these representations and warranties occurred shall be final. Client further represents and warrants that the loans fully comply with all applicable federal, state and local laws and regulations, including licensing requirements for the Client and other parties involved in the origination of each loan. To avoid suspensions that create avoidable purchase delays, please be sure to: Coordinate delivery of the imaged loan file with your custodian or warehouse bank s delivery of the original Note. Have any new warehouse lines and/or wire instructions prior approved by Gateway Client Administration prior to delivery of loans. Ensure that borrower names and property addresses are identical on the Note, Mortgage/Security Instrument, Title Commitment, Appraisal, Flood Certificate, AUS findings, and all insurance policies. Re-run AUS prior to closing once final numbers are known. Review AUS findings to make sure file documentation matches last AUS run. Make sure all AUS conditions have been met. Include an explanation of how you calculated qualifying income and assets. If applicable, release the DO findings to Gateway. Upload all required ULDD data to Fannie Mae for conventional loans. Utilize FNMA Early Check Documents necessary to clear suspensions must be delivered by 10 a.m. CST on or before the lock expiration date. 30

31 Loan Delivery and Purchase (cont.) Calculating Interest For purposes of amortizing payments, Gateway calculates interest using a 30/360 calendar year. For purposes of calculating interest per diem between Gateway and the Client, a 365 day calendar year is used. Delivery of Closed Loan Packages Age of Loan / Prior Rejects The following loans are not eligible for delivery: Loans closed more than 60 days prior to delivery to Gateway. Loans previously rejected by or repurchased from Gateway. Loans previously rejected by or required to be repurchased from or indemnified by FHLMC, FNMA, FHA, ONAP, VA or USDA. Loans previously rejected by or required to be repurchased from a private investor, unless such prior rejection / repurchase is fully and specifically disclosed to Gateway in the loan file and Gateway determines the loan is eligible for purchase regardless of the prior investor s determination. Electronic & Stamped Signatures An electronic or digital signature is one generated by a computer. A stamped signature is one produced by a rubber stamp. Electronic or stamped signatures are eligible on specific documents and loan types and loan types as noted below. All closing documents must be signed (live signatures) by the borrowers and property sellers. Conforming Loans: Electronic signatures are only acceptable on the initial disclosures and the initial 1003 application. FHA Loans: For applications taken on or after 2/10/14, E-Signatures are allowed on the initial 1003 loan application and initial disclosures. The change in policy affects borrower signatures. Loan originators are not permitted to electronically sign the 1003 loan application. Lender must comply with HUD Mortgagee Letter Electronic & digital signatures are allowed on third-party documents and disclosures if permitted by the applicable regulator. Stamped signatures on the sales contract and any addendums by the property seller are acceptable to FHA only when the property seller is Fannie Mae or Freddie Mac (i.e. Fannie Mae/Freddie Mac REO). VA loans: Electronic & digital signatures are allowed on third-party documents and disclosures if permitted by the applicable regulator Stamped signatures on the sales contract and any addendums by the property seller are acceptable to FHA and VA only when the property seller is Fannie Mae or Freddie Mac (i.e. Fannie Mae / Freddie Mac REO). Other Requirements: An indication of the electronic signature and date must be clearly visible when viewed electronically and/or in a paper copy of the electronically signed document. 31

32 Delivery of Closed Loan Packages (cont.) Other Requirements (cont.) Clients must employ the same level of care and due diligence with electronically signed documents that they would for paper documents with wet or ink signatures. Electronic signatures must be in accordance with the Electronic Signatures in Global and National Commerce Act (ESIGN) and the Uniform Electronic Transactions Act (UETA), as applicable. FHA defines third-party documents as those originated and signed outside the lender s control, such as a sales contract, amendatory clause or real estate certification. Third-party documents do not include the HUD-1 or any of its supplements unless the electronic signature is provided by HUD, such as in a HUD property disposition sale. Pre-Signing Documents On purchase and refinance transactions, the closing loan documents can be signed prior to the computer generated date on the documents. The computer generated document date remains the same. The notarization (of the security instrument and other documents that require notarization), however, must match the date the documents are signed by the borrower. On rescindable transactions, the 3 day rescission period begins following consummation, delivery of the Notice of Right to Cancel, or delivery of all material disclosures, whichever occurs last. The rescission period cannot begin until the day the borrowers sign and date the Notice of Right to Cancel. Pre- and Post- Purchase Reviews Gateway has the right, but not the obligation, to perform reviews on loans delivered for purchase. These reviews may be pre-purchase (done before a decision to purchase) or post purchase (done after the loan is purchased). The review selection is weighted to loans determined as having higher risk characteristics. These reviews may or may not include review of all aspects of the loan and may or may not include re-underwriting. Gateway may use fraud detection tools, Early Check, or a similar service to screen any loan. With respect to these reviews, Gateway reserves the right to reject any loan for purchase or to demand repurchase, as applicable, if Gateway determines the loan is not of investment quality or does not otherwise conform to the requirements of the Contract documents. The fact that Gateway has conducted or not conducted any partial or complete review of a loan before purchasing it, including, without limitation, underwriting or not underwriting the loan, shall not affect Gateway s rights and remedies and the Client s obligations, liabilities, representations, or warranties under the Contract Documents, this Guide or the Agreement, including without limitation, the Client s repurchase and indemnification obligations. Refer also to your Correspondent Loan Purchase and Sale Agreement. Delivering Loan Packages Loan packages (excluding original Notes, Bailee Letters / Wire Instructions, and the Trailing Documentation as detailed later in this Guide) must be delivered to Gateway s Correspondent Operations Center utilizing our website s image delivery system at 32

33 Delivering Loan Packages (cont.) Images must be in PDF Format. No specific stacking order is required. All documentation obtained by the Client in originating, processing, underwriting and closing the loan must be delivered to Gateway. All documents must be in form and content acceptable to the applicable investor, Agency, insurer and regulator(s). This section includes only information related to specific Gateway requirements that differ from or expand upon investor, Agency, insurer, and regulatory requirements. Gateway may determine for legal, secondary marketing, or other reasons that other original documents must be delivered. Upon such determination, the Client is required to deliver the original documents. Purchase Requirements Balance & Payment Amortized The first payment due Gateway is based on when the file is scheduled for purchase by Gateway and the date of the first payment. All first payments are amortized for loans scheduled for purchase after the 14th of the month. If the 14th falls on a weekend or holiday, Gateway will use the previous business day as the amortization cutoff date. Examples: IF the scheduled purchase date is on or prior to the 14th of the month, on or after the 15th of the month, on or after the 15th of the month, AND the first payment is due on the first of the following month or the month after that, Example: Scheduled purchase date: March 14th; First payment due either April 1st or May 1st first of the following month, Example: Scheduled purchase date: March 15th; First payment due: April 1st the month after the following month, Example: Scheduled purchase date: March 15th; First payment due May 1st THEN the loan will NOT be amortized the loan will be purchased at the original principal balance Gateway will begin immediately servicing the loan the Client is responsible for collecting the first payment and continuing to service it until the first payment is due Gateway the amount of the first payment will be netted out of the Purchase Advice the loan will be amortized one time, and the loan will be purchased at the original principal balance less one payment (including escrows if applicable) the loan will NOT be amortized the loan will be purchased at the original principal balance Gateway will begin immediately servicing the loan 33

34 Fees Refer to the Gateway Rate Sheet in effect as of the loan s Lock Date for the amount of Gateway s administrative, tax service, flood determination, and other fees (if specified). Fees due Gateway will be netted from the loan funding wire. Additionally, any applicable loan level specific passthrough delivery fees due the investor will be net funded (e.g., FNMA PIW fee). Purchase Advice Gateway s Purchase Advice will reflect the detailed calculation of the net amount funded. Once a Purchase Advice is generated, it will be posted to our website for the Client s access at www. GatewayCorrespondent.com. Funds are wired to the Client or their designated warehouse bank. (See also the Bailee Letter/Wire Instructions sections of this Chapter and the Warehouse Bank section of Chapter 2.) The Client is urged to reconcile purchase advices and wires on a daily basis and report any discrepancies immediately to their Gateway Correspondent Client Liaison. See also the Post-Purchase Documentation section of this Chapter regarding actions that Original Collateral Package Documentation Note The original Note (and any applicable original Note Riders or Addenda) must be delivered, along with the applicable Gateway prior-approved Wiring Instructions and/or warehouse bank s Bailee letter to: Gateway Mortgage Group, LLC Attention: Correspondent Note Custodian 6910 East 14th Street Tulsa, OK Original Notes (including any applicable required Note Riders or Addenda) are always required; Gateway does not accept lost Note affidavits or Notes marked as duplicate original, corrected Note, replacement Note or similar verbiage. Gateway will complete its pre-purchase audit based on the original Note document(s) delivered to the Gateway Note Custodian at the above address. Clients must use the current and correct uniform Note as required by the applicable investor or agency. Click here to access Fannie Mae s current list of uniform Note instruments for conventional loans. 34

35 Original Collateral Package Documentation (cont.) Note Endorsement or Allonge The Note must have a complete endorsement chain ending with Gateway Mortgage Group, LLC. Any intervening or canceled endorsements require a written explanation and may result in the loan being ineligible for purchase as provided in the Age of Loan / Prior Rejects section of this Chapter. The correspondent Client name on the face of the Note and in the endorsement language must match exactly and must also be the exact Client entity prior approved by Gateway. Only those officers authorized on the most recent Corporate Resolution approved by Gateway may execute the endorsement. The endorsement should appear on the Note if there is sufficient room on the Note. An Allonge may be used for the endorsement as long as the following requirements are met: The form and content of the Allonge must comply with all applicable state, local, or federal law governing the use of Allonges and result in an enforceable and proper endorsement to the Note. The Allonge must be permanently affixed to the related Note and must clearly identify the Note by referencing at least the name of the borrower(s), the date of the Note, the amount of the Note, and the address of the security property. Any subsequent endorsement should also be placed on the Allonge. The endorsement language must read materially as follows: Pay to the order of Gateway Mortgage Group, LLC without recourse (Client / Lender printed name) By: (Signature of Authorized Officer) Name: (Printed) Title: (Printed) 35

36 Original Collateral Package Documentation (cont.) Bailee Letter / Wire Instructions Gateway requires that a Bailee Letter be submitted with the delivery of the original Note. Clients that are regulated depository institutions, or that have a regulated depository parent, may deliver Wire Instructions in lieu of the Bailee Letter. Gateway will complete its pre-purchase audit based on the original Note document(s) delivered to the Gateway Note Custodian at the above address. Do not include a copy of the Note in the imaged file upload. As part of the Client approval process, and prior to Gateway wiring any funds, Gateway has the right to confirm the bank account wiring information. Once confirmed, the information is entered into the Client s record on Gateway s correspondent systems. This process takes approximately five business days. If an original Note is delivered without wire instructions, or if the wire instructions delivered do not match the approved instructions on Gateway s system, the loan will be suspended. The suspension will not be cleared until approved wiring instructions, signed by an authorized signer, as named on the RESOLUTION OF BOARD OF DIRECTORS AND CERTIFICATE OF SECRETARY form, are received, processed, and entered into Gateway s system. To deactivate previously authorized wire transfer instructions, an authorized officer of the Client, as named on the RESOLUTION OF BOARD OF DIRECTORS AND CERTIFICATE OF SECRETARY form, must complete and sign a Deactivation of Wire Instructions form letter. 36

37 Original Collateral Package Documentation (cont.) Powers of Attorney Powers of Attorney ( POAs ) are acceptable during the processing and closing of a loan transaction if they meet applicable legal, title insurer and program guidelines. If a Power of Attorney is used by a borrower to execute the Note, the original recorded POA or a certified copy of the original POA which has been sent for recording with the Security Instrument, must be attached to the Note. For all loans, a copy of the original POA must also be included within the imaged loan file delivery. When signing documents under a Power of Attorney, the words attorney-in-fact must appear as part of the signature line. An example of an acceptable signature line for documents executed under a Power of Attorney is: (Signature Line) (Typed Name) John Public by Jane Public, his Attorney-in-Fact (Jane would sign as John Public by Jane Public, his Attorney-in-Fact ) All POAs must also: comply with applicable state law and Agency and/or Investor requirements be accepted by the title insurer; no POA related title policy exception or coverage limitation is allowed be recorded prior to or concurrently with the Security Instrument be signed and dated by the party granting the POA be signed by an appropriate witness (if required by applicable state law) specifically identify the subject property by legal description matching the Security Instrument specifically provide for the execution of any and all documents pertaining to the mortgaging of real property be in effect on the date of signing be notarized be irrevocable even upon disability or incapacity of the granting party not be granted to an interested party to the transaction (e.g. realtor, broker, seller, closing agent) For Conventional and FHA loans the initial loan application may not be executed using the POA if the POA is used to execute the final loan application (e.g. either the initial or final application must be signed by all Borrowers). 37

38 Original Collateral Package Documentation (cont.) POA (cont.) For VA loans, a POA may be used for any documents necessary to obtain a VA guaranteed loan, including a Certificate of Eligibility. VA also requires the Veteran to provide written consent to the specifics of the transaction as evidenced by either: The Veteran s signature on both the sales contract and the initial loan application, as long as the Veteran s intention to obtain a VA loan on the specific property is expressed somewhere in these documents OR: A specific POA or other document signed by the Veteran that includes all of the following: Entitlement: A clear intention to use all or a specific amount of the veteran s entitlement Purpose: A clear intention to obtain a loan for the purpose identified (e.g., purchase, refinance, construction) Property Identification: Identifies the specific property. Price and Terms: States the sales price, if applicable, or other relevant terms of the transaction. Occupancy: Indicates the veteran s intention to use the property as an owner occupied home or other appropriate VA occupancy requirement. At the time of loan closing, the Client must also verify the veteran is alive, and, if on active military duty, not missing in action. This alive and well information must be confirmed the Client, who must in turn make the following certification using the VA Lender s Certification Regarding Power of Attorney (VAPOA): The undersigned lender certifies that written evidence in the form of correspondence from the veteran or, if on active military duty, statement of his or her commanding officer (including statement of person authorized to act for said officer), affirmatively indicating that the veteran was alive and, if the veteran is on active military duty, not missing in action status on (date), was examined by the undersigned and that the said date is subsequent to the date the Note and security instruments were executed on the veteran s behalf by the attorney-in-fact. Any hardship exceptions to VA s POA requirements must be made in writing by VA. 38

39 Closing, Servicing and Compliance Documentation Submission Document Checklist The Submission Document Checklist is provided as a tool for Client s use in submitting required delivery documentation. It lists the most commonly required documentation but is not intended to be all-inclusive for every loan. Use is recommended, but optional. Rate Lock Confirmation Include a copy of the final, unexpired Gateway Rate Lock Confirmation accessible at Security Instrument and Riders A complete certified, true copy of the Security Instrument signed by the borrower(s), with all applicable riders required by Fannie Mae, FHA, VA, USDA or HUD/ONAP, must be included. The correct uniform document security instrument and applicable rider(s) must be used according the product, property type and state as required by Fannie Mae, FHA, VA, USDA or HUD/ONAP. Click here for Fannie Mae s current list of uniform Security Instruments and Riders. The FHA case number must be listed on security instrument for FHA loans. For conventional loans, the tagline that identifies the Security Instrument and/or Riders as a uniform instrument must be reflected on each page. If any information on the Security Instrument is incorrect or incomplete, the errors must be corrected and the Security Instrument re-recorded. Gateway will require a copy of the instrument with corrections and a letter that the corrected document has been sent for re-recording prior to funding. Changes that affect the terms of the loan (e.g. loan amount, maturity date) must be initialed by all borrowers. If a required Rider is not signed at closing, the borrower(s) must execute the applicable Riders and the Security Instrument with Rider attached must be rerecorded. Gateway will require a copy of the instrument with Rider and a letter that the corrected document has been sent for re-recording prior to funding. If closed in the name of a Trust, borrower must sign individually and as Trustee. The complete name of the Trust is required on the signature line. (See also Trust requirements). The Security Instrument must be a MERS MOM document and have 18 digit MIN #. If the Client s Org ID and MIN # is incorrect or missing, the Client must take one of the following actions to correct: Execute a Mortgagee s Affidavit to be recorded Execute Mortgage Modification to be re-recorded Correct the Security Instrument and re-record 39

40 Closing, Servicing and Compliance Documentation (cont.) MERS All loans must be closed on a MOM Security Instrument. The originator must register the loan with a MOM security instrument on the MERS System within seven (7) calendar days of the Note Date (or Funding Date in escrow states). The loan must be registered prior to Gateway purchasing the file. The Client must transfer the loan servicing to Gateway within five (5) calendar days from the date of purchase. The correct way to transfer is: Servicer: (Gateway Mortgage Group, LLC) Subservicer: None Investor: (Gateway Mortgage Group, LLC) MERS Fraud Tools (accessed either directly through MERS or through a third party fraud service such as Interthinx, CoreLogic or DataVerify) should be utilized within 24 hours of closing to confirm no undisclosed liabilities identified by the MIN number or under the borrower s social security number. The output of this check should be printed and included in your file prior to purchase. Title Insurance Each loan must be covered by a mortgagee title insurance policy issued in the name of the originating lender, its successors and/or assigns, as their interests may appear ( ATIMA ). The title insurance binder/commitment must be delivered prior to funding and it and the final policy must meet these additional requirements: The title commitment must be issued within 60 days prior to the closing date; the title policy effective date must be no earlier than the date on which the Security Instrument was recorded Must be issued by an approved American Land Title Association (ALTA) title insurance company acceptable to Fannie Mae and/or the applicable investor/agency/regulator (Note: CLTA acceptable in CA). Coverage must equal the mortgage amount Must contain at least a 12 month history of the property s ownership In purchase transactions, the property seller must be the owner of record and match the current owner on the Sales Contract and Appraisal In refinance transactions, title must be vested in the borrowers. All applicable investor/ agency continuity of ownership and seasoning/anti-flipping requirements must be met Must insure a valid first lien position for Gateway and be in the form prescribed the applicable investor/agency/regulator, including all required and applicable endorsements for the loan and property terms/type. Copies of any required mortgage payoffs or subordination agreements must also be in file All judgments/liens must be documented as paid off, subordinated or insured over. Real estate taxes must reflect Not yet due and payable. On condominiums and PUDs, taxes can only be assessable against the subject unit and it s undivided interest in the common areas and not the project as a whole Must contain no exceptions not expressly permitted by the applicable investor/agency, including, but not necessarily limited to survey exceptions, unpaid real estate taxes and/or assessments, or exceptions related to the use of a POA, taking title in the name of a Trust, or any leasehold form of ownership A signed attorney opinion letter with the complete and correct legal description, easements and /or restrictions is acceptable in place of a title commitment in Iowa. 40

41 Closing, Servicing and Compliance Documentation (cont.) Closing Protection Letter ( CPL ) Gateway must receive an acceptable Closing Protection Letter (CPL) on every loan. If applicable state law does not permit issuance of Closing Protection Letters, a copy of the closing agent s Fidelity Bond Insurance and E&O coverage must be provided, evidencing minimum coverage of $1,000,000 under each policy. The CPL must also meet the following conditions: Closing Agent Name and Address on the CPL must be the Settlement Agent on the HUD-1 except in Escrow States Title Insurance Underwriter issuing the CPL must be the same title underwriter on the Title Commitment as well as on the Final Title Policy. The CPL must state the title commitment number or file number. The CPL must reflect the borrower(s) name(s) and full property address of the transaction. The CPL must be dated between the date of the title commitment and the date of the loan closing/funding. Surveys A survey is not required in areas where surveys are not customary and the title insurance policy insures the mortgagee against loss or damage by any violation, variation, encroachment or adverse circumstances that an accurate survey would have disclosed. Surveys are not required for condominium units. In all other cases or, if the borrower(s) has been charged for a survey on the HUD-1 Settlement Statement, a survey is required and must meet the following minimum requirements: Be acceptable to the title insurer and meet all requirements of the applicable investor/ agency, including but not necessarily limited to, requirements related to the age of the survey and as to the nature and extent of any identified encroachments Be based on the results of an instrument survey performed, dated and certified by a licensed civil engineer or registered surveyor Provide proof that the improvements are wholly within the established boundaries of the defined legal description Name Affidavit A name affidavit is required when a borrower did not sign either the Note or Security Instrument exactly as typed or when the borrower is on title differently from the Note or Security Instrument (e.g., middle initial is typed on Note but borrower signed Note with full middle name and/or borrower is in title under maiden name and is refinancing as married name). A name affidavit is also necessary in cases of name variations on credit reports and borrower identification documents. 41

42 Closing, Servicing and Compliance Documentation (cont.) Trusts Inter Vivos Revocable Trusts and Land Trusts are acceptable if allowed by the applicable investor/agency for the product, property and occupancy type and further provided: The Client has documented and reviewed the nature and terms of the Trust and determined it to meet all applicable investor/agency requirements. The file contains the Trust documentation required by the applicable investor/agency and reviewed by the Client. A checklist or other worksheet evidencing Client s determination of investor/agency compliance must be included in the loan file. The title insurer has reviewed the Trust documentation and made no related exceptions or coverage limitations. The Note and Security Instrument, including any required Riders thereto, are properly executed both individually and as trustee as required by the applicable investor/agency. Life Estates are ineligible Payment History Payment histories are required when: The borrower makes a curtailment payment to the Client prior to Gateway purchasing the loan. Any payment due dates have passed Any payments have been received Any escrow disbursements have been made Payment history must include: Escrow balance Any disbursements made Date payments received Amount of payments and disbursement of payments Unpaid principal balance Gateway recommends that all closed loans contain a payment history to assist in the accurate purchase of the principal and escrow balances. First Payment A first payment letter is required to be in the closed loan package. The payment breakdown in the first payment letter must reconcile to the P & I indicated on the Note and the escrow account items as reflected on the HUD-1 and Initial Escrow Account Disclosure. The first and subsequent payment due dates must comply with applicable Investor/Agency requirements. 42

43 Closing, Servicing and Compliance Documentation (cont.) HUD-1 Gateway requires a true and certified copy of the original HUD-1 (or estimated HUD-1 in escrow states). The HUD-1 provided must meet all investor/agency/regulatory and Gateway requirements, including but not limited to, the following: Borrower s name(s), property address and loan amount must be consistent with other documentation in file such as the Note, Security Instrument, 1003, AUS findings and Title Commitment/Policy. Purchase transactions must also include the sales price and otherwise reflect terms of the transaction consistent with the Sales Contract for the subject property. In Non-Escrow States Include the Final HUD-1 and all addendum which must be executed by all borrower(s), seller(s), and closing agent. Escrow States Include the Final HUD-1 and the Estimated HUD-1. The Final HUD-1 Settlement Statement and all addenda must be executed by the escrow agent. (The Closing Instructions executed by all borrower(s), seller(s) and closing agent may be provided if an Estimated HUD-1 is not obtained.) The Initial Escrow Account Disclosure must be properly completed and given at settlement for loans with monthly escrows/impounds. Flood insurance, when required, must be escrowed for if there are escrows for any other item. If the loan has MI, monthly MI must be on the Initial Escrow Account Disclosure and match the MI certificate. A two (2) month cushion should be used in the Initial Escrow Account Disclosure unless state law requires a lesser cushion amount. Interest credits at closing are allowed but cannot exceed 7 calendar days and must be used to reduce closing costs (e.g., cannot result in cash back to the borrower at closing.) If escrows are collected on the HUD-1, the escrow balance will be net funded from the Purchase Advice. For refinances, payoff statements must be provided to support any mortgages paid off on the HUD-1. For refinances, subordination agreements must be provided to support any HUD-1 charges or entries related to subordinating an existing mortgage. To document a post-closing cure a Loan that has been suspended for evidence of a RESPA Tolerance Cure to the HUD-1, the Seller must provide Gateway a copy of the entire corrected HUD-1, and a copy of the check refunding the borrower. Gateway will review the HUD-1 and suspend for any unresolved but required corrections or tolerance cures. To document a tolerance cure for a Loan that has been suspended for evidence of a RESPA Tolerance Cure, the Client must provide Gateway a copy of the entire corrected HUD- 1, and a copy of the check refunding the borrower. To correct a Loan that has been suspended for an inadvertent or technical error on the HUD-1 or HUD-1A, the Client must provide a copy of the corrected HUD-1 or HUD-1A, and the letter of explanation to the borrower regarding the correction to the loan documentation. Click here to access HUD s line-by instructions for proper completion of the HUD-1 and HUD-1 A. Click here to access HUD s RESPA compliance website for guidance regarding reconciliation of the HUD-1 to the GFE, as well as the most current RESPA FAQs. 43

44 Closing, Servicing and Compliance Documentation (cont.) Escrow Waivers If the loan has no escrows collected on the HUD-1, an Escrow Waiver Letter should be in the file and contain the following borrower acknowledgments: Borrower(s) are responsible to pay the taxes/insurance on the subject property. Borrower(s) will provide the servicer with proof of payment of taxes/insurance. Borrower(s) understand that if they fail to pay the taxes/insurance, the servicer has the right to revoke the escrow waiver and/or force place insurance, and/or pay the taxes and charge the borrower accordingly. Refer to the Product Descriptions in Chapter 5 to determine if escrow waivers are permitted for a particular loan product. Refer to Chapter 3 of this Guide for our escrow waiver policy and pricing requirements. Taxes Each file must evidence compliance with the following closing requirements relative to real estate taxes: Tax bills due within sixty (60) days of the settlement date should be paid before or at settlement. Initial taxes on new construction rarely reflect an accurate tax assessment. Typically, the initial taxes are based upon unimproved or partially improved land. The discrepancy between the initial tax year assessment and the following tax year assessment (based upon the fully improved land) is often substantial and can result in payment shock to the borrower. The following options for such tax escrow collection are allowed, provided any estimated figure must comply with RESPA provisions for using estimates: Collect based upon an estimated full tax figure on the HUD-1 and base both the payment and the escrow allocation upon an estimated tax amount. The file must document how the Client arrived at the estimated tax amount used. Collect on the land or partially assessed value only, but base future escrow allocation and payment upon an estimated tax amount. The file must document how the Client arrived at the estimated tax amount used and also contain a disclosure signed by the borrower acknowledging the payment shock risk associated with this method of collection. A completed Tax Certificate must be in the file and must include the following: All collecting tax authorities for the property Addresses for all taxing authorities Last paid date of all taxes Next due date of all taxes The amount of taxes, and All applicable parcel ID numbers If the borrowers are exempt from paying real property taxes, the file must contain proof of the tax exemption, usually a letter from the taxing authority 44

45 Closing, Servicing and Compliance Documentation (cont.) Hazard Insurance The Client must ensure that the insurance carrier, policy, and coverage meet all applicable Investor/Agency requirements. The loan file must contain a copy of the Policy or a Certificate of Insurance, Declaration Page, or Insurance Binder containing sufficient information for Gateway to audit such compliance. Additionally: Mortgagee clause must read as set forth in Chapter 1 of this Guide Policy term must be written for at least one year or be continuous until canceled Refinance loans must have a policy term remaining of at least 45 days after closing. If the insurance is due to expire within 45 days of closing, a paid receipt for the next year s premium must be submitted. For purchase transactions, for first year premium must be paid on the HUD-1 or a paid receipt provided if POC. For units in condominium projects, both the Master or Blanket policy of insurance and the individual unit Certificate of Insurance are required. The Master or Blanket policy of insurance must also reflect compliance with the Investor/Agency general liability insurance requirements. Individual unit insurance must cover both the exterior and interior (a/k/a walls in ) coverage as required by the applicable Investor/Agency. Flood Determination Certificate A FEMA Standard Flood Zone Determination Certificate with Life of Loan Monitoring is required in each file. Client may obtain this initial determination from a vendor of their choice. However, if Client utilizes CoreLogic Flood Data Services for this required initial determination, Gateway will waive its $10 flood determination fee and continue monitoring under the original certificate. 45

46 Closing, Servicing and Compliance Documentation (cont.) Flood Insurance If the Flood Zone Determination Certificate obtained shows any part of the principal structures securing the loan in a Special Flood Hazard Area, the file must contain: The Notice of Special Flood Hazards and Availability of Federal Disaster Relief Assistance that was provided to the borrower in accordance with the Flood Disaster Protection Act, and; Evidence of flood insurance, effective as of the closing date, and in one of the following forms: Flood insurance policy Declarations page; or Copy of the Flood Insurance Application with a paid receipt for the first year s premium The form of policy must be the standard policy issued under the National Flood Insurance Program and additionally must meet all applicable investor/agency requirements. Additionally: Mortgagee clause must read as set forth in Chapter 1 of this Guide Policy term must be written for at least one year or be continuous until canceled Refinance loans must have a policy term remaining of at least 45 days after closing. If the insurance is due to expire within 45 days of closing, a paid receipt for the next year s premium must be submitted. For purchase transactions, for first year premium must be paid on the HUD-1 or a paid receipt provided if POC. The required coverage offered is the lesser of the following: The outstanding principal balance of the loan, or The maximum amount of NFIP flood insurance coverage available which is the lesser of: The insurable value of the building structure only. (Land values are not covered under the NFIP.) The maximum amount available for the type of structure. The current maximum deductible under the NFIP is $5,000; ($25,000 for a PUD or Condominium Project blanket/master policy) For units in Condominium projects, the HOA must obtain a Master or Blanket policy of flood insurance covering the buildings and the associated contents if owned in common by the association members. Individual condominium unit coverage is generally not required if the Master policy meets all requirements. For units in PUDs, the PUD owner s association must obtain a Master or Blanket policy to cover any common element buildings and other common property located in a SFHA. This Master/Blanket policy is in addition to individual properties in a PUD. Click here to access FEMA s Insurance Professionals and Lender FAQs. 46

47 Closing, Servicing and Compliance Documentation (cont.) PMI An activated and accurate Mortgage Insurance Certificate is required on all loans with an LTV over 80%. Both the insurer and coverage must meet all applicable Investor/Agency and regulatory requirements. Please refer to the applicable Gateway Product Description for the current list of eligible mortgage insurers and product/plan/premium structures. If the MI Certificate shows initial premium due, the amount due must be shown on the HUD-1 as being paid. If the MI Certificate also requires monthly premiums payable after closing, an escrow account must be established and reflected on the Initial Escrow Account Disclosure; any monthly premiums due or payable prior to the borrower s first payment must also be collected on the HUD-1. All loan information reflected on the MI Cert must match the loan terms and AUS findings, including but not necessarily limited to: the Borrower s name and property address the loan amount and loan term the appraised value and sales price coverage % Remember to re-submit the loan and obtain an updated MI Certificate any time you resubmit an insured loan to DU. This includes post-closing or pre-purchase DU resubmissions. Files must contain a copy of the check for the initial MI premium due at closing, and the collection should be reflected on the HUD-1. The file must also contain an accurately completed and executed Notice Regarding PMI Disclosure or, if applicable, LPMI Disclosure. Government Loans For HUD/FHA loans, the HUD required calculation must be used to determine any monthly MIP payments. (Caution: Simply multiplying the loan amount x.5 and dividing by 12 does NOT produce an accurate payment stream.) Click here to access HUD s MIP calculation formula. Clients are responsible for submitting their own government loans for insurance/guaranty and for paying the upfront MIP/funding fees prior to purchase by Gateway. Loans must be insured/ guaranteed within 60 days following the date of loan closing. Closing Instructions Closing Instructions (both general and loan specific) must be included in the file. In escrow states, the instructions must be signed by Closing Agent, Borrower(s) and Seller(s) if an Estimated HUD-1 was not executed. The Client s Closing Instructions must provide specific instructions to the closing agent to confirm the identity of the borrowers utilizing at least one form of photo ID form and a secondary form of ID, both forms of which must comply with the Patriot Act and all other applicable investor, agency and regulatory requirements. Copies of IDs are required to be delivered to Gateway. W9 Each file must contain a completed W-9 for each Borrower. 47

48 Closing, Servicing and Compliance Documentation (cont.) Disclosures It is the Clients responsibility to accurately prepare all applicable disclosures and provide them to the borrower(s) in the manner prescribed and in the time frames prescribed by local, state and federal laws and regulations. Gateway does not provide legal advice regarding the applicability or acceptability of specific disclosures. Clients should refer to their own legal counsel, compliance department and/or regulator for such advice. Gateway will accept loans for purchase in which the borrowers disclosures electronically according to the requirements outlined by the Electronic Signatures in Global and National Commerce Act of 2000 (E-Sign). This also applies to FHA loans as long as the initial disclosures are not required as part of the insuring process. Gateway requires that Clients provide copies of all applicable local, state and federal disclosures in the closed loan package submitted to us for purchase. Right of Rescission Gateway will not purchase any mortgage if a waiver to a required rescission period was granted. HMDA It is required that the government monitoring information on the 1003 be completed on all files delivered to Gateway and that the interviewer completes the interview data section on the application. In addition, to determine if the race, ethnicity, and gender information is required, the Method Application Taken block must be completed. Closed loans underwritten by the Client and subsequently purchased by Gateway should be reported by the Client as an origination on its LAR. (Gateway will report the loan as a Code 6 Loan Purchased on its LAR). Clients may refer to HMDA Reporting Getting it Right at for additional information. IRS Form 4506-T An IRS Form 4506-T must be signed at the time of application and at closing for all borrowers, regardless of the borrower s employment status (i.e., self-employed, salaried, commissioned, retired, etc.). The forms must request validation of the IRS documentation provided by the borrowers and as required by the AUS findings and applicable investor/agency requirements. The IRS Form 4506-T signed at application must be processed for all borrowers prior to closing and the results included in the file when delivered to Gateway. The IRS Form 4506-T signed at closing may be utilized by Gateway as part of its post-purchase Quality Control processes. 48

49 Closing, Servicing and Compliance Documentation (cont.) Goodbye Letter Gateway requires a copy of the combined Notice of Assignment, Sale, or Transfer of Servicing Rights in the closed loan package prior to purchasing any loan. The Notice must provide the borrower with the information conforming to the Model Form in Appendix MS-2 of Regulation X (RESPA), with the following contact information for Gateway Mortgage Group, LLC as the new servicer ( Transferee ): Business Address: 6910 East 14th Street, Tulsa, OK Toll-free Number: (877) Hours of Operation: Monday through Friday 8:30 AM 5:30 PM QWR Address: 6910 East 14th Street, Tulsa, OK Attn: Chief Compliance Officer Clients must deliver the Notice to the borrower(s) at least fifteen (15) calendar days prior to the effective date of the loan transfer (first payment due date to Gateway). However, the Notice should not be provided to the Borrower until the Client is in receipt of the Purchase Advice from Gateway. The Client must deliver the Notice no later than the next business day after receipt of the Purchase Advice. Borrower Contact Sheet In order to facilitate servicing of the loan, Gateway requests that the Client have the Borrower(s) complete this Borrower Contact Sheet and include it in the loan file. 49

50 Underwriting Documentation Underwriting Methods Underwriting Approval Refer to the applicable Gateway Product Description for underwriting method and AUS requirements and limitations. Note: Gateway does not allow manual underwriting (except for FHA Streamline and VA IRRRL) for any loan product or program and accepts loans with Approve/Eligible (or equivalent) DU or GUS (if applicable) findings. LP findings are accepted only for FHA and VA, provided the loan did not receive DU Refer or DU Ineligible findings through Fannie Mae s Desktop Underwriter ( DU ). Prior approval by ONAP is required for nondirect guarantee Section 184 Clients. Each file submitted to Gateway must include a signed underwriting approval that matches the terms of the loan and the DU or GUS (if applicable) findings. Any of the following forms will be accepted as approval: 1008 Transmittal Summary HUD LT (FHA loans only) VA Loan Analysis (VA loans only) Client s own approval form with conditions equivalent ONAP prior approval (Section 184 only) If contract underwritten, the approval cannot reference Gateway. It must show the Correspondent Client as the sole contract underwriting client. The Client must also document in the file that the contract underwriter is properly licensed if required to be licensed by any applicable regulator. AUS Findings Each loan file must include the most current AUS Findings that reflect the terms of the loan as approved AND closed. AUS findings that reflect more than 10 submissions require an acceptable written explanation as to why so many submissions were necessary. Loans with more than 20 AUS submissions are not eligible for purchase, regardless of the explanation. The file must contain all the necessary documentation to show that the loan passes all the eligibility and underwriting tests performed by DU or GUS (as applicable) and that any verification messages or approval conditions specified on the findings have been satisfactorily resolved. Terms and conditions of the closed loan must match the data on which the AUS findings were based. All documentation required by the AUS or Gateway s Overlay Matrix must be provided and must be acceptable to Gateway. The file must contain documentation evidencing that any findings generated through DO have been final released to Gateway. AUS re-submissions by the Client prior to deliver to Gateway are permitted only if required by the applicable investor/agency and if completed in accordance with the investor/agency s re-submission requirements. If the Client re-submits the loan to the AUS after closing, the final re-submitted AUS finding must also be included in the loan file, along with the final AUS finding run prior to closing. Once delivered to Gateway, all loans may be subject to 100% validation audit (at a minimum to include data integrity) as well as pre-or post-funding audits by Gateway. Any inconsistencies in the data and/or documentation may result in Gateway requiring the Client to have the Loan re-underwritten by DU or GUS (as applicable) and may result in non-fund, suspense, or repurchase. ONCE DELIVERED, DO NOT RE-RUN THE AUS WITHOUT GATEWAY S SPECIFIC INSTRUCTION TO DO SO. 50

51 Underwriting Documentation (cont.) Income Calculation Worksheet A full and detailed explanation of how the underwriter calculated the stable monthly qualifying income must be included. For borrowers who are self-employed or that receive income from real estate activities, a Self-Employed Analysis Worksheet - FNMA 1084 form must be used. For other borrowers, the income calculation can be defined on the 1008 or on a separate worksheet, provided it must be detailed and clearly document how the income was calculated. Blanket Authorization A blanket Borrower s Authorization and Certification is required on all loans and must be signed by all borrowers. It is used by the originating Client to verify information contained in the application and must also allow the Client s successors or assigns (e.g., Gateway) to reverify information contained in the file for quality control purposes. Overlays You must refer to the Correspondent Overlay Matrix for Gateway restrictions and overlays to Fannie Mae, FHA, ONAP Section 184, VA and USDA eligibility, underwriting and documentation requirements regarding: Appraisals and PIWs AUS acceptability and underwriting methods Credit scores Down Payment Assistance and Bond Programs Income, Asset, Source of Funds (including Gift) Verification Documentation Ineligible Properties Investment Properties ITINs LTVs/CLTVs Mortgage Insurers and Mortgage Insurance Coverage Options Multiple Loans Serviced by Gateway Natural Disasters Non-Arm s Length Transactions Primary Residence Conversion to Second Home or Rental Principal Curtailments at Closing Streamline Refinance Documentation Temporary Buydowns Product Descriptions Refer to the Product Descriptions in Chapter 5 of this Guide for additional requirements for underwriting and documenting loan files submitted for purchase. 51

52 Underwriting Documentation (cont.) ULDP For conventional loans, the UAD Submission Summary Report from Fannie Mae must be included when such data submission is required by FNMA. Fannie Mae LQI Checks Sellers are responsible for documenting each conventional file to evidence compliance with Fannie Mae s Loan Quality Initiative. This includes, but is not limited to verbal reverification of employment, updated credit report prior to closing, related parties search, verification on MERS regarding borrower and property liens, third party fraud checks prior to closing, and data integrity check on DO/DU with latest AUS findings. Post-Purchase Documentation General Within one hundred twenty (120) days of loan purchase, Gateway must be in receipt of all required post-purchase documents or loans are subject to repurchase. Gateway will consider extension of this 120 day requirement, in 30-day increments, only in cases where the delay can be documented as solely attributable to the delays or turn times of the applicable jurisdictional recording office. Gateway reserves the right to charge late document delivery fees when extensions are granted. Final documents should be sent to the address specified in Chapter 1 of this Guide, with Gateway s loan number clearly displayed in the upper right hand corner of each document. When Gateway requires corrections to those final documents, the Client agrees to correct and post-purchase documents within fifteen (15) calendar days after being notified by Gateway. Post-Purchase Documents The following Post-Purchase documents are required: Original recorded Mortgage or Deed of Trust (Security Instrument) and all applicable Riders Original recorded specific power of attorney or copy of power of attorney with origination recording receipt, if applicable Original recorded intervening assignments, if any Original title insurance policy and all applicable endorsements Any corrections and/or endorsements requested by Gateway as a result of our document review Insuring/Guaranty/Guarantee documents (e.g., MIC, LGC, LGN) 52

53 Post-Purchase Documentation (cont.) Post-Purchase Actions Clients are also responsible for the following post-purchasing actions: Mail Goodbye Letter to borrower the next business day following purchase Mail Loan Sale and Servicing Transfer Notice to insurers, including but not necessarily limited to: Hazard, including fire, wind, condominium or PUD master and HO-6 Flood, if any MI on Conventional loans: Complete Loan Sale and Servicing Transfer at the insurer s website Complete MERS transfer of servicing and beneficial interest transactions (TOSR/TOB) within five (5) calendar days of purchase Complete FHA Connection transfer to show Gateway as the servicer and holder, within five (5) calendar days of loan purchase Complete insuring/guaranty/guarantee processes within sixty (60) days of closing but no later than the first payment due date; completion includes update of all applicable insurer/guarantor systems 1098 Clients must provide the Year-End 1098 to the borrower for pre-paid interest collected at closing, any points paid at closing, and any interest paid by the Borrower to the lender prior to purchase by Gateway. 53

54 Loan Product Descriptions Client Guide Chapter Gateway Mortgage Group, LLC. Re. 8/12/2014