Section 5 UNDERWRITING REQUIREMENTS 5.1 GENERAL

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1 Section 5 UNDERWRITING REQUIREMENTS 5.1 GENERAL Huntington underwrites Broker transactions prior to closing/loan purchase. We provide the Broker with a loan approval, which lists any conditions of our approval. Information and documentation to clear all conditions of approval must be submitted by the Broker and approved by Huntington prior to closing/purchase. 5.2 PROGRAM GUIDELINES Huntington s underwriting and documentation requirements for each loan program are set forth in a Product Profile which is available on the website. The Product Profiles are frequently updated for investor and or Huntington Product/Risk changes. Program changes are communicated through Client Bulletins. It is the responsibility of the Broker to remain apprised of all program changes and requirements. 5.3 FHA AND VA SPONSORSHIPS Huntington offers Sponsorship to those Lenders without Direct Endorsement/VA Automatic designations. The Broker must apply to FHA and/or VA for approval. Once you have your HUD ID number, notify Huntington and we will complete the process in our office. When you have a VA ID number, please complete a Resolution and a Correspondent Sponsorship Application and forward to our office with a check for $100 payable to the Veterans Administration. 5.4 FLOOD DETERMINATIONS Huntington requires flood zone determinations in every loan file. The determination will be ordered by Huntington and must also provide for life of loan coverage. Huntington will ensure that the provider includes life of loan coverage that such coverage is transferable to all future investors through servicing sales. 5.5 REFINANCES Huntington s policy regarding FHA and VA Streamline Refinances requires a single credit report in addition to FHA and VA Standard Streamline documentation. Refer to the product profiles for more information. For such loans, we follow FNMA Section 103 and applicable FNMA Automated Underwriting System, Desktop Underwriter (DU) recommendations and requirements, which means we may require a new appraisal even if Huntington is currently servicing the loan. Planned refinances, in which you close a loan with an agreement to refinance the loan at a later date, are prohibited. Refinance solicitation of any customer whose loan is being serviced by Huntington is prohibited. Failure to observe this policy could be grounds for termination of your Huntington approved Broker status. Created December 2000 December 2015 Page 1

2 5.6 BROKER S PROCESSING RESPONSIBILITIES After registration of a loan and prior to submitting a loan to Huntington for underwriting, the Broker must complete the following: Obtain a tri-merge credit report on the borrower(s). Submit the loan to FNMA s Automated Underwriting System, Desktop Underwriter (DU) or FHLMC s Automated Underwriting System, Loan Prospector (LP). This is required on all loans, including FHA, VA and Jumbo loans. Assign the DU or LP findings to Huntington. In the case of an FHA or VA loan, the Broker must ensure that the Case Number is assigned to Huntington. FHA case number assignments are completed by Huntington. Broker should complete the Huntington TPL HUD Case ID Order Sheet and should be faxed along with a completed 1003 to Obtain the supporting credit documentation required by the DU or LP findings. Underwriting (credit) documents must be processed by and in the name of the Lender. On conventional loans, Huntington will accept alternative documentation in accordance with FNMA DU recommendations and requirements. Jumbo loans in excess of FNMA and FHLMC conforming loan limits must be processed to full documentation standards. Income Paystub(s) with thirty days earnings and/or Verification of Employment (VOE); Employment Salaried Telephone Certification of Employment and two years W2 s; Employment Self Employed Two years most recent personal and business tax returns Source of Funds Two months bank statements reflecting previous month s average balance or Verification of Deposit (VOD); and The above full documentation standards are the basic guidelines. The investor guidelines will be adhered to explicitly and Huntington reserves the right to require additional documentation. 5.7 UNDERWRITING SUBMISSION PROCEDURES The Broker obtains the necessary documents shown on Huntington s Initial Loan Estimate Checklist and the Initial Credit Package Submission Checklist and as required by the DU or LP findings. The Broker submits the documents via a Doc Velocity Thread IF required by AUS findings, the product profile, or because tax returns are submitted with the Loan Credit Package, Huntington will order the tax transcripts using the signed IRS Form 4506T. Estimated underwriting turn times are communicated daily by Huntington. Huntington will notify the Lender, usually within forty-eight hours of receipt, of the underwriting status. The status can be one of the following: Approved without prior-to-purchase conditions; Approved with prior-to-purchase conditions; Created December 2000 December 2015 Page 2

3 Hold for additional information and/or documentation; or Denied (the credit documents are returned to the Lender). Huntington will send a copy of the Underwriting Review Sheet to the Broker via a thread in Doc- Velocity. The review sheet lists any approval conditions and specifies an expiration date for the approval. The Broker is responsible for notifying the borrowers of the underwriting status including approval or adverse action letters. Huntington will not communicate with any party other than the Broker regarding the loan. The Broker is responsible for obtaining documentation to satisfy any Huntington prior-to-purchase conditions including the ordering of mortgage insurance, flood insurance, and issuance of closing instructions To satisfy Prior-to-Closing (PTC) conditions, Broker should send documentation a thread through Doc Velocity, along with a copy of the Underwriting Review Sheet with attachments notated. If additional information is needed, the Broker will be notified. The Broker will be notified by a Doc Velocity thread, that all PTC conditions have been satisfied. Please allow sufficient time for a response from the Underwriting Department based on the underwriting turn time estimates communicated to Brokers each day. Once all PTC conditions have been cleared the Mortgage Loan Processor will contact the Broker and the closing may be scheduled. Approval conditions may be listed on the review sheet as ATC which means At-Closing. Such conditions must be included in the closing package but do not have to be satisfied prior to closing. If the Broker is in doubt as to whether certain documents will be accepted as satisfactory for conditions, the Broker may call us and/or submit the documents prior to closing. All ATC conditions must be cleared to Huntington s satisfaction. 5.8 APPRAISAL PROCESS FOR BROKER CLIENTS Appraisals must be ordered through a Huntington approved Appraisal Management Company (AMC). Once Huntington validates the customers Intent to Proceed (ITP) as outlined in 1.8, we will issue the Appraisal Authorization Form for use when ordering an appraisal with a Huntington approved AMC. Brokers wishing to order the appraisal prior to the ITP may do so only by paying for the appraisal and requesting reimbursement from the borrower after the ITP is obtained by Huntington. Reimbursement can occur at the loan consummation and documented on the Closing Disclosure or collected from the borrower prior to the issuance of the CD. Huntington requires proof of payment by the Broker to the AMC and subsequent proof of reimbursement by the borrower, if collected prior to consummation. Huntington will provide a copy of the approved appraisal to the borrower. An approved appraisal occurs once both Huntington s Real Estates and Technical Services (RETS) and Underwriting has reviewed and satisfied any conditions. The release of the appraisal by the AMC to the Broker does not constitute an approved appraisal Created December 2000 December 2015 Page 3

4 5.9 APPRAISAL APPEAL PROCESS FOR BROKER CLIENTS There are limited situations when an appraisal may be appealed for factual misstatements or when there is a reasonable basis to believe the initial appraisal is flawed. The Broker must complete the following steps to initiate the appraisal appeal process: Step Action 1 Broker must submit the Appraisal Appeal Form to Huntington. For Huntington to process the request, Broker must complete all fields. 2 In the Appeal Reason section, Broker must provide: Comments that identify specific inaccuracies, the correct information, and source of the correct information. Comments that detail improvements made including estimated expense if available. A copy of the original appraisal report along with the Appraisal Appeal Form. Comments that support why the current comps are not reflective of the subject property or market area. Comments to support why the alternative comps are more reflective of the subject property or market area. Address information for suggested alternative comps. 3 Huntington will review the initial appeal and advise the Broker as to whether or not the appraisal warrants reconsideration by the appraiser. 4 The vendor management company will work with the appraiser to analyze the information and make a determination on whether or not a revision is required. A response with or without revision will be provided to Huntington. The appraisal management company (AMC) will provide a final response to the appeal request within 72 hours depending on complexity of the appeal. 5 Huntington will provide the Broker with the final determination RISK EVALUATION REPORTS A Risk Evaluation Report is required on all loans. A Data Verify DRIVE report with a passing score of 701 is required. Huntington will pull the report, a minimum of two times during the loan process, and may request documentation to satisfy alerts. The number of reports pulled is Huntington s discretion. Low risk scores will not automatically be cleared but will be reviewed on a case by case basis. Some instances of low risk score descriptions that will still need to be documented and cleared are: Identity issues. Transcripts questions. Properties ownership issues. Created December 2000 December 2015 Page 4

5 Any scores that are deemed medium or high risk are unacceptable and must be cleared with detailed comments as well as supporting documentation used to justify the cleared status. The supporting documentation must also be clearly found in the file. Example: Subject Description Action(s) to resolve Unable to verify Examine business name and verify existence of legitimacy of business. Review Borrower #2 employer for VOE, W-2's. Order 4506T tax Borrower #2. return verification. 9/2/2014 CLEARED Verified business through VOE, pay stubs and W2's. JSmith All Risk Evaluation Scores are evaluated on a case by case basis and documentation might be required to clear the risk description, regardless of the score, or level of risk prior to close / funding. Created December 2000 December 2015 Page 5