Concurrent Servicing Sale Manual for Prospect Mortgage, LLC under the Mortgage Partnership Finance Program

Transcription

1 Concurrent Servicing Sale Manual for Prospect Mortgage, LLC under the Mortgage Partnership Finance Program Mortgage Partnership Finance, MPF, empf and MPF Xtra are registered trademarks of the Federal Home Loan Bank of Chicago

2 TABLE OF CONTENTS CHAPTER 1 OVERVIEW Organization of the Manual... 1 CHAPTER 2 PFI APPROVAL New PFI Existing PFI Cenlar Loan ID Numbers. 2 CHAPTER 3 SERVICING RELEASED PREMIUM (SRP) / PRICING SCHEDULE Master Commitment Delivery Commitment... 4 CHAPTER 4 MORTGAGE ORIGINATION AND PURCHASE Origination and Underwriting Closing Purchase by the MPF Bank... 5 CHAPTER 5 DOCUMENT CUSTODY MPF Program Custodian Collateral File Label Endorsements and Assignments Certification with the MPF Program Custodian Document Access Selling PFI... 8 CHAPTER 6 SERVICING TRANSFER PROVISIONS Servicing File Delivery Time Frame and Stacking Order (a) Electronic File Delivery Servicing File Packing Procedures Review and Acceptance of the Servicing File (a) Incorrect Document Information Recorded / Final Documents Servicing Released Premium (SRP) Payment Other Fees Escrow Funds (a) Escrow Funds Waiver Property Taxes Hazard and Flood Insurance Supplementary Information...13 Page I

3 TABLE OF CONTENTS CHAPTER 7 OTHER SELLING PFI RESPONSIBILITIES Regulatory Requirements MPF Quality Control Selling PFI Quality Control...14 CHAPTER 8 DEFECTS AND REMEDIES Curable Defects Incurable Defects / Breach of PFI Sale Agreement Early Payment Default Early Payoff Funds Repayment...15 CHAPTER 9 SERVICING General Servicing Servicing Reports for the Selling PFI Customer Service Servicing Fees Coupon Book or Monthly Statement Payment Processing Custodial Account Management Escrow Account Management Default Management...18 EXHIBITS Exhibit 1 PFI Information Sheet...19 Exhibit 2 Servicing Released Premium / Pricing Schedule...20 Exhibit 3 Notice of Transfer of Servicing - Goodbye/Welcome Letter...21 Exhibit 4 Servicing File Checklist Exhibit 5 Where to Send it - Important Addresses & Instructions...25 Exhibit 6 Escrow Funds Reconciliation...26 Exhibit 7 Recorded /Final Documents Checklist...27 Exhibit 8 Servicing Release Premium (SRP) Statement...28 Exhibit 9 Tax Information Sheet...29 Exhibit 10 Sample Mortgagee Letter...30 Exhibit 11 Tax Bill Authorization...31 Exhibit 12 Servicing Transfer Instructions...32 Exhibit 13 Glossary...35 Page II

4 CHAPTER 1 OVERVIEW CHAPTER 1 OVERVIEW The MPF Program concurrent sale servicing released arrangement with Prospect Mortgage, LLC ( Prospect ), Designee of Prospect Mortgage Insurance, LLC, a member of the Federal Home Loan Bank of Chicago, involves the sale of Conventional Mortgage MPF Servicing Rights to Prospect at the same time a Participating Financial Institution (the Selling PFI ) sells loans to the MPF Bank. The Selling PFI will remain liable for origination warranties for the Mortgages arising under the Participating Financial Institution Agreement ( PFI Agreement ) of the Selling PFI. In order to participate in concurrent servicing sale transactions, PRIOR to Delivering loans and Selling Servicing to Prospect, the Selling PFI must: 1-Be a member of MERS, or become one, at a minimum Residential Lite level. Prospect will help facilitate the PFI s MERS application, if necessary. 2-Execute the MPF Program documents for selling loans Servicing Released under the applicable MPF Product with the FHLB. 3- Sign a PFI Servicing Sale Agreement with Prospect. 4- Provide to Prospect a completed PFI Information Sheet (Exhibit 1). 1.1 Organization of the Manual With respect to the sale of Serviced Mortgages by a Selling PFI, all provisions of the MPF Origination and Servicing Guides ( MPF Guides ), MPF Xtra Manual (if applicable), the PFI Agreement and this Manual shall apply. All capitalized terms used but not defined in the Glossary of this Manual shall have the meaning provided in the MPF Guides, the PFI Agreement, or the PFI Servicing Sale Agreement. All references to Serviced Mortgage in this Manual shall be understood to refer to a Fixed Rate Mortgage Loan originated by a Selling PFI and sold to an MPF Bank at the same time that Servicing for the loan is transferred to Prospect. Page 1

5 CHAPTER 2 PFI APPROVAL CHAPTER 2 PFI APPROVAL In order to be eligible for Servicing Released sales to Prospect, a PFI must sign the PFI Servicing Sale Agreement noted in Chapter 1 of this Manual and meet the requirements listed below, as applicable. 2.1 New PFI A PFI Approval under the MPF Program is governed by the PFI s MPF Bank. A PFI who is new to the MPF Program may elect on the PFI Application to be considered for approval as a Sales Only PFI (servicing released) and/or a Standard PFI (servicing retained). A Standard PFI that elects to also deliver loans servicing released would do so under specified Master Commitments. All new PFIs must sign a PFI Agreement, Master Commitment and appropriate MPF Product Addendums. 2.2 Existing PFI For an existing PFI, no additional approval is required to participate in servicing released sales to Prospect. 2.3 Cenlar Loan ID Numbers Following the signing of the Servicing Sales Agreement and completion of the PFI Information Sheet (Exhibit 1) by the Selling PFI, Prospect will provide the Selling PFI with a block of Cenlar Loan ID Numbers. The Selling PFI will assign a Cenlar Loan ID Number, in sequential order, to each Serviced mortgage. This Cenlar Loan ID Number will replace the PFI Loan Number in the Selling PFI and MPF Provider records and will be used on all loan documents. It is the Selling PFI s responsibility to inform Prospect when its block of Cenlar Loan ID Numbers needs to be replenished. Page 2

6 CHAPTER 4 MORTGAGE ORIGINATION AND PURCHASE CHAPTER 3 SERVICING RELEASED PREMIUM (SRP) / PRICING SCHEDULE The Servicing Released Premium (SRP) / Pricing Schedule (in the form of Exhibit 2) is produced by Prospect. The SRP Schedule represents the price to be paid by Prospect for the Servicing Rights, stated as a percentage of the Unpaid Principal Balance of the Serviced Mortgages on the date the Delivery Commitment (DC) is taken down. The date of funding of a Serviced Mortgage by the MPF Bank shall be referred to in this Manual as the Sale Date. 1) The SRP / Pricing Schedule will be distributed to the Selling PFIs by 8:30 a.m. CST via secure . 2) SRP Prices are live between 8:30 a.m. CST until the FHLB Delivery Commitment deadline at 3:30 p.m. CST. PFIs can only lock the SRP Price during this time frame. 3) PFIs will automatically be locked into an SRP Price with Prospect at the time they enter into a Delivery Commitment with their MPF Bank. 4) Prospect will confirmation of transactions to Selling PFIs within 24 hours. Notification of changes in the SRP / Pricing Schedule will be provided by Prospect via alerts to the Selling PFIs. Changes to the SRP / Pricing Schedule will be effective immediately for Delivery Commitments issued after the change in the SRP / Pricing Schedule. The PFI is responsible for utilizing the latest SRP / Pricing Schedule from Prospect in effect on the Sale Date as it is the only Schedule that will be honored. Please Note: The Prospect Servicing Released Option assumes loans are newly originated. If a PFI desires to sell servicing on a seasoned loan (aged within the FHLB MPF Xtra month limit described in the MPF Guides), the PFI must notify Prospect before funding. This will ensure that the loan balance will be imputed correctly in the Cenlar servicing system and the proper amortization schedule will be applied. An adjustment to the SRP Pricing for dropped payments may apply. 3.1 Master Commitment The MPF Provider will manage all Master Commitments (MC) and Delivery Commitments in accordance with the MPF Guides, the MPF Xtra Manual and the requirements provided in this Manual. When the PFI takes out a Concurrent Sale Master Commitment for Serviced Mortgages, the MC will identify the Selling PFI as the Originator and Prospect as the Servicer. The MC will only be for Fixed Rate Loans with an Actual/Actual remittance schedule. Page 3

7 CHAPTER 5 DOCUMENT CUSTODY 3.2 Delivery Commitment A Concurrent Sale Delivery Commitment must reference the applicable Concurrent Sale Master Commitment. See the MPF Origination Guide Chapter 19.3 and the MPF Xtra Manual Origination Guide Chapters through and 19.4 for the issuance of Delivery Commitments. Page 4

8 CHAPTER 5 DOCUMENT CUSTODY CHAPTER 4 MORTGAGE ORIGINATION AND PURCHASE 4.1 Origination and Underwriting Serviced Mortgages must be originated and underwritten by the Selling PFI in accordance with the MPF Origination Guide (which includes the MPF Underwriting Guide), MPF Xtra Manual, the PFI Agreement and this Manual. Serviced Mortgages eligible for delivery: 4.2 Closing Conventional Fixed-Rate Mortgages with a minimum term of ten (10) years Serviced Mortgages must be closed by the Selling PFI or its agent in accordance with the MPF Origination Guide and the MPF Xtra Manual. The Selling PFI represents and warrants that it has provided a Notice of Transfer of Servicing - Goodbye/ Welcome Letter to the Borrower at the time of the Closing in the form of Exhibit 3 which: Includes accurate and complete Servicer contact information for Prospect; Complies with all Applicable Law; and Includes in the Letter s first line the date which is ten (10) days after the Closing date, or the intended Sale Date for the Serviced Mortgage, if sooner. 4.3 Purchase by the MPF Bank Purchase of a Serviced Mortgage by the MPF Bank must be completed via the empf Website (see empf User Manual). The Selling PFI must sell to its MPF Bank each Serviced Mortgage to be purchased under this structure not later than ten (10) calendar days after the Mortgage Closing date. The first payment due date for each Serviced Mortgage must be the first day of the month following the first full month after the Closing date. No interest credit due to the Borrower from Prospect or the Selling PFI will be permitted. Page 5

9 CHAPTER 5 DOCUMENT CUSTODY CHAPTER 5 DOCUMENT CUSTODY 5.1 MPF Program Custodian The MPF Program Custodian must be the Custodian for all Serviced Mortgages under this structure. The Selling PFI is required to deliver Collateral Files to the MPF Program Custodian (see contact information provided in MPF Servicing Guide Chapter 111) in accordance with the timeframes and requirements of MPF Origination Guide Chapter 24 and the MPF Xtra Manual, and to obtain the approval of the MPF Program Custodian that documents are in proper form and are properly executed. The Collateral File, which is sent to the MPF Program Custodian, must contain original documents or certified copies of originals, as required below and in MPF Origination Guide Chapter 24.2 and the MPF Xtra Manual. 5.2 Collateral File Label The Collateral File for each Serviced Mortgage delivered to the MPF Program Custodian must be labeled as required by MPF Origination Guide Chapter The Collateral File must be identified by the Selling PFI as a Prospect loan by having the PFI Name listed as Prospect. The label must include both the MPF Loan Number and the Cenlar Loan ID Number and boxed and sent in MPF loan number order to the MPF Program Custodian. 5.3 Endorsements and Assignments The Selling PFI must provide a Note endorsement in blank as required by MPF Origination Chapter The Selling PFI must be a member of MERS, able to register and transfer loans through MERS. All loans must be registered with MERS by the PFI at time of closing. The MERS registration must be made as follows: 1. PFI as the originating organization as documented on the security instrument and note and must be reflected in the MERS registration system; 2. FHLB recommends PFI promptly transfer both beneficial and servicing rights TOS/ TOB to Prospect Mortgage, LLC Organization ID: Naming Prospect Mortgage, LLC as investor and servicer. 3. In the event Fannie Mae initiates a TOB / Transfer of beneficial rights via an option 1 transfer of beneficial rights the PFI is required to proceed to step 4. Page 6

10 CHAPTER 5 DOCUMENT CUSTODY Note: The PFI which was removed during the TOB Option 1 process is notified of its removal by MERS via the Investor Removed by Option 1 TOB BI report. 4. TOS / Transfer of servicing rights must be initiated by PFI, naming/ transferring servicing rights to Prospect Mortgage, LLC Organization ID: NOTE: Steps 3 and 4 are in lieu of step 2. IMPORTANT INFORMATION: Prospect will independently add its Sub- Servicer, Cenlar, to MERS upon receipt of the serviced loan at transfer. Otherwise the PFI may list Cenlar as the sub-servicer at transfer, but only at TOS/ step 4 If the documents are not MOM closing documents, a recordable assignment with an assigned Mortgage Identification Number (MIN) naming MERS as the nominee will be required. A copy must be included in the collateral and closing package. The selling PFI is required and responsible for recording the assignment. *Required: Formal endorsement used to name MERS as the nominee: Mortgage Electronic Registration Systems, Inc., its successors and assigns P.O. Box 2026, Flint, Michigan The MIN and MERS Phone: is to be placed on the assignment in a visible location, but not in a space reserved for the jurisdiction s recorder per jurisdictional requirements. **Optional: For states requiring a physical address, use the following MERS address in addition to the P.O. Box address: 1901 E Voorhees Street, Suite C, Danville, IL If the state of incorporation for MERS is required, please note that MERS is organized and existing under the laws of Delaware, not Virginia. The Selling PFI Represents Warrants and Covenants the following to Prospect as to each Mortgage Loan offered for sale: 1) the Selling PFI has timely recorded the Mortgage/Deed of Trust to protect Prospect's interests; 2) the Selling PFI has closed the Mortgage Loan with MERS as the named nominee within five (5) days of funding; 3) can validate that the Mortgage Loan has been transferred free and clear of any pledge, lien, encumbrance or security interest; and 4) the PFI will not assign or transfer any interest in the Mortgage Loan to any person or entity other than Prospect. Page 7

11 CHAPTER 5 DOCUMENT CUSTODY 5.4 Certification with the MPF Program Custodian The Selling PFI is responsible for the Initial Certification of the Collateral Files, resolving Initial Certification issues with the MPF Program Custodian, and payment of all fees imposed for uncertified documents or custodial Exceptions (see MPF Origination Guide Chapter 24.7). All Serviced Mortgages that do not meet the Initial Certification requirements must be repurchased in accordance with MPF Origination Guide Chapter For all repurchased loans, Prospect shall be entitled to a refund of the SRP in accordance with Chapters 8.2 and 8.5 of this Manual. 5.5 Document Access Selling PFI The Selling PFI may request and obtain the Collateral File from the MPF Program Custodian in order to correct Certification Exceptions up until the point of Initial Certification. After Initial Certification, the Selling PFI may not request the Collateral File from the MPF Program Custodian. The PFI must follow prudent business practices in protecting and safeguarding all documents released to it by the MPF Program Custodian until these documents are returned to the MPF Program Custodian, as required by MPF Origination Guide Chapters and Page 8

12 CHAPTER 6 SERVICING TRANSFER PROVISIONS CHAPTER 6 SERVICING TRANSFER PROVISIONS 6.1 Servicing File Delivery Time Frame and Stacking Order For each Serviced Mortgage the Selling PFI must deliver to Prospect within seven (7) calendar days after the Sale Date the Servicing File which contains the documents listed in the Servicing File Checklist (Exhibit 4). The Selling PFI should retain a copy of the Servicing File for its records. If the original Servicing File is retained by the Selling PFI, it must be made available to Prospect upon request. 6.1(a) Electronic Delivery of Imaged Files It is strongly preferred that Servicing Files be delivered electronically. It is secure, efficient, eliminates the possible loss of files, less costly than physical delivery and is easy to do. Because electronic delivery can significantly reduce the time it takes to deliver files, file review and acceptance can occur sooner and payment for MSRs can be paid more quickly in the process. Each document comprising the contents of a complete Servicing File can be imaged and uploaded to the Prospect secure file transfer (SFTP) site. This secured site will be provided and maintained by Prospect and Prospect will provide each PFI with its own unique log-in and password. The PFI may use its own file transfer software or Prospect will provide a free file transfer software agent. Prospect requests that each PFI provide an IT contact to Prospect with whom Prospect can work to set up electronic file delivery process and test procedure. 6.2 Servicing File Packing Procedures Servicing Files should be shipped to the address shown in Where To Send It Important Addresses & Instructions (Exhibit 5) using the procedures specified below: All Servicing Files must be in the order specified in the Servicing File Checklist (Exhibit 4) with the following label on the outside of each file: Cenlar Loan ID Number Borrower Last Name Example: Jones All Servicing Files must be arranged in Cenlar Loan ID Number order, from lowest to highest; Each box must contain an inventory list of the files included in that box. The list should be in Cenlar Loan ID Number order; Page 9

13 CHAPTER 6 SERVICING TRANSFER PROVISIONS The Escrow Funds Reconciliation (Exhibit 6) and the wire transfer confirmation must be in each Servicing File; and If more than one box is shipped at a time, (i) boxes should be numbered starting with box number one (1); and (ii) the box number should be indicated on the inventory list. 6.3 Review and Acceptance of the Servicing File Prospect will review each Servicing File upon receipt from the Selling PFI in order to: Determine that all required data/documents have been provided; and Ensure that the Servicing Files and the Serviced Mortgage comply with the terms of this Manual and the PFI Servicing Sale Agreement. If Prospect determines that the Servicing Files or the related Serviced Mortgage is not in compliance, the deficiencies will be cured as follows: 1) Prospect will issue a rejection notification identifying deficiencies that will need to be addressed within two (2) Business Days of the notification. (It is anticipated that most of these deficiencies will be related to the boarding of the loan to the servicing system.) 2) If the Selling PFI fails to cure the Servicing File deficiencies before the tenth (10 th ) calendar day prior to the first payment due date for a Serviced Mortgage (or the preceding Business Day if that day is not a Business Day) Prospect will attempt to cure the deficiencies and bill the PFI for this service. 3) If Prospect is unable to cure the deficiencies in a reasonable time frame, it will ask the FHLBC to contact the PFI to promptly cure the deficiencies. 4) In the unlikely event that the PFI fails to respond and cure the deficiencies after the procedure described above Prospect will request that the FHLBC ask Fannie Mae for authorization to have the PFI repurchase the loan. 6.3 (a) Incorrect Document Information If corrections are necessary to the information in the Servicing File delivered to Prospect, the PFI must first contact the FHLBC regarding the corrections. Once the corrections are made at the FHLBC, the PFI must provide Prospect with confirmation from the FHLBC that the corrections were made. Prospect will then make the correction to the Servicing File. Prospect may not make corrections requested by PFIs without the FHLBC confirmation. Page 10

14 CHAPTER 6 SERVICING TRANSFER PROVISIONS 6.4 Recorded / Final Documents The Selling PFI should deliver to Prospect the original recorded and/or final documents (where applicable) in the Recorded / Final Documents Checklist (Exhibit 7) within ninety (90) days after the Sale Date. If not all documents are available at ninety (90) days, the Selling PFI should deliver the available documents and provide the remaining documents as they become available. Documents that are not received within 120 days are subject to a late charge of $ per document. The checklist must be attached to the copies sent for each Serviced Mortgage. Recorded and/or final documents should be shipped to the address shown in Where To Send It Important Addresses & Instructions (Exhibit 5), using the packing procedures provided in Chapter 6.2 of this Manual (last 3 bullet points). It is the PFI s responsibility to ensure that the information on the recorded and final documents (trailing documents) is correct before delivering to Prospect. Prospect does not make document corrections. 6.5 Servicing Released Premium (SRP) Payment 6.6 Other Fees On the fifth (5th) Business Day of the month following receipt and acceptance by Prospect of the Servicing File and all required Escrow Funds, Prospect will deliver the Servicing Released Premium (SRP) payment to the Selling PFI. On the fifth (5th) Business Day of each month, Prospect will also supply to the Selling PFI loan level SRP information and summary SRP payment data for Serviced Mortgages boarded the prior month in the form of the Servicing Released Premium (SRP) Statement (Exhibit 8). The SRP to be paid for the Servicing Rights with respect to a Serviced Mortgage will be an amount equal to the SRP Percentage in effect on the date on which the Delivery Commitment covering such Serviced Mortgage was issued, multiplied by the original Unpaid Principal Balance of such Serviced Mortgage as of the Sale Date. If the Unpaid Principal Balance used in computing the SRP for any Serviced Mortgage is later found to be incorrect, the SRP shall be promptly and appropriately adjusted, and the reconciling payment will be promptly made by the appropriate party. Prospect will charge the following fees for each Serviced Mortgage and will net the fees from the SRP due to the Selling PFI for the Serviced Mortgage: Tax Service Fee.... $89 Servicing File Processing Fee...$100 Page 11

15 CHAPTER 6 SERVICING TRANSFER PROVISIONS 6.7 Escrow Funds The Selling PFI (or the Closing agent) will wire the Escrow Funds collected at Closing to Prospect as directed in Where To Send it - Important Addresses & Instructions (Exhibit 5). Funds must be wired and the Escrow Funds Reconciliation (Exhibit 6) must be ed to servicingcashmanagement@prospectmtg.com within one (1) Business Day after the Sale (Funding) Date. The Escrow Funds Reconciliation (Exhibit 6) should also be included in the Servicing File sent to Prospect, along with the wire transfer confirmation. If funds for multiple loans are combined in one wire, the Selling PFI must identify the funds purpose and make it clear to which specific serviced loan each amount applies. A spreadsheet providing a detailed breakdown is required. The Selling PFI should not combine the escrow amount with the first principal and interest payment. Payments for principal curtailments must be identified as such. Documents in the Servicing File should indicate whether an Escrow Account has been established for the Serviced Mortgage. These documents include, but are not limited to the, HUD-1 Settlement Statement and the Escrow Funds Reconciliation (Exhibit 6). 6.7a. Escrow Waiver If escrows are waived, the Tax Bill Authorization (Exhibit 11) still must be completed and included in the Servicing File, but need not be signed by the borrower. The tax authority will not be instructed to send billing to Cenlar. PFIs shall include a signed escrow waiver notice used at loan closing with the serviced loan file. 6.8 Property Taxes The Selling PFI must provide Prospect with a complete and accurate Tax Information Sheet (Exhibit 9) for each Serviced Mortgage, regardless of whether or not an Escrow Account is established for the loan. Prospect requires this information in order to monitor payment of taxes during Servicing. Any incorrect information provided by the Selling PFI could result in Selling PFI responsibility for tax penalties. The Selling PFI must pay all delinquent taxes, taxes or related tax amounts due within sixty (60) days before or after the Sale Date. This includes but is not limited to, base tax amounts, penalties, interest, etc. Page 12

16 CHAPTER 6 SERVICING TRANSFER PROVISIONS 6.9 Hazard and Flood Insurance Mortgagee Clause The Servicing File should include evidence of hazard and (if applicable) flood insurance and flood zone determination certificate with a Mortgagee clause to Prospect (see Where To Send It Important Addresses & Instructions (Exhibit 5)). If an insurance policy or flood zone determination certificate is not in the name of Prospect the Selling PFI may provide a letter requesting endorsement of the Mortgagee clause in the form of the Mortgagee Letter (see sample in Exhibit 10) Selling PFI is responsible for paying all insurance premiums due within sixty (60) days after the Sale Date Approved Flood Zone Certificate Vendors A flood zone determination certificate with life-of-loan coverage is required for each Serviced Mortgage. Approved vendors: American Flood Research, Inc. CBC Innovis Data Quick E-Floodzone Fidelity National Flood Service First American Flood Data Services GC Engineering GeoLogix GeoTrac, Inc LandAmerica LPS Flood Palma, Lazar & Ulsh Stewart Mortgage Information Stormwater Research Group United One Resources US Determination Services, a division of PCi Corporation US Flood Research, Inc Supplementary Information Prior to and after the Sale Date for a Serviced Mortgage, the Selling PFI will at its own expense: Furnish promptly to Prospect any supplementary information related to the Serviced Mortgage which Prospect reasonably requests and which is reasonably available to the Selling PFI; and Render reasonable assistance to Prospect to enable Prospect to efficiently take over and service the Serviced Mortgage. Page 13

17 CHAPTER 7 CHAPTER 7 OTHER SELLING PFI RESPONSIBILITIES OTHER SELLING PFI RESPONSIBILITIES 7.1 Regulatory Requirements The Selling PFI will be responsible for compliance with all regulatory requirements related to the origination and transfer of Servicing for the Serviced Mortgages. 7.2 MPF Quality Control The Serviced Mortgages will be included in the normal MPF Program quality control review sample population for the Selling PFI in accordance with MPF Origination Guide Chapter 26. The Selling PFI will be responsible for providing copies of the required documents upon request from the MPF Provider. Findings with respect to the Serviced Mortgages will be provided to the Selling PFI. However, Prospect will be responsible for the special quality control reviews required by the MPF Bank. 7.3 Selling PFI Quality Control The Selling PFI is responsible for conducting in-house quality control reviews in accordance with MPF Origination Guide Chapter 28. Page 14

18 CHAPTER 8 DEFECTS AND REMEDIES CHAPTER 8 DEFECTS AND REMEDIES Prospect will work directly with the Selling PFI to resolve issues involving, but not limited to, the Servicing File delivery, loan boarding, SRP payments and Escrow Funds reconciliation. In the event an issue cannot be resolved, the MPF Provider will act as arbitrator to resolve the issue, and the decision of the MPF Provider will be controlling. 8.1 Curable Defects If a Serviced Mortgage fails to comply with applicable requirements at the time of delivery to Prospect and the noncompliance is curable, Prospect will take appropriate action to remedy the defect at the expense of the Selling PFI. Prospect will bill the Selling PFI and collect all expenses directly from the Selling PFI. 8.2 Incurable Defects / Breach of PFI Sale Agreement If Prospect and the Selling PFI are unable to resolve material issues related to file delivery and loan boarding, the Selling PFI may be required to repurchase the Serviced Mortgage from the MPF Bank in accordance with MPF Origination Guide Chapter and the approval of FNMA. In the event the Selling PFI is required to repurchase a Serviced Mortgage or if the Selling PFI is otherwise required to pay the SRP Refund, the Selling PFI will be required to pay to Prospect the SRP Refund for the Mortgage in accordance with the PFI Servicing Sale Agreement. In the event that Servicing must be transferred back to the Selling PFI, both Prospect and the Selling PFI will be required to provide proper notice to the Borrower of the transfer as required by Applicable Law. 8.3 Early Payment Default If any of the first four (4) payments due on a Serviced Mortgage becomes ninety (90) days or more delinquent, Prospect will be entitled to a SRP Refund plus an administration fee. The SRP and administration fee will be collected in accordance with Chapter 8.5 of this Manual. 8.4 Early Payoff If a Serviced Mortgage pays off (or otherwise liquidates) within onehundred eighty (180) days after the MSR Purchase Date (See Glossary), Prospect will be entitled to a SRP Refund. The SRP will be collected in accordance with Chapter 8.5 of this Manual. 8.5 Funds Repayment All SRP-related funds flow will occur directly between the Selling PFI and Prospect, including SRP Refunds. SRP Refunds will be paid on the fifth Page 15

19 CHAPTER 8 DEFECTS AND REMEDIES (5 th ) Business Day of the month following the accounting cycle during which an issue is identified, or in the case of default or payoff, or following completion of foreclosure. If applicable, loan level SRP Refund information will be supplied to the Selling PFI by Prospect on the fifth (5th) Business Day of the month in the form of the Servicing Released Premium (SRP) Statement (Exhibit 8). Page 16

20 CHAPTER 9 SERVICING CHAPTER 9 SERVICING 9.1 General Servicing Prospect will service the Serviced Mortgages in accordance with the MPF Servicing Guide and the PFI Agreement. Prospect may, at its discretion, charge the Borrower for changes made to the mortgage account. As an example, this would include items such as Loan modifications on Conventional Loans. The Borrower should contact Prospect s Sub-servicer Customer Service Department for any additional information or questions as shown in the Prospect Contact Information (Exhibit 5). 9.2 Servicing Reports for the Selling PFI Monthly, the MPF Provider will make available via the empf website, the following reports for the Serviced Mortgages: Pool Detail Report Active Master Commitment Summary Report. 9.3 Customer Service Borrower inquiries should be directed to the Prospect s Sub-servicer Customer Service Department as shown in the Where To Send It Important Addresses & Instructions (Exhibit 5). 9.4 Servicing Fees Prospect will be entitled to the Servicing Fees for the Serviced Mortgages in accordance with the MPF Guides and the PFI Servicing Sale Agreement. 9.5 Coupon Book or Monthly Statement Upon completion of loan boarding, Prospect will send a coupon booklet or a monthly statement to the Borrower. In the event that the coupons / statements are not received in time for the first payment, the Borrower should send the payment as directed in the Selling PFI Goodbye / Prospect Mortgage Welcome Letter (Exhibit 3). The Borrower may contact the Prospect Sub-servicer Customer Service Department (see Where To Send It Important Addresses & Instructions (Exhibit 5)). Page 17

21 CHAPTER 9 SERVICING 9.6 Payment Processing Processing and application of Borrower Principal and Interest Payments will be managed by Prospect following the Sale Date. Borrower payments and other funds related to the Serviced Mortgage which are received by a Selling PFI after the Sale Date must be endorsed to the order of Cenlar, Sub-Servicer for Prospect, and forwarded by overnight mail to the address shown in the Where To Send It Important Addresses & Instructions (Exhibit 5). The Selling PFI must not issue receipts for payments received or indicate that immediate credit will be given. Payments will not be considered received until processed by Cenlar, Sub-Servicer for Prospect. Payments sent directly to Prospect by the Borrower should be directed to the address designated in the Where To Send It Important Addresses & Instructions (Exhibit 5). 9.7 Custodial Account Management Prospect will manage the Custodial Accounts related to the Serviced Mortgages in accordance with the MPF Servicing Guide requirements and will ensure the timely remittance of funds to the appropriate accounts. Prospect is required to establish its P&I Custodial Account with the MPF Provider. The P&I Custodial Accounts and the T&I Custodial Accounts for the MPF Xtra Product shall be separate from Custodial Accounts for other MPF products, regardless of remittance type and must be titled as required in MPF Xtra Manual Servicing Guide Chapter Escrow Account Management Following the transfer of Escrow Funds from the Selling PFI to Prospect, the payment of applicable insurance and property taxes, as well as the Borrower Escrow Payment analysis, will be managed by Prospect. Insurance correspondence and tax bills, which are received by a Selling PFI after the Sale Date of a Serviced Mortgage, must be forwarded by overnight mail to the address shown in the Where To Send It Important Addresses & Instructions (Exhibit 5). 9.9 Default Management In the event of Borrower default, Prospect will perform all delinquency management (including collection, Foreclosure, short sale, bankruptcy management, REO, and other related duties) in accordance with the MPF Guides, MPF Xtra Manual and the requirements of Fannie Mae. Prospect will continue to service the Serviced Mortgage through Foreclosure and disposal of the Mortgaged Property. During this time, Prospect will be responsible for all necessary advances. Page 18

22 EXHIBITS Exhibit 1 PFI Information Sheet Complete and Return as per Instructions - Chapter 1 of this Manual. Selling PFI Information Selling PFI Name: Selling PFI Number: Street / Overnight Delivery Address: Mailing Address (if different than above): Selling PFI Toll-Free Telephone Number: Selling PFI Main Telephone Number: Selling PFI Borrower Correspondence Address (if different from above): Loan Documents Delivery: Physical Electronic Image Selling PFI Contact Names Telephone Facsimile Primary Contact: Secondary Contact: Funding Contact*: * The person who should be made aware of items such as SRP payments/refunds and debits/credits to the PFI s account with the MPF Bank. Selling PFI Wire Instructions: Information Depository Name: Address: City, State, Zip Code: ABA Number (9 digits): Account Number: Page 19

23 EXHIBITS Exhibit 2 Servicing Released Premium / Pricing Schedule Product MSR Rate sheet - 30 Year Fixed Note Rate Base Serv Fee Base SRP FNMA FNMA FNMA State Adjustments AZ, CA, CO, DC, DE, HI, ID, IL, MA, MD, FNMA Zone 1: ME, MI, FNMA MN, MT, NH, NM, NV, RI, UT, WV, WY AL, AR, GA, IA, IN, KS, LA, MO, MS, NC, FNMA Zone 2: NE, OH FNMA OR, SC, SD, TN, VA, VT, WA, WI FNMA Zone 3: AK, CT, KY, ND, NJ, OK FNMA Zone 4: FL, NY, PA FNMA Zone 5: TX FNMA FNMA Loan Amount FNMA > $300,000 FNMA $99,999 - $70,000 (0.250) FNMA $69,999 - $40,000 (0.500) FNMA < $40,000 Not Eligible FNMA FNMA No Impounds FNMA FNMA FNMA FNMA FNMA FNMA FNMA FNMA FNMA FNMA FNMA FNMA FNMA FNMA FNMA Page 20

24 EXHIBITS Exhibit 3 Notice of Transfer of Servicing <Date> <Borrower 1> <Borrower 2> <Street> <City> <State> <Zip Code> NOTICE OF SERVICING TRANSFER Re: Notice of Transfer of Servicing Mortgage Loan Account Number: Dear <Borrower name>: The servicing of your mortgage loan is being transferred, effective [Date]. This means that, on or after this date, a new servicer will be collecting your mortgage loan payments from you. Nothing else about your mortgage loan will change. [Name of Servicer]( [Servicer] ) is now collecting your mortgage loan payments. [Servicer] will stop accepting mortgage loan payments received from you on or after [Date]. Central Loan Administration and Reporting ( Cenlar ) will begin collecting mortgage loan payments received from you on or after [Date]. Send all mortgage loan payments due on or after [Date] to Cenlar at this address: Central Loan Administration and Reporting P. O. Box 986 Newark, NJ If you have any questions for either your current servicer or your new servicer Cenlar, about your mortgage loan or this transfer, please contact them using the information below: Current Servicer: New Servicer: [Servicer] Cenlar Customer Service Department P. O. Box Telephone No. [Servicer Phone] Ewing, NJ [Servicer Address] Customer Service Department Telephone No Monday-Friday 8:30am 8:30pm EST [Use this paragraph if appropriate; otherwise omit.] Important note about insurance: If you have mortgage life or disability insurance or any other type of optional insurance, the transfer of servicing rights may affect your insurance in the following way: Page 21

25 EXHIBITS You should do the following maintain coverage: Under Federal law, during the 60-day period following the effective date of the transfer of the loan servicing, a loan payment received by your old servicer on or before its due date may not be treated by the new servicer as late, and a late fee may not be imposed on you. Thank you for being a valued customer. Very truly yours, Servicer <Date> Page 22

26 EXHIBITS Exhibit 4 Servicing File Checklist Borrower Name Cenlar Loan ID Number MPF Loan Number Mailing Address if different than Property The Selling PFI must send all required original custodial documents to the MPF Program Custodian at the address shown in MPF Servicing Guide Chapter 111 (see Chapter 5 of this Manual and MPF Origination Guide Chapter 24). The Selling PFI should send the following documents in the order listed below to Prospect. See Chapters 6.1 and 6.2 of this Manual or delivery time frame and Servicing File packing requirements. See Where To Send It Important Addresses & Instructions (Exhibit 5) for shipping address. 1. Servicing File Checklist (Exhibit 4) with enclosed items checked. 2. Notice of Transfer of Servicing - Goodbye / Welcome Letter (Exhibit 3) First Payment Letter All required disclosures including RESPA and TIL disclosures and Initial Aggregate Escrow Statement. Mortgage / Deed of Trust. Loan Application. Note with all riders and addenda. 8. Settlement Statement / HUD Mortgage Insurance (MI) certificate (if applicable) and notice letter to MI Company that Servicing has been transferred to Prospect. Hazard insurance policy with Mortgagee clause to Central Loan Administration and Reporting or if not in Cenlar s name, a Mortgagee Letter (see sample in Exhibit 10), as required by Chapter of this Manual. Flood zone determination certificate with life of loan coverage provided by an approved vendor (see Chapter of this Manual) with coverage to Prospect, or if not in Cenlar s name, a Mortgagee Letter (see sample in Exhibit 10), as required by Chapter of this Manual. 12. Flood insurance policy (if applicable) with Mortgagee clause to Central Loan Administration and Reporting or if not in Cenlar s name, a Mortgagee Letter (see sample in Exhibit 10), as required by Chapter of this Manual. 13. Tax Information Sheet (Exhibit 9), as required by Chapter 6.8 of this Manual. 14. Tax Bill Authorization in the form of Exhibit 11, which was sent to the taxing authority by the Title Company at Closing and/or state specific requirements in NY and NJ to indicate the change in Servicer. 15. Appraisal. Page 23

27 EXHIBITS 16. Title policy/commitment. 17. Wire transfer confirmation for Escrow Funds and competed Escrow Funds Reconciliation (Exhibit 6), as required by Chapter 6.7 of this Manual. 18. Request for Taxpayer Identification Number and Certification (IRS Form W9). 19. Underwriting file (including documents required by MPF Origination Guide Chapters and ). 20. Buydown Agreement and Buydown Plans 22. Tax sheets in accordance to Wisconsin requirements. 23. Notice of Right to Cancel (Right of Rescission) 24. Legal description if not part of the Mortgage folder. Prepared by Date Telephone Address Page 24

28 EXHIBITS Exhibit 5 Where To Send it Important Addresses & Instructions NOTE: BORROWERS SHOULD BE GIVEN ONLY THIS INFORMATION: BORROWER CUSTOMER SERVICE INQUIRES OR PAYMENTS SENT DIRECTLY BY THE BORROWER Central Loan Administration & Reporting Payment Processing Center P.O. Box 986 Newark, N.J Hours of Operation: 8:30AM to 11:30PM EST M-F 9AM 4PM EST Sat FOR SELLING PFI USE ONLY: What is it Ship Servicing Files and final/recorded documents: Curtailment Checks: Provide Cenlar loan number on check and indicate it is for principal curtailment Mortgagee Clause for insurance and flood certificates See Chapter 6.9 of this Manual Wire Transfer of (1) Escrow Funds; (2) Curtailment/Principal Reduction *if wire amount includes funds for multiple loans, provide borrower last name, Cenlar loan #, PFI loan # and match with funds amount for each loan Borrower payments received by the Seller PFI See Chapter 9.6 of this Manual Where to Send it Prospect Mortgage Ventura Blvd. D-250 Sherman Oaks, CA Prospect Mortgage Att: Loan Servicing Ventura Blvd. D-300 Sherman Oaks, CA Central Loan Administration and Reporting Its Successors and/or Assigns, ATIMA P.O. Box Florence, SC Bank of the West Ventura Blvd. Sherman Oaks, CA Prospect Mortgage, LLC ABA # Account Name: FHLB Escrow Servicing Account Account Number: Borrower last name, Cenlar loan #, PFI loan # Central Loan Administration and Reporting Payment Processing Center 425 Phillips Blvd Ewing, N.J Overnight Delivery: Central Loan Administration and Reporting 425 Phillips Blvd. Ewing, NJ Insurance correspondence and tax bills received by the Selling PFI See Chapter 9.8 of this Manual Central Loan Administration and Reporting Escrow Department P.O. Box Ewing, NJ Page 25

29 EXHIBITS Exhibit 6 - Escrow Funds Reconciliation Borrower Name Cenlar Loan ID Number MPF Loan Number The Escrow Funds Reconciliation (Exhibit 6) should be used as required by Chapter 6.7 of this Manual and funds wired according to (Exhibit 5) Where To Send It Important Addresses and Instructions. This reconciliation and wire transfer confirmation should be included in the Servicing File. Please check this box if loan is Non-Escrow Funds collected at closing and wire transferred to Prospect on (date) Property Taxes $ Hazard Insurance $ Mortgage Insurance $ Flood Insurance $ Aggregate Adjustment Amount $ TOTAL $ Initial Escrow Amount Wired Monthly mortgage payment to be collected from the Borrower by Cenlar (or attach a First Payment Letter, if prepared). Principal & Interest $ Property Taxes $ Hazard Insurance $ Monthly Mortgage Insurance $ Flood Insurance $ Other (specify escrow type) $ TOTAL $ Prepared by Date Telephone Address -Remember to always identify purpose of funds wired- Page 26

30 EXHIBITS Exhibit 7- Recorded/Final Documents Checklist Borrower Name Cenlar Loan ID Number MPF Loan Number The Selling PFI must send all required original custodial documents to the MPF Program Custodian at the address shown in MPF Servicing Guide Chapter 111 (see Chapter 5 of this Manual and MPF Origination Guide Chapter 24) Originals of the following documents should be sent to Prospect in the order listed below. This checklist must be attached to the recorded / final documents sent for each Serviced Mortgage. See Chapters 6.2 and 6.9 for delivery time frame and file packing requirements. See Where To Send It Important Addresses and Instructions. (Exhibit 5) for shipping address. Check documents that are attached to this checklist: 1. Recorded Security Instrument 2. Final title policy and endorsements or final title opinion 3. Recorded Intervening Assignments 4. Recorded Intervening Assignment from selling PFI to Prospect 5. Recorded Power of Attorney (if recording is required) Prepared by Date Telephone Address Page 27

31 EXHIBITS Exhibit 8 - Servicing Release Premium (SRP) Statement Page 28

32 EXHIBITS Exhibit 9 - Tax Information Sheet The Tax Information Sheet (Exhibit 9) should be included in the Servicing File. MPF Loan Number: Cenlar Loan Number: Name of Borrower: Date : Property Address: Street City State Zip Legal Description of Property: COUNTY TAXING AUTHORITY OFFICE NAME: Mailing Address of Tax Collector: Telephone Number: Tax ID/Parcel# Tax Paid-through Date Last Amount Paid Date of Last Payment Est. Annual Tax # of Installments Yearly Next Economic Loss Date Current Assessed Value Previous Value or Exempt CITY TAXING AUTHORITY OFFICE NAME: Mailing Address of Tax Collector: Telephone Number: Tax ID/Parcel# Tax Paid-through Date Last Amount Paid Date of Last Payment Est. Annual Tax # of Installments Yearly Next Economic Loss Date Current Assessed Value Previous Value or Exempt SCHOOL TAXING AUTHORITY OFFICE NAME: Mailing Address of Tax Collector: Telephone Number: Tax ID/Parcel# Tax Paid-through Date Last Amount Paid Date of Last Payment Est. Annual Tax # of Installments Yearly Next Economic Loss Date Current Assessed Value Previous Value or Exempt OTHER TAXING AUTHORITY OFFICE NAME: Mailing Address of Tax Collector: Telephone Number: Tax ID/Parcel# Tax Paid-through Date Last Amount Paid Date of Last Payment Est. Annual Tax # of Installments Yearly Next Economic Loss Date Current Assessed Value Previous Value or Exempt Page 29

33 EXHIBITS Exhibit 10 - Sample Mortgagee Letter [Selling PFI Letterhead] [DATE] Insurance Company or Flood Certificate Vendor Street Address City, State, ZIP Cenlar Loan ID Number: MPF Loan Number: Insurance Policy Number: Insurance Company: Insured: Borrower Co-Borrower To Whom It May Concern: In connection with the captioned mortgage account, servicing has been transferred and the mortgagee clause should read: Central Loan Administration and Reporting Its successors and / or Assigns, ATIMA P.O. Box Florence, SC Please include the MPF loan number on all correspondence sent to Prospect. Thank you for your prompt attention in responding to this request. Sincerely, [Selling PFI Contact] Page 30

34 EXHIBITS Exhibit 11 - Tax Bill Authorization Borrower Name Cenlar Loan ID Number MPF Loan Number TAX AUTHORIZATION Tax identification number: Tax Assessor / Collector <address> <address> Dear Tax Assessor / Collector: I hereby request that you send all future real estate tax bills for the property located at the address indicated below, to: Cenlar 6053 S. Fashion Square Drive Suite 200 Murray, UT Property Address: This authorization should continue in effect until I notify you otherwise or until I sell this property. Signature Signature Date Date Page 31

35 EXHIBITS Exhibit 12 - Servicing Transfer Instructions 1.1 Hazard Insurance Every mortgage loan must have a hazard policy insuring the mortgaged property. PFI s must notify the borrower s insurance carrier to change or make the mortgagee clause as of the Sale Date to the following: Central Loan Administration & Reporting ISAOA, ATIMA PO Box Florence, SC Flood Insurance If a property is located in a special flood hazard zone, the borrower must have a flood policy covering the mortgaged property. PFI s must notify the borrower s insurance carrier to change the mortgagee clause as of the Sale Date to the following: Central Loan Administration & Reporting, ISAOA, ATIMA PO Box Florence, SC If the mortgaged property is not located in a special flood hazard zone but the borrower elects to secure flood insurance, Cenlar will not collect the escrow funds for disbursement for flood insurance. If the mortgaged property is in a special flood hazard zone and is covered by flood insurance, Cenlar must also escrow the flood insurance if it also escrows for hazard insurance. 1.3 Flood Determination Every mortgage loan must have a Life of Loan Flood Determination. PFI must notify the Flood Determination Company of the change of servicer as of the Transfer Date to the following: Central Loan Administration & Reporting, ISAOA, ATIMA PO Box Ewing, NJ Private Mortgage Insurance For any mortgage loan requiring Private Mortgage Insurance (PMI), Business Partner shall make any PMI disbursements on amortized loans prior to the Transfer Date. Please notify the PMI Company of the change of servicer. Central Loan Administration & Reporting, ISAOA, ATIMA PO Box Page 32

36 EXHIBITS Ewing, NJ Taxes If a mortgage loan is secured by new construction, or is an existing property where improvements to the property have been completed, taxes made available by the taxing authority may be under assessed. Cenlar asks that Business Partner make its best effort to estimate the projected taxes. Under assessed taxes may appear to benefit the borrower at the time of the mortgage loan closing; however it generally leads to frustration for the borrower down the road. When a mortgage loan is closed on a new home built on previously unimproved land, or whenever it is likely that the tax escrow is based on underestimated taxes, PFI should advise the affected borrowers to expect an increase in their monthly payment when taxes are fully assessed. Taxes due within sixty (60) days of closing must be paid at closing by the closing agent. The PFI is responsible for identifying Multiple Tax Parcels. The Client must e- mail a copy of the legal description with the Cenlar loan number written across the top to: multipleparcel@cenlar.com. This is in addition to including the legal in the new loan setup package. Prospect will not be responsible for any loss, expenses or penalties associated with taxes not paid at closing or for Multiple Parcels not setup under tax contract if above procedure is not followed. 1.6 Service members Civil Relief Act. A report reflecting all loans for which relief has been requested under the Service members Civil Relief Act of 1940, as amended: including the loan number, mortgagors name, due date, unpaid principal balance, effective date of the subsidy, active duty start date, active duty termination date, and a complete copy of the Military Orders. 2.0 Post Transfer 2.1 Forwarding Payments Borrowers should be directed to send their payments to Central Loan Administration & Reporting lockbox at: Central Loan Administration and Reporting P.O. Box 986 Newark, NJ Page 33