Emerging Mortgage Banker Training Manual February 2017 MKT-18016

Transcription

1 Emerging Mortgage Banker Training Manual February 2017 MKT-18016

2 Introduction to the EMB Program Franklin American Mortgage Company s (FAMC) Emerging Mortgage Banker (EMB) program is designed for Brokers, Community Banks, and Credit Unions that have the resources and desire to fund their own loans, who are looking to take the next step to becoming a lender. This program allows the EMB to act as a lender without incurring expenses related to operating and employing an entire fulfillment center. The EMB lender uses its own funds to close. FAMC performs a post-funding audit on the closing documents and purchases the loan once the docs are satisfactory, provided the loan meets all applicable guidelines and is in compliance with appropriate laws and regulations. Truth in Lending Act (TILA)-Real Estate Settlement Procedures Act (RESPA) Integrated Disclosures (TRID) Rule Impact FAMC originates and purchases loans that are in compliance with the requirements of TILA and RESPA. Accordingly, FAMC will also originate and purchase loans that are in compliance with the TRID requirements as specified in FAMC s published policy, which is available in the FAMC Lending Guide > Federal > TRID. Emerging Mortgage Banker Training Manual 2

3 Table of Contents Benefits of the EMB Program 6 Registering and Locking an EMB loan 7 EMB Lock Policy for Delivery and Purchase 8-9 EMB Underwriting Submission Procedures 10 Loan Estimate (LE) Requirements Loan Estimate (LE) Delivery Requirements 13 QM Guidelines Program Eligibility 16 FHA Approved Lender without DE Authority (SOFA) 17 FHA Approved Lender with Unconditional DE Authority 18 FAMC Customer Type Chart 19 UCDP, SSR and Appraisal Sharing Higher Priced Loan (HPML) Determination Instructions FFIEC Rate Spread Calculator Undisclosed Debt Emerging Mortgage Banker Training Manual 3

4 Table of Contents, continued EMERGING MORTGAGE BANKER EMB Closing Procedures 29 Ordering Procedures when FAMC Prepares Docs Final Underwriting Approval - Best Practices Third-Party Processing Fees Third-Party Documents Procedures/MERS Requirements Closing Disclosure (CD) 44 CD Timing Reference Guides 45 Proof of CD Delivery 46 CD Revisions and Corrections 47 ICPL Requirements 48 Opt In/Opt Out 49 Disaster Requirements List of Approved Third-Party Document Vendors 52 Closed Loan Submissions Via Upload Emerging Mortgage Banker Training Manual 4

5 EMB Lock Policy for Delivery and Purchase 55 EMB Purchase Requirements 56 EMB Post-closing Procedures Remittance of FHA MIP, VA LGC and USDA Guarantee Fee EMB Late Fees FHA and VA Late Fees EMB Universal Closed Loan Submission Form (For Purchase) Common suspense items Table of Contents, Continued EMB Shipping Procedures 65 EMB Auditing Procedures 66 Purchase Advice 67 Purchase Advice 68 Purchase Suspense Notice 69 Final Document Delivery 70 Final Docs/Outstanding Final Document Report 71 EMB Final Document Transmittal Form Emerging Mortgage Banker Training Manual 5

6 Benefits of the EMB Program A few benefits of the EMB program include the following: 1. Allows pricing flexibility since the EMB is not tied to a specific compensation selection. 2. Qualified EMBs allowed to select their AMC of choice or set up their own AMC. Allowed on Conventional loans and USDA loans. Allowed on FHA loans if EMB is HUD approved with DE lending authority. 3. Allows EMB the ability to take control and issue initial and final disclosures. 4. FAMC handles the Underwriting and Government insuring. Subject to prior approval by FAMC, EMB may remit their own UFMIP and/or VAFF if desired. 5. EMB lenders also have the option to use FAMC closers to draw documents for them. 6. Having the ability to prepare closing documents with an approved vendor of choice. 7. Funding loans on time without the Investor s prior approval. Emerging Mortgage Banker Training Manual 6

7 After signing into FAMC s website, select Register/Lock Loan. Registering and Locking an EMB Loan Emerging Mortgage Banker Training Manual 7

8 Customers that participate in both the EMB and Broker programs must submit all loans of the same product type as EMB or Brokered (no flipping between EMB and Broker on Conventional loans, for example). EMB Registration and Locking Procedures Customer accounts are set with the appropriate program for each product which is then automatically reflected on FAMC s website at the time of lock/register. EMB loans have a unique loan number and separate pricing. Please refer to the current rate sheet on the FAMC website for additional information. Note: Select FLOAT as the Lock Term if wanting to register, but not lock the loan. Emerging Mortgage Banker Training Manual 8

9 EMB Registration and Locking Procedures Important note: when selecting a lock period, EMB lenders should be mindful of turn-times and potential issues that could affect funding of the loan. EMB lenders must fund the loan on their line prior to the lock expiration and are required to submit the loan to FAMC prior to the expiration of the lock. Emerging Mortgage Banker Training Manual 9

10 EMB Underwriting Submission Procedures Note: Make sure the loan is registered or locked under the EMB program before submitting to FAMC s underwriting department. All loan submissions must be uploaded to the FAMC website via Q.image. Loan files must be submitted with a Q.image Submission Form which can be found on the FAMC website under Forms. Loan files must clearly indicate EMB on the folder or Q.image Submission Form. Underwriting procedures remain unchanged. Offsite contract underwriting is not allowed. Ohio properties are eligible. However, they must be done through the TN office and FAMC must draw the closing documents. Third party closing documents are ineligible. Emerging Mortgage Banker Training Manual 10

11 Loan Estimate (LE) Requirements The LE is intended to provide consumers with help understanding the key features, costs, and risks of the mortgage loan they are applying for. The LE will be reviewed upon submission to ensure it is completed in its entirety and is not lacking any required information. Note: In order to accurately review the disclosure, the settlement services provider list must be included with the loan submission. Loan Estimate Content The EMB lender must ensure the LE is delivered or placed in the mail no later than the third business day after receiving an application and the disclosure must comply with all prescribed information within the Rule. For the purpose of the LE, a business day is a day on which the creditor s offices are open to the public for carrying out substantially all of its business functions. The EMB lender must ensure the LE contains the correct and specific content for that transaction. Emerging Mortgage Banker Training Manual 11

12 Loan Estimate (LE) Requirements All new Changed Circumstance Worksheets (CCWs) and LEs must be submitted to FAMC for review so that FAMC s systems may be updated accordingly. Emerging Mortgage Banker Training Manual 12

13 LE Delivery Requirements The EMB lender is responsible for ensuring that it delivers or places in the mail the LE no later than the third business day after receiving the application. The Mortgage Disclosure Improvement Act (MDIA) waiting periods apply; therefore the LE must also be delivered or placed in the mail no later than the seventh (7 th ) business day before consummation of the loan. Please refer to the TILA MDIA Policy, which is available in the FAMC Lending Guide > Compliance > Federal, for further information. Emerging Mortgage Banker Training Manual 13

14 QM Specific Guidelines Closely review all typical fees being charged to the consumer in your markets. It is important to note that loans with points and fees that exceed the limits cannot be purchased. EMB loans that exceed the Points and Fees Test CANNOT be cured after origination and WILL NOT be purchased. Review all affiliate relationships, if applicable and as allowed. As previously noted, all fees that are paid to an affiliate of the lender are included in the Points and Fees Test. This includes both real estate fees that are non-apr, and fees included in the finance charge. Review and consider all available mortgage insurance (MI) products when determining the best fit for your customers, while ensuring the loan maintains QM eligibility. Due to the uncertainty surrounding the pro rata refund ability of the various MI products, FAMC will include the entire amount of borrower paid, single premium mortgage insurance in the applicable Points and Fees Test (regardless of seller or lender credits). LPMI, annual, and Monthly premiums will remain excluded from the Points and Fees Test. Emerging Mortgage Banker Training Manual 14

15 Document Applies to Link Description Broker Compensation Acknowledgment and Agreement (BCAA) Current Policy This specific form is required. Discount Points Form and Instructions New Policy - This specific form is optional but may be required to determine if discount points need to be excluded from the QM Points and Fees Test on EMB loans. Invoices on 3 rd Party Charges Current Policy Invoices on all 3 rd party charges are required. QM Documentation Requirements Broker Link to BCAA Added an affiliate fees section to certify that no fees and charges in connection with the loan were paid to or retained by an affiliate of the broker. Needed for the Points and Fees Test. EMB Lender Broker or EMB Lender Link to Discount Points Form and Instructions N/A Created a loan level specific form and instructions to ensure discount points are bona fide and the appropriate amount may be excluded from the QM Points and Fees Test. Invoices for all 3 rd party charges must be present in the file. Needed for the Points and Fees Test to determine affiliate relationship and/or reasonableness. Emerging Mortgage Banker Training Manual 15

16 Program Eligibility ELIGIBLE LOAN PROGRAMS Note: Third-Party closing documents are not allowed on any Jumbo and USDA loans or Ohio properties. Closing documents must be drawn through FAMC s Q.docs. The following programs are eligible for the EMB program: Conventional FHA, under SOFA or principal agent relationship VA USDA (must use FAMC s Q.docs; third-party docs not allowed) Jumbo (must use FAMC s Q.docs; third-party docs not allowed) Ohio properties (must use FAMC s Q.docs; third-party docs not allowed) INELIGIBLE LOAN PROGRAMS The following programs are ineligible for the EMB Program: Borrowers held in a trust HELOCs FHA for non approved HUD-EMBs (SOFA and full DE allowed) POAs (Power of Attorney) on cash-out Emerging Mortgage Banker Training Manual 16

17 FHA Approved Lender without DE Authority (SOFA) Originating lender goes through the approval process with FHA, but does not need to have a DE underwriter on staff or submit test cases to FHA. Originating lender enters into a Sponsored Originator (SO) relationship with FAMC. FHA Approved (SOFA) File Flow: o o o o The FHA approved SO originates the FHA loan FAMC orders the case number, manages the appraisal process, and underwrites the file FAMC may prepare the closing docs, or may allow doc approval by an approved vendor FHA allows the loan to close in the SOFA s name Emerging Mortgage Banker Training Manual 17

18 FHA Approved Lender with Unconditional DE Authority Lender goes through the approval and test case process with FHA, and must continually maintain a DE underwriter on staff The lender enters into a principal/agent relationship with FAMC Under a principal/agent relationship, the originating DE lender(customer) is the principal and the underwriting DE lender (FAMC) is the agent Typical Principal/Agent File Flow: o o o o o o The principal (customer) originates the FHA loan, orders the case number, and may manage the appraisal process under certain circumstances as allowed by FAMC The underwriting agent (FAMC) underwrites the file The underwriting agent (FAMC) may prepare the closing docs, or may allow doc approval by the originating principal through an approved vendor FHA allows the loan to close in either the originating OR the underwriting DE lender s name The loan is purchased by FAMC after the collateral and closing packages are reviewed FAMC performs the mortgage insurance function although either party is allowed access in FHAC Emerging Mortgage Banker Training Manual 18

19 FAMC Customer Type Chart Broker/EMB Case Number, Appraisal, and Closing Authorities (FHA/Conventional) Emerging Mortgage Banker Training Manual 19

20 Uniform Collateral Data Portal (UCDP) and Submission Summary Report (SSR) To facilitate the electronic collection of appraisal report data to the Government-Sponsored Enterprises (GSEs), Fannie Mae and Freddie Mac, at the direction of the Federal Housing Finance Agency (FHFA), developed the Uniform Collateral Data Portal (UCDP ), which is a single portal for the electronic submission of appraisal data files. Lenders are required to use the UCDP to submit electronic appraisal data files that conform to all GSE requirements, including the Uniform Appraisal Dataset (UAD) when applicable, before the delivery date of the mortgage to Fannie Mae and Freddie Mac. If you have been approved by FAMC to manage the appraisal process and elect to continue to do so, it will be your or your Appraisal Management Vendor s responsibility to obtain the Doc File ID and the SSRs from both GSEs and provide them at the time of appraisal delivery. Note: Franklin American Mortgage Company will not purchase any loans with a missing Doc File ID or unacceptable SSRs. All appraisals successfully uploaded to the UCDP receive a Submission Summary Report (SSR) summarizing the appraisal submission details and the status of the submission, as well as a Document File Identifier (Doc File ID), which is the unique appraisal identifier generated by the UCDP. Loans delivered to either GSE must have an appraisal with a "Successful" status in the UCDP prior to loan delivery. Emerging Mortgage Banker Training Manual 20

21 Uniform Collateral Data Portal (UCDP) and Submission Summary Report (SSR), continued Appraisal Sharing One key benefit of participating in the FAMC Emerging Mortgage Banker (EMB) program is the ability to manage the appraisal procurement process. This feature has consistently been identified as a factor that led a number of Emerging Mortgage Bankers to invest in their business, expand internal capabilities, and take on the larger role of becoming a lender. Franklin American Mortgage Company (FAMC) requires Uniform Collateral Data Portal (UCDP ) appraisal-sharing for appraisals by Emerging Mortgage Bankers (EMBs) who manage their appraisal procurement. This feature gives FAMC immediate access to appraisal data and has been shown to significantly improve appraisal review turn times in many instances. EMB lenders who manage their own appraisal process must complete the one-time UCDP appraisal-sharing setup process now and begin sharing appraisals in UCDP immediately. Note: While there is a one-time process to get setup, the actual sharing is transactional. Therefore, the EMB will need to identify in the UCDP each individual appraisal to be shared. Please refer to the training materials on the next slide for full details including step-by-step instructions, FAQs, and tutorials. Emerging Mortgage Banker Training Manual 21

22 Uniform Collateral Data Portal (UCDP) and Submission Summary Report (SSR), continued EMBs complete the one-time UCDP appraisal sharing setup process to share appraisals in UCDP Both Fannie Mae and Freddie Mac have detailed instructions and training materials available. FannieMae.com Onboarding Instructions Appraisal Sharing for Correspondents Related Materials niform-collateral-data-portal FreddieMac.com Appraisal Sharing for Correspondents _ucdp.html Please note: To complete the setup process, you must reference our Aggregator Name ( Franklin American Mtg Co ) and Aggregator ID ( OUX478 ). Emerging Mortgage Banker Training Manual 22

23 Sample UCDP Submission Summary Report Fannie Mae Emerging Mortgage Banker Training Manual 23

24 Sample UCDP Submission Summary Report Freddie Mac Emerging Mortgage Banker Training Manual 24

25 HIGHER PRICED MORTGAGE LOAN (HPML) DETERMINATION INSTRUCTIONS There are a number of guidelines regarding HPML /Section 35 Mortgages. An Average Prime Offer Rate (APOR) is an APR that is derived from average interest rates, points, or other loan pricing terms currently offered to consumers. The APOR and a rate spread calculator can be found on the Federal Financial Institutions Examination Council (FFIEC) website. EMB lenders must submit a printout of the HPML determination with their closed loan package. Detailed HPML guidelines can be found at > Lending Guide > Compliance > Federal > TILA - Higher Priced Mortgage Loans (HPML). 1. Access the FFIEC website at 2. Choose the amortization type: fixed or adjustable 3. Enter the Lock-in Date (mm/dd/yyyy) the date that the EMB locks the loan with the customer 4. Enter APR (00.00)% 5. Enter the loan term in years 6. Confirm lien status (1st or 2nd) 7. Select Submit If the result is > 0, then the loan is HPML. If the result is N/A, the loan is not HPML. 8. Print the results and place with the loan file. Submit this with the closed loan package. Emerging Mortgage Banker Training Manual 25

26 FFIEC Rate Spread Calculator EMERGING MORTGAGE BANKER Emerging Mortgage Banker Training Manual 26

27 What is Undisclosed Debt? Undisclosed debt is generally considered either new debt or customer obligations not otherwise reported on the initial or final loan application. In addition to full disclosure at the time of application, borrowers have an obligation to inform their lender of any new debt or change in financial responsibility that occurs prior to closing the loan. Any consumer debt that is not on the loan application, credit report, or otherwise not disclosed throughout the loan process is considered undisclosed debt. This includes all new debt acquired after credit is pulled at time of initial application through loan closing (for loans that are brokered). Any new debt obtained by the borrower(s) will require the loan to be re-underwritten to account for the additional credit; any new inquiries must be addressed by the borrower(s) with a signed letter of explanation. While the new disclosure informs the borrower(s) of their responsibilities, EMB lenders are strongly encouraged to educate their customers of these guidelines and their obligations. Emerging Mortgage Banker Training Manual 27

28 FAMC strongly encourages EMB lenders to utilize the Undisclosed Debt Acknowledgement disclosure (or a similar disclosure) for all loans. The disclosure is available at > Forms > EMB for your convenience. EMB Lenders are responsible for ensuring that no new debt has been incurred on or before the date of the note. Emerging Mortgage Banker Training Manual 28

29 EMB Closing Docs Ordering Procedures When FAMC Prepares the Documents Note: TN Closing Coord. fax: ( ) TX Closing Coord. fax: ( ) CA Closing Coord. fax: ( ) MA Closing Coord. fax: ( ) Closing documents will be delivered as indicated by the EMB during the Q.docs process. There are Two Options: The EMB may choose to receive the entire closing package and forward to the settlement agent. OR The EMB may choose to have FAMC forward the entire closing package to the settlement agent on their behalf. PA Closing Coord. fax: ( ) Emerging Mortgage Banker Training Manual 29

30 EMB Closing Docs Ordering Procedures, cont. Reminder: POAs (Power of Attorney) are not allowed on Cash-Out From the Process page in Q.docs, RCD s (Required Closing Docs) can be uploaded at any time after the loan is Registered or Locked AND Underwriting Received. The RCDs include insurance, taxes, title commitment, flood certificate, survey (if required) and Insured Closing Protection Letter (ICPL). Once FAMC receives notification of the Q.docs completion and is in receipt of all RCDs, the file will be merged with the approved underwriting file and assigned to a closer. Note: Q.docs and RCD Upload training materials can be found on FAMC s website under Resources>>Training Materials>>Q.docs Training Materials. FAMC will coordinate with the Settlement Agent in order to prepare the Closing Disclosure (CD) and will disclose the CD to all applicable borrowers. All Q.docs procedures remain unchanged in regards to document delivery and turn times. All EMB loans must close in the EMB s name (a corporate POA must be on file with FAMC). No fees will be paid to or collected by FAMC at closing (administration, cure, and penalty fees will be net funded from EMB proceeds at time of purchase). Franklin American Mortgage Company will allow funds to be held in escrow for weather and non-weather related repairs under some circumstances. Detailed guidelines can be found at: > Lending Guide > Property Eligibility > Escrow Holdbacks. Emerging Mortgage Banker Training Manual 30

31 EMB Closing Docs Ordering Procedures When FAMC Prepares the Documents, continued Preparation and delivery of the CD can now happen before the loan is cleared to close (CTC) For loans in UW Received status but not yet CTC: Processing in Q.docs can occur up to 10 business days prior to the estimated closing date; Preparation of the CD can begin up to 7 business days prior to the estimated closing date; and Delivery of the CD to the borrower(s) can occur up to 4 business days prior to the estimated closing date. 1. Provide FAMC with the estimated closing date. EMB Lenders: Enter the estimated closing date on the Loan Status screen prior to loan submission upload. If the estimated closing date changes once the loan has been submitted, please go back to the Loan Status page and change it. 2. Loans in UW Received status may be processed in Q.docs up to 10 business days prior to the estimated closing date. Note that a preliminary CD from the settlement agent has been added to the list of RCDs and should be uploaded with all other RCDs when Q.docs is processed. To ensure the loan closes on time, all RCDs (including the preliminary CD from settlement agent) must be submitted to FAMC at least 4 business days prior to the closing date. As a reminder, the closing department will not be notified until the loan is processed in Q.docs. Emerging Mortgage Banker Training Manual 31

32 EMB Closing Docs Ordering Procedures When FAMC Prepares the Documents, continued 3. Once Q.docs has been processed and all RCDs have been received and reviewed by the closing department, FAMC will complete the CD by the following business day! 4. FAMC will send the CD to the borrower(s) no sooner than 4 business days prior to the closing date provided that: All conditions have been received. The appraisal has been received and the estimated value is supported. The loan amount has been finalized. The loan is locked through the funding date. 5. FAMC will release the closing package to the settlement agent within 5 business hours once the loan is CTC by underwriting and the CD has been acknowledged by the borrower(s). Emerging Mortgage Banker Training Manual 32

33 Final Underwriting Approval Best Practice for EMB Lenders FAMC recommends that EMB lenders obtain final underwriting approval prior to closing the loan. Closing the loan prior to the receipt of final underwriting approval may result in the loan becoming ineligible for purchase by FAMC. Note: FAMC will not purchase an FHA loan with a Note Date prior to the Direct Endorsement (DE) final approval date. Examples: An EMB lender s FHA loan receives a DE final approval date on 4/1/2015 and has a Note date of 4/10/2015. The loan is eligible for purchase by FAMC. An EMB lender s FHA loan receives a DE final approval date on 4/1/2015 and has a Note date of 3/30/2015. The loan cannot be purchased by FAMC since the DE final approval date is after the Note date. The EMB lender s conventional/va/usda loan receives a final underwriting approval date on 4/1/2015 and has a Note date of 4/10/2015. The loan is eligible for purchase by FAMC. Emerging Mortgage Banker Training Manual 33

34 Examples, continued: EMERGING MORTGAGE BANKER Final Underwriting Approval, continued The EMB lender s conventional/va/usda loan receives a final underwriting approval date on 4/1/2015 and has a Note date of 4/10/2015. The loan is eligible for purchase by FAMC. The EMB lender s conventional/va/usda loan receives a final underwriting approval date on 4/1/2015 and has a Note date of 3/30/2015. The loan will require further review by FAMC EMB management since the final underwriting approval date is after the Note date. The loan purchase process may be delayed or the loan may become ineligible for purchase by FAMC. Emerging Mortgage Banker Training Manual 34

35 Third-Party Processing Fees EMB lenders can choose to outsource certain aspects of loan processing to a 3 rd party. Services that may be provided by a 3 rd party processor include, but are not limited to, The following: Collecting signed loan documents from the borrower Obtaining borrower paystubs and tax returns Ordering appraisals Performing verifications of borrower information (employment, assets, etc.). FAMC will allow reasonable 3 rd party processing fees to be charged on EMB transactions provided they are not in violation of FAMC restrictions and requirements. FAMC reserves the right to review each 3 rd party processing fee charged on a loan to determine: if the services performed merit the fee being charged and the fee is reasonable; and/or the independence of the 3 rd party processor and processing company from the mortgage loan originator or mortgage loan originator s company. 3 rd party processing fees that do not meet the requirements or are considered to be excessive cannot be charged. EMB lenders in this scenario would need to build their processing fee into the compensation plans and make the appropriate adjustments. FAMC policy exceptions cannot be made. Emerging Mortgage Banker Training Manual 35

36 Restrictions Third-Party Processing Fees, cont. The 3 rd party processing company must not be affiliated with or connected to the mortgage loan officer/originator (LO) and/or the mortgage loan origination company. The 3 rd party processor cannot be related to the EMB lender or LO. The 3 rd party processor cannot have the same work location as the EMB lender or LO, unless required by state law. The 3 rd party processor cannot be employed by the mortgage loan origination company.* o The 3 rd party processor cannot be employed as a LO for the EMB lender or any other mortgage company. o The 3 rd party processor cannot be employed both as an originator and as a processor within the mortgage industry but can hold additional employment outside the mortgage industry. *Some states require 3 rd party processors to be sponsored by a mortgage loan origination company and it is permissible in those cases. Emerging Mortgage Banker Training Manual 36

37 Third-Party Processing Fees, cont. EMERGING MORTGAGE BANKERA Procedural Guide Required Documentation If the 3 rd party processor is listed in NMLS, their self-reported employment record must reflect the 3 rd party processing company as their current employer. This includes states that require the mortgage loan origination company to sponsor the 3 rd party processor. The Third-Party Processing Company Certification & Acknowledgement form must be provided on all loans that charge a 3 rd party processing fee. An invoice describing the services must be included, and the fee disclosed/charged must be equal to the invoice and the certification. o The invoice must be computer generated and not hand-written. o The processing invoice must include the processing company name, address, borrower name, loan number, amount of the 3 rd party processing fee, and description of services. o The invoice should be provided at or prior to closing. A Procedural Guide EMERGING MO Emerging Mortgage Banker Training Manual 37

38 Third-Party Processing Fees, cont. Third-Party Processing Company Certification and Acknowledgement Effective on all submissions, loans that have a 3 rd party processing fee require the Third-Party Processing Company Certification & Acknowledgement form to be completed by the EMB lender. This form identifies the amount of the 3 rd party processing fee and which services are being performed on the loan. The form is required for all loan types and must be provided at submission. The certification must be completed in its entirety, including an accurate description of services provided by the processor (commensurate with the fee charged), and must be signed by the LO. The processing fee included on the certification must match the amount disclosed on the Loan Estimate and the invoice provided by the processor. Emerging Mortgage Banker Training Manual 38

39 Third-Party Processing Fees, cont. Third-Party Processing Company Certification and Acknowledgement Form A copy of the form is located at > Forms > Miscellaneous. Emerging Mortgage Banker Training Manual 39

40 EMB Loans Closing on Third-Party Documents This enhancement to FAMC s Emerging Mortgage Banker (EMB) program is intended to accommodate an EMB account who possesses the resources and ability to generate a set of closing documents through a third-party vendor. This allows the EMB to maintain control of the closing and funding process without incurring the expenses associated with employing an entire back shop to resolve post-closing issues. Note: All Franklin American Mortgage Company (FAMC) Emerging Mortgage Banker (EMB) customers who would like to utilize a third-party vendor to generate closing documents must obtain prior approval by FAMC. If a third-party doc vendor is utilized, the EMB lender or third-party doc vendor will be responsible for preparing and disclosing the CD to the borrower within the appropriate timing guidelines, as outlined in FAMC s published TRID policy, which is available in the FAMC Lending Guide > Federal > TRID. Reminder: Third-party documents are not allowed on Jumbo loans. Closing documents must be ordered through Q.docs. Emerging Mortgage Banker Training Manual 40

41 EMB Loans Closing on Third-Party Documents, continued Texas A-6 Loans Lender Credits on page 3 of the Closing Disclosure are not allowed to cure the A-6 3% test. Fees will need to be lowered on page 2 the Closing Disclosure in order to pass the 3% test. FEDERAL TOLERANCE COMPLIANCE TEST INCLUDES FNMA AND FHLMC Charges included in the points and fees calculation Points and fees for purposes of this threshold include: Origination fees, underwriting fees, broker fees, and finder s fees Charges imposed as a condition for making the mortgage and paid to the seller or third party Emerging Mortgage Banker Training Manual 41

42 EMB Loans Closing on Third-Party Documents MERS Requirements Any loan utilizing a MERS as Original Mortgagee (MOM) must be originated by a MERS member. The EMB lender is responsible for notifying FAMC if they are a MERS member. Provide the MERS Org ID# and expiration/renewal date to FAMC s Broker Administration Department (brokeradmin@franklinamerican.com). For more information about MERS membership, please visit If the EMB lender has MERS membership, MOM documents (security instrument with MERS verbiage) should be utilized. Either FAMC s MIN or the EMB Lender s MIN (if capable of generating one) may be used. FAMC s MIN is located on the Underwriting Disposition in the Loan Info section. The MIN will only be displayed for customers that FAMC has identified as MERS members. If the EMB Lender has MERS membership and uses their own MIN number, FAMC will require the batch number for the transfer of the MIN to FAMC prior to purchase. If the EMB lender is NOT a MERS member, a non-mom security instrument must be used in lieu of a MOM. This must be accompanied by an Assignment for MERS purposes as Assignment to MERS. Emerging Mortgage Banker Training Manual 42

43 EMB Loans Closing on Third-Party Documents MERS Requirements MERS Rider State Specific for Montana, Oregon, and Washington Freddie Mac and Fannie Mae announced the creation of a new joint MERS Rider (Form 3158), to be attached to an updated security instrument with revised MERS verbiage, for mortgages in the states of Montana, Oregon, and Washington. The new MERS Rider and updated security instrument must be used effective immediately. Loans in these states are now required to be registered with MERS on the original security instrument and rider; subsequent assignments into the MERS system are not permitted. Consequently, if you wish to close loans in your name in these states, you are required to be a MERS member. Franklin American Mortgage Company (FAMC) will not purchase loans if the updated security instrument and MERS rider are not utilized in these states. Non-MERS Members If you are an EMB lender that table funds and you are not a MERS member and do not wish to become one, loans with property states in Montana, Oregon, or Washington must be brokered and close in the name of FAMC. Emerging Mortgage Banker Training Manual 43

44 Closing Disclosure (CD) EMERGING MORTGAGE BANKER Delivery Requirements and Definitions: The EMB lender must ensure that the CD is delivered to the consumer no later than three (3) business days before consummation. The loan documents cannot be signed until the third (3 rd ) business day after the CD is considered delivered. If documents are ordered through Q.docs, FAMC will disclose the CD to all applicable parties. If a third-party document vendor is utilized, the EMB lender or third-party document/fulfillment provider will be responsible for disclosing the CD. Definition of a Business Day: for the CD, a business day means all calendar days except Sundays and legal public holidays. Please note that this is a different definition than business days for purposes of the LE. Who must receive the CD? Purchase Money Loan: the CD can be given to the primary applicant or any consumer with primary liability for the loan. Rescindable Transaction: the CD must be given separately to each consumer who has the right to rescind under TILA. Reminder: The consummation date for EMB loans, in all states, is defined as the date that the borrower(s) sign the Mortgage Note. Emerging Mortgage Banker Training Manual 44

45 CD Timing Reference Guides Emerging Mortgage Banker Training Manual 45

46 Proof of CD Delivery For documents that are ordered through Q.docs, FAMC will disclose the CD to all applicable parties and maintain proof of delivery. For loans through third-party doc vendors, proof of delivery must be submitted with the closed loan file for purchase. Emerging Mortgage Banker Training Manual 46

47 CD Revisions and Corrections EMERGING MORTGAGE BANKER Creditors must re-disclose terms or costs on the CD if certain changes occur to the transaction after the disclosure was first provide that cause the disclosure to become inaccurate. Please note that after a CD has been received by the borrower, a revised LE cannot be disclosed. There are three (3) categories that require a corrected CD: Changes that occur before consummation that require a new three (3) business day waiting period. Changes that occur before consummation and do not require a new three (3) business day waiting period. Changes that occur after consummation. Emerging Mortgage Banker Training Manual 47

48 ICPL Requirements EMERGING MORTGAGE BANKER ICPL should be in the EMB lender s name for all EMB loans ICPL should be dated within 30 days of the closing date FAMC will validate the ICPL prior to purchase for third-party doc loans (prior to docs out if FAMC is drawing the docs) To be complete, the ICPL must include the following: FAMC loan number, Borrower name, Property address, Title commitment number, The name of Insurer who issued the commitment, The Insurer on the Insured Closing Protection Letter must be the same as the Insurer on the title commitment. ICPLs are required on ALL loans* and no exceptions are to be made to this policy. *An ICPL is not required for a HUD REO Property Note: If the loan is drawn through FAMC, we will require and validate the CPL just as we would on a wholesale loan (i.e. prior to the documents being drawn as part of the Required Closing Documents review process). Emerging Mortgage Banker Training Manual 48

49 Opt In/Opt Out Process EMERGING MORTGAGE BANKER Regulation P, Privacy of Consumer Financial Information, requires that each borrower must receive a Privacy Notice. Each borrower must select and sign to participate in, or opt out of, the sharing of personal information. If a borrower makes no choice on the form, they are considered to be agreeable to receiving materials except in the states of California and Vermont. In those states, a borrower must specifically opt in to receive materials, otherwise they are considered to have opted out. Franklin American Mortgage Company (FAMC) is required to capture this data and provide it to the sub-servicer on any loans in which servicing rights are maintained. To ensure all FAMC loans are able to be funded, Emerging Mortgage Bankers (EMBs) will need to ensure the Privacy Policy Disclosure is completed, signed, and submitted with all other loan documents in the closing package. If not utilizing FAMC for documents, the EMB is responsible for making sure the third-party includes the disclosure in the closing package and that it is submitted with the closed loan that is presented to FAMC for purchase. An Opt Out Model Privacy Form can be found on the Federal Trade Commission s website. Note: If the borrower(s) have not made any selections on the form, FAMC will automatically opt them In or Out based on their state. Emerging Mortgage Banker Training Manual 49

50 Disaster Policy FAMC distributes and publishes a Disaster List on our website and Lending Guide that generally includes counties that have been declared by FEMA as eligible for Individual Disaster Assistance (applies to all loan products) or Public Disaster Assistance (only applies to the conventional non-conforming jumbo product). Properties that are located in the counties listed on the Disaster List must comply with FAMC s Disaster Policy requirements. Disaster Policy requirements apply to all EMB loans that have not yet been purchased. Resources: For detailed guidelines, please refer to > Lending Guide > Appraisal Guidelines > Disaster Policy. Click on the FAMC Disaster County List link to access the most current Disaster List. The list can also be accessed on the EMB materials and FAMC bulletins pages at > Resources. Emerging Mortgage Banker Training Manual 50

51 Summary of Disaster Policy Requirements All Loans with Full Appraisals: Eligible if the appraisal was performed on/after the Full Appraisal/Inspection Eligibility date. If the appraisal was performed before the Full Appraisal/Inspection Eligibility date, then a disaster inspection must be performed on/after that date. Refer to the Lending Guide for FHA Damage Inspection Requirements. Conventional Loans with PIW/PIA: Eligible if the most recent AUS submission offering the PIW/PIA is dated on/after the PIW/PIA Eligibility date. If the most recent AUS submission date is before the PIW/PIA Eligibility date, then a full appraisal is required. FHA Streamlines w/o Appraisal: Eligible with a Standard Disaster Inspection performed on/after the Full Appraisal/ Inspection Eligibility date. The inspection is no longer required for initial applications dated on/after the Non-Standard Appraisal Eligibility date. All VA Loans: Require a Certification of Undamaged Property form signed by the borrowers at closing, if the appraisal was performed before the Full Appraisal/Inspection Eligibility date. This form is programmed to print in VA closing packages where the property is located in an active disaster area. Emerging Mortgage Banker Training Manual 51

52 Approved Third-Party Document Vendors Beadles, Newman & Lawler Black, Mann & Graham Creative Thinking Document Express DocMagic* Doc Prep Services Inc. Docu Prep Docutech EllieMae (DocMagic Version) Encompass 360 FirstFunding Gregg & Valby L.L.P. Guardian Mortgage Documents International Document Systems (IDS) Jackson Law Firm McGlinchey Stafford and Youngblood & Bendalin L.L.P. M.D. Gibson & Associates, P.C. MRG Document Technologies Online Documents, Inc. PeirsonPatterson L.L.P. Polunsky & Beitel, L.L.P. RapidDocs Robertson & Anschutz, P.C. Schwartz & Associates Emerging Mortgage Banker Training Manual 52

53 Closed Loan Submissions Via Upload The upload method is the most efficient approach for submitting a closed loan package. EMB lenders are encouraged to use this method whenever possible. Please note that EMB lenders that use fulfillment companies will still need to submit closed loan packages via using the process outlined in the section below. Future system enhancements will allow fulfillment companies to use the upload feature. Once the loan receives final approval and is in the U/W Approved or Docs-Out stage, a closed loan package may be uploaded by following the steps below. Only PDF or TIFF files can be uploaded. 1) Log into and select a loan from your pipeline to be rerouted to the Loan Status page. 2) Under the Closed Loan Submission section toward the bottom of the page, select the applicable file using the browse function and then click Upload. If Closed Loan Submission does not appear in the green banner, please contact an EMB auditor. Emerging Mortgage Banker Training Manual 53

54 Closed Loan Submissions Via Upload, Continued 3) Once the package is uploaded, the Closed Package Received date will populate. The name of the FAMC EMB auditor will populate in the Auditor field once the loan is assigned to an auditor. Note: If the package is uploaded on a holiday, weekend, or after 5:00 PM local time of the EMB lender, the following business day will populate. Emerging Mortgage Banker Training Manual 54

55 EMB Lock Policy for Delivery and Purchase All closed loans MUST be delivered to FAMC, in purchasable condition, prior to lock expiration. If the lock has expired prior to delivery, the loan must be relocked at worse case pricing. Important note: EMB lenders must fund the loan on their line prior to the lock expiration and are required to submit the loan to FAMC prior to the expiration of the lock. If the lock expires after delivery, FAMC will grant a two business day Grace Period to cure any deficiencies. If the loan is still not purchasable after the grace period, the loan will be subject to a two basis points (2 bps) per day Cure Fee up to a maximum of 15 calendar days. At the end of the 15-day cure period, if still not purchasable, the loan will be subject to a mandatory re-lock at worse case pricing plus the accrued cure fees. Note: The two (2) business day grace period allotted to clear suspense items does not include weekends or holidays. The loan can always be relocked at worse case pricing once the original lock has expired plus accrued cure fees, if any. All FHA and VA delivery requirements still apply regardless of lock expiration date. Please refer to the FHA or VA sections of this presentation for more information. Emerging Mortgage Banker Training Manual 55

56 EMB Purchase Requirements FAMC s warehouse bank must have the Note twenty four (24) hours prior to clearing for purchase. FAMC will not clear a loan for purchase until seventy two (72) hours past disbursement date. Emerging Mortgage Banker Training Manual 56

57 EMB Post Closing Procedures Note: FAMC will not order funds for purchase until the complete collateral package is received. Reminder: FAMC will not purchase a USDA loan if USDA/RD funds are not available unless the conditional commitment was obtained prior to USDA running out of funds. 1. Settlement agent is required to ship all executed closing documents directly to the EMB after funding. 2. Both the Closed Loan Package and the Collateral Package should be thoroughly reviewed for accuracy, consistency and compliance prior to delivery to FAMC. This will help avoid delays in the purchase process. 3. Prior to shipping the Closed Loan Package, the EMB or warehouse bank must endorse the Note (executed by an authorized signer). The interim endorsement on the Note should read as follows: Pay to the order of Franklin American Mortgage Company Without Recourse by (EMB company name) 1) By: (signature) 2) Name: (printed name) 3) Title: 1. Executed documents need to be delivered to FAMC according to the (conventional, FHA or VA) Emerging Mortgage Banker Closed Loan Stacking Order. All documents must be included in a file folder. Emerging Mortgage Banker Training Manual 57

58 Remittance of FHA UFMIP, VA Funding Fee, and USDA-RD Guarantee Fee FHA Up Front Mortgage Insurance Premium (UFMIP) and VA Funding Fee With prior FAMC approval, EMB customers may remit their own FHA Up Front Mortgage Insurance Premium (UFMIP) and/or VA Funding Fee (VAFF) payments directly to HUD and VA. EMB lenders requesting to participate in this option will need to contact their Account Executive (AE) to submit the initial request for approval. If an EMB does not wish to remit their own fees, FAMC is responsible for insuring FHA loans, and thus, is responsible for the remittance of the UFMIP. The UFMIP will be remitted at the time FAMC purchases the loan. Additionally, the VA Funding Fee will be remitted by FAMC at the time FAMC purchases the loan. The MIP Calculator on the FHA Connection s Case Processing menu can be used to get an estimate of the upfront MIP amount (and annual MIP amount). Note: There is no rounding of the upfront MIP calculation. For example, if the calculated MIP is $1, , the upfront MIP amount collected is $1, Emerging Mortgage Banker Training Manual 58

59 Remittance of FHA UFMIP, VA Funding Fee, and USDA-RD Guarantee Fee, continued FAMC obtains the Conditional Commitment (Form RD ) and thus is responsible for the remittance of the Guarantee Fee to Rural Development (RD). The Guarantee Fee is paid by the borrower on the CD. In order to comply with the USDA requirements, FAMC net funds the USDA Guarantee Fee on all EMB loans. EMERGING MORTGAGE BANKER Training Manual On the CD, USDA Guarantee fee may be made payable to "USDA," or "(EMB lender) fbo USDA." Both of these will be acceptable. The EMB must net fund the USDA Guarantee Fee from the wire they send to the title company for closing. FAMC will net fund the USDA Guarantee Fee and it will be itemized on the EMB lender's purchase advice. FAMC will finalize remittance of the Guarantee Fee electronically to RD at the time FAMC purchases the loan. Emerging Mortgage Banker Training Manual 59

60 EMB Remittance of UFMIP/VAFF, Continued Verifying Acceptable Proof of Payment FHA Loans For FHA loans, the EMB must provide a printout of a Case Query from FHA Connection (FAHC) that shows the UFMIP has been received. The EMB auditor will review the printout provided by the EMB and match up the FHA Case Number on the query to that of the loan to ensure they match. The amount paid will also be reviewed to ensure a full payment has been received. VA Loans For VA loans, the EMB must provide a printout of the VAFF Receipt showing that full payment for the VAFF has been made. The EMB auditor must match up the VA Loan Number (VA Case Number) on the paid receipt to that of the loan to ensure they match. The amount paid should also be reviewed to ensure a full payment has been received. Emerging Mortgage Banker Training Manual 60

61 All EMB Late Fees EMERGING MORTGAGE BANKER All closed loans MUST be delivered to FAMC, in purchasable condition, prior to lock expiration. If the lock has expired prior to delivery, the loan must be relocked at worse case pricing. If the lock expires after delivery, FAMC will grant a two (2) business day grace period to cure any deficiencies. If the loan is still not purchasable after the grace period, the loan will be subject to a two (2) basis point per day cure fee up to a maximum of fifteen (15) calendar days. At the end of the 15 day cure period, if still not purchasable, the loan will be subject to a mandatory re-lock at worse case pricing plus the accrued cure fees. The loan can always be relocked at worse case pricing once the original lock has expired plus accrued cure fees, if any. Loan amount x.02% x # of days = cure fee Note: These late fees will be net funded when FAMC purchases the loan. Emerging Mortgage Banker Training Manual 61

62 The following FHA requirements are in addition to previously stated procedures and guidelines: The loan MUST be purchased eight (8) calendar days after the interest date on the CD, regardless of weekends or holidays. If it is not, there will be a 4% fee added to the UFMIP. Original UFMIP $$ x 4% = the late charge FHA and VA Late Fees Example: Up-front MIP amount of $3, will result in a late fee of $ ($3, x 4% = $133.61) The following VA requirements are in addition to previously stated procedures and guidelines: The loan must be purchased twelve (12) calendar days after the closing date, regardless of weekends or holidays. If the loan is not purchased, there will be a 4% fee added to the funding fee. Original VA funding fee $$ x 4% = the late charge Example: Funding fee amount of $4, will result in a late fee of $ ($4, x 4% = $191.78) Note: These late fees will be net funded when FAMC purchases the loan. Emerging Mortgage Banker Training Manual 62

63 EMB Universal Closed Loan Submission Form (for Purchase) EMB Universal Closed Loan Submission Form can be found on the FAMC Website under Forms Emerging Mortgage Banker Training Manual 63

64 Common Suspense Items 1. Figures on the executed CD do not match the final closing instructions. 2. Signatures on the executed CD are incorrect, missing, or undersigned. 3. Escrow amount collected on the executed CD does not match the Initial Escrow Account Disclosure Statement. 4. Borrower s name or address is incorrect on the hazard insurance policy. 5. Coverage amount on the hazard insurance policy is insufficient. 6. Mortgagee clause on the hazard insurance is incorrect. 7. Coverage amount on the flood insurance policy is insufficient. 8. Mortgagee clause on the flood insurance is incorrect. 9. Note is not endorsed. 10. Note is endorsed incorrectly. 11. Signatures on the Note are incorrect, missing, or undersigned. 12. POA verbiage on the Note is missing. 13. Property address on the Note does not match the appraisal. 14. Alterations on the Note were not initialed. 15. Note is not a certified copy. 16. Signatures on the Security Instrument are incorrect, missing, or undersigned. 17. POA verbiage on the Security Instrument is missing. 18. Property address on the Security Instrument does not match the appraisal. 19. Alterations on the Security Instrument were not initialed. 20. Security Instrument is not a certified copy. 21. Legal description on the Security Instrument does not match the title commitment. 22. Legal description is missing. 23. Applicable Rider boxes are not checked on the Security Instrument. 24. Applicable Riders are missing. 25. Notary acknowledgement on the Security Instrument is incorrect. 26. Non-Purchasing spouse did not sign the Security Instrument. 27. Borrower(s) executed rescission papers on a different date than the Security Instrument. 28. Borrower(s) did not sign the rescission papers. 29. Borrower(s) rescinded. 30. Loan disbursed prior to the end of the rescission period. 31. Dates on the rescission papers are incorrect. 32. Underwriting conditions from the final approval were not met. 33. Final 1003 is not signed by the borrower(s). 34. Final 1003 is not signed by the loan officer. 35. HMDA information on the final 1003 is incomplete or missing. 36. Collateral package has not been received by FAMC. 37. Lock has expired. 38. Missing a copy of the borrower(s) ID. 39. Documents are missing. Emerging Mortgage Banker Training Manual 64

65 EMB Shipping Procedures The audit function for all EMB loans is centralized to the Texas Regional Operations (Ops) Center. This only applies to the audit portion of the loan process (after the loan is closed and is being submitted for purchase). Underwriting will remain in the Ops Center that the EMB is assigned to. Also, EMB lenders that utilize FAMC for documents will continue to order them in their designated Ops Center. EMB lenders will need to submit the following to the address below: Original Note Original Allonge (if applicable) Bailee Letter Please be sure to use the mail code of EMB-1000 to ensure proper delivery to the EMB Purchase Department. Franklin American Mortgage Company EMB N. O Connor Blvd., Suite 1000 Irving, TX Emerging Mortgage Banker Training Manual 65

66 EMB Internal Auditing Procedures Any expense incurred due to correcting and/or recording documents must be paid by the EMB. Refinance loan transactions will not be purchased until the rescission period has expired. FAMC will audit the Closed Loan Package to insure all required documentation is included and is satisfactory, both in content and in form. Upon completion of the audit process, one of the following events will occur: A. If the audit reveals no deficiencies, the loan will be purchased within 72 hours of when the Note is received. For example, if the loan and Note are delivered on Monday, the earliest date to purchase will be Wednesday. B. If the audit reveals documentation deficiencies, the purchase of the loan will be suspended pending the correction of such deficiencies. The EMB will receive a Purchase Suspense Notice via fax or . C. The VVOE (Verbal Verification of Employment) is valid through the Note Date. IMPORTANT NOTE: Part of FAMC s purchase process includes a re-verification of the VVOE(s) if they expire prior to the Note Date. If the borrower is no longer employed, FAMC will not purchase the loan. Emerging Mortgage Banker Training Manual 66

67 Purchase Advice Emerging Mortgage Banker Training Manual 67

68 Purchase Advice Once a loan is determined to be Purchasable, a Purchase Advice, detailing the loan proceeds, will be ed to the EMB the following business day. Emerging Mortgage Banker Training Manual 68

69 Purchase Suspense Notice An example of the Purchase Suspense Notice Emerging Mortgage Banker Training Manual 69

70 EMB lenders are responsible for delivering all final documents (docs) to FAMC within 60 days of the loan purchase date. This is outlined in the EMB Loan Purchase Agreement > Article II Purchase and Sale of Mortgage loans > Section 2.5 Closing and Delivery of Documents. Note: final docs are separate from those docs included in the closing package. Final docs required to be submitted to FAMC: Original recorded mortgage Final title policy Final Document Delivery EMB lenders should utilize the EMB Final Document Transmittal Form to deliver all final docs to FAMC. The form is located at franklinamerican.com> Forms > EMB and in the Lending Guide > Forms > EMB. Upon receipt, please deliver all final docs to: Franklin American Mortgage Company Attn: Final Documents 6100 Tower Circle, Suite 600 Franklin, TN FAMC s post-closing department will submit a monthly Outstanding Final Document Report to all EMB lenders to indicate if there are any remaining outstanding documents on a loan. If the report indicates that a document is missing, the EMB lender should submit the document along with the EMB Final Document Transmittal form, as indicated. Emerging Mortgage Banker Training Manual 70

71 Final Docs The following Outstanding Final Document Report will be generated to advise the EMB of any remaining outstanding documents on a loan. EMERGING MORTGAGE BANKER A Procedural Guide Emerging Mortgage Banker Training Manual 71

72 EMB Final Document Transmittal Form EMBs will submit final documents to FAMC utilizing the following EMB Final Document Transmittal Form. Emerging Mortgage Banker Training Manual 72