Correspondent Lending SEPTEMBER 2016 COMMON SUSPENSE DEFICIENCIES IN FOCUS DEFICIENCY REQUIREMENTS

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1 Nationstar Mortgage is committed to providing the performance tools needed by our Correspondents to better manage their overall quality efforts. By focusing on this process, we are able to spotlight areas of concern that have SEPTEMBER 06 COMMON DEFICIENCIES IN FOCUS Suspense deficiencies (commonly known as stips) are potential errors that are noted and conditioned by Nationstar Mortgage during pre-purchase review, and they can affect the overall timing of loan purchase. In this focus flash, we ll discuss the suspense deficiencies we have identified based on loan deliveries for the month of September. We will also provide you with a snapshot of the overall Top 0 Suspense Deficiencies, as well as the Top Unique Suspense Deficiencies by Program. Finally, you will also find tips and seller guide references that should prove helpful in reviewing the requirements in more detail so that we can work together to purchase your loans faster and more efficiently. TOP 0 DEFICIENCIES ITEM COUNTDOWN E-Sign Disclosure(s) E-consent should be present if there is evidence that any loan document was e-signed during the transaction in accordance with the E-Sign Act consent requirements. All years personal tax returns required by the AUS must be validated with tax transcripts. Additionally, Nationstar Mortgage requires that any 0 business tax return received also be validated with coinciding business tax transcripts. For wage earners, VVOE must be completed within 0-days prior to the Note date. Third party verification is acceptable per agency guidelines. Delivery, 5JJ - TILA/RESPA Integrated Disclosure Rule Tax Transcripts Delivery, 5XX - Tax Transcripts 3 Verbal Verification of Employment (VVOE) Chapter 0: Conventional Underwriting, 0F Income

2 TOP 0 DEFICIENCIES BY TYPE cont. ITEM COUNTDOWN In accordance with 0.6-9(e)() (vi), methods to document that the SSPL was disclosed within 3-days of application include, but are not limited to any one of the following items: SSPL is dated Borrower signed the SSPL within 3-days of application c. Lender provides Loan Origination System (LOS) disclosure tracker documenting SSPL- issued date 4 Settlement Service Provider List A Settlement Service Provider List (SSPL) with a service provider disclosed for every required shop-able service (section C of initial Loan Estimate) should be disclosed within 3-business days of the application date disclosing at least service provider for all required shop-able services. 5 Homeownership Counseling Disclosure (with proper data elements required) All Pages of Initial Application (003) FHA Case Number Assignment Documentation Requirements for Ability to Repay (ATR) Cash-to-Close Amounts on the Loan Estimate (LE) and the Closing Disclosure (CD) Do Not Match A Homeownership Counseling Disclosure Listing (signature not required), and verify it was disclosed within 3-business days of application, and lists 0 counselors. Delivery, 5KKK - Homeownership Counseling Rule (Reg X) Requirements 6 All pages of the Initial Application (003) must be present. Delivery, 5FF - Application (003) 7 All FHA loans require a Case Number Assignment and that all borrowers are successfully validated. Delivery, 5EE - FHA Loans 8 Underwriter s comprehensive analysis of all income and debt considered and an explanation on how it was determined to be included or not included in the DTI. Delivery, 5MMM - Compliance with Qualified (QM) Points and Fees Restrictions, 5NNN - Verification of the Ability to Repay Requirements 9 The cash-to-close table on the Closing Disclosure (CD) should match at least one of the Loan Estimates (LEs) provided. In accordance with (i), the cash-to-close table on the Closing Disclosure (CD) should match at least one of the Loan Estimates (LEs) provided. 0 Evidence of Borrowers Intent to Proceed Evidence of borrowers Intent to Proceed should be documented and placed in every loan file. Forms may vary. Delivery, 5JJ - TILA/RESPA Integrated Disclosure Rule (TRID - Regulation X & Regulation Z)

3 TOP UNIQUE DEFICIENCIES BY INVESTOR CONVENTIONAL Paystub or Fully Executed Form 005 (WVOE) Successful FNMA/FHLMC Appraisal Submission Summary AUS requires paystubs or a fully executed WVOE (Form 005) dated no more than 30-days prior to the initial application be provided for all employed borrowers. The Appraisal Submission Summary Report (SSR) should match the subject property address on the appraisal and must also show successful. Chapter 0: Conventional Underwriting, 0F - Income Chapter 0: Conventional Underwriting, 0I - Appraisal Requirements TOP UNIQUE DEFICIENCIES BY INVESTOR FHA FHA Case Number Assignment or Not All Validations Successful Verify Part V, Question 5, Number 6 is Complete on Final HUD 9900-A Completed LDP/GSA/EPLS Search Results (Loan Processor Name) The FHA case number assignment should be verified to ensure the presence of a case number assignment that has passed all validations and reflects Success (the only acceptable warning is for multiple case numbers assigned to the borrower). Question 5, Number 6 of Part V on the Final 9900-A must be completed accurately, and if the home was built prior to 978, a lead based paint disclosure must be in file. Correspondents are reminded that all items within Question 5 must be addressed, if applicable. In accordance with the HUD Handbook 4000., Nationstar Mortgage requires completion of a check on any borrower(s), any seller(s) (except where selling his/ her principal residence), Loan Officer, listing and Selling Agent(s)against the Limited Denial of Participation (LDP) list, and the Excluded Parties List System (GSA). Delivery, 5EE - FHA Loans Delivery, 5EE - FHA Loans Delivery, 5CCC - GSA, LDP and Exclusionary List 3

4 Nationstar Quality Reminder for FHA Loans: For FHA loans that are NOT manually underwritten and that have an appraisal in the file, there are sections that the underwriter must complete on the new 9900-A: Under Mortgagee Representative must include the Underwriter Signature (electronic or live) and the Underwriter s Name/Title (ZFHA is not required).. Second Section under And if Applicable must include the Underwriter Signature (electronic or live) and the Underwriter s DE CHUMS ID Number. They must include their actual DE CHUMS ID Number, as the ZFHA is not allowed in this field. EXAMPLE: All conditions of Approval have been satisfied This mortgage was rated as an accept or approve by FHA's TOTAL Mortgage Scorecard. As such, the undersigned representative of the mortgagee certifies that the mortgagee reviewed the TOTAL Mortgage Scorecard findings and that this mortgage meets the Final Underwriting Decision (TOTAL) requirements for approval. The undersigned representative of the mortgagee also certifies that all information entered into TOTAL Mortgage Scorecard is complete and accurately represents information obtained by the mortgagee, that the information was obtained by the mortgagee, pursuant to FHA requirements, and that there was no defect in connection with the approval of this mortgage such that the result reached in TOTAL should not have been relied upon and the mortgage should not have been approved in accordance with FHA requirements. Mortgagee Representative: Signature: Printed Name/Title: And if applicable: OR This mortgage was rated as an accept or approve by FHA's TOTAL Mortgage Scorecard and the undersigned Direct Endorsement underwriter certifies that I have personally reviewed and underwritten the appraisal according to standard FHA requirements. Direct Endorsement Underwriter Signature DE's CHUMS ID Number This mortgage was rated as a refer by a FHA's TOTAL Mortgage Scorecard, or was manually underwritten by a Direct Endorsement underwriter. As such, the undersigned Direct Endorsement Underwriter certifies that I have personally reviewed and underwritten the appraisal report (if applicable), credit application, and all associated documents used in underwriting this mortgage. I further certify that: I have approved this loan and my Final Underwriting Decision was made having exercised the required level of Care and Due Diligence and in performing my underwriting review; I have performed all Specific Underwriter Responsibilities for Underwriters and my underwriting of the borrower s Credit and Debt, Income, Qualifying Ratios and Compensating Factors, if any, and the borrower s DTI with Compensating Factors, if any, are within the parameters established by FHA and the borrower has assets to satisfy any required down payment and closing costs of this mortgage; and I have verified the Mortgage Insurance Premium and Mortgage Amount are accurate and this loan is in an amount that is permitted by FHA for this loan type, property type, and geographic area. There was no defect in connection with my approval of this mortgage such that my Final Underwriting Decision should have changed and the mortgage should not have been approved in accordance with FHA requirements. Direct Endorsement Underwriter Signature CHUMS ID Number NOTE: As a reminder, FHA announced in Mortgagee Letter the revised HUD Form 9900-A must be used on mortgage transactions with case numbers assigned on or after August, 06. 4

5 TOP UNIQUE DEFICIENCIES BY INVESTOR VA VA Funding Fee Receipt (or not reflecting paid/ settled/submitted) Signature and Title of Lender s Representative not Complete on Report and Certification of Loan Disbursement (Form 6-80) The Lender's Notice of Value If VA Funding Fee is present on the HUD-, the file must include either a Funding Fee Receipt indicating that the Funding Fee has been paid OR a current VA Loan Guaranty Certificate. The Lender s Representative s signature and title must be included on the Report & Certification of Loan Disbursement (Form 6-80). The Lender s Notice of Value (NOV) must be present in the file (not required on a VA IRRRL). All contingencies per the NOV must be documented and satisfied such as pest inspection. Delivery, 5ZZ - VA Loans Delivery, 5ZZ - VA Loans Delivery, 5ZZ - VA Loans For more information, you may visit our website at If you have any questions, please call our operations team at Nationstar Mortgage LLC, 8950 Cypress Waters Boulevard, Dallas, Tx NMLS Unique Identifier #9. The information contained herein is for informational purposes only and is not intended and should not be construed as legal advice. This information is not intended to be relied upon by third parties and is not to be distributed to consumers. Nationstar Mortgage disclaims any and all representations (expressed or implied) with respect to the accuracy of the foregoing information. Some products may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. The programs, rates, terms and conditions are subject to change at anytime without notice. All rights reserved. Trademarks are the property of Nationstar Mortgage LLC. 06 Nationstar Mortgage LLC. 5