T0PIC... PAGE. Nationstar Mortgage Correspondent Lending Communications

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1 T0PIC... PAGE Nationstar Mortgage Correspondent Lending Communications... 1 Conventional Underwriting... 2 Income Tax Transcripts Requirements using the 4506-T... 2 Loan File Submission Delivery... 2 New Mortgage Insurance Provider... 2 Lockbox Address Changes for Borrower Payments... 3 Credit Fair and Accurate Credit Transaction Act Procedures... 4 Reminders... 5 Disaster Area Lending Policy... 5 Loan Eligibility Standards Borrower Requirements... 5 Property Planned Unit Development (PUD)... 5 Clarifications... 6 Principal Reductions... 6 Conventional Underwriting Appraisal Requirements (Age of Appraisal)... 7 Questions... 8 Nationstar Mortgage Correspondent Lending Communications Effective with the publication of this Correspondent Seller s Guide Update, and going forward, we will publish Correspondent Communications, including Seller Guide Updates and Announcements from the following centralized address: Correspondent Communications Address: no-reply@nationstarcorrcommunications.com Note: Please do not reply to this address. To ensure receipt of these communications, add this address to your contacts/safe address lists. Additionally, please continue to use the contact information, as outlined on the last page of this announcement for any questions you may have. 1

2 Conventional Underwriting Income Tax Transcripts Requirements using the 4506-T The expiration date of the official IRS period for extensions has been updated, as indicated below in red: Tax transcripts using the 4506-T are required to validate the income for all borrowers. Nationstar Mortgage requires the number of years of income documentation as indicated in this chapter of the Sellers Guide. NOTE: Transcripts cannot take the place of the required tax returns. The official IRS period for extension expires 10/15/2013. Therefore, any loan closing after 10/15/2013 that requires tax returns for income verification; must have a signed copy of 2012 returns in the file. If the tax returns can not be provided by the borrower, the file is ineligible for sale to Nationstar Mortgage Note: Borrowers that have filed an extension must provide the most recent years signed extension form and obtain the prior year's tax transcript. If a borrower has not filed tax returns, or the extension for the most current year has exceeded the 10/15 extension cutoff period, the borrower will not qualify until the required 4506-T tax year transcripts are received. It typically takes four to six weeks to add new filings or corrections to the IRS database. Seller Guide Update: Chapter 10 Conventional Underwriting, 10F Income Loan File Submission Delivery New Mortgage Insurance Provider Effective immediately, the following Mortgage Insurance Company has been added as an eligible MI provider for both Lender Paid and Borrower Paid Mortgage Insurance options: National Mortgage Insurance (NMI) Seller Guide Update: Chapter 9 Property, 9H Mortgage Insurance; Chapter 15 Loan File Submission Delivery, Section 15CC Mortgage Insurance 2

3 Lockbox Address Changes for Borrower Payments Effective immediately, Nationstar Mortgage has updated the payment address for many customers billing statements. Please note the following borrower payment addresses based on the customer s zip code: Los Angeles Lockbox Address Dallas Lockbox Address PO Box PO Box City of Industry, CA Dallas, TX Customer Zip Code Beginning 3 Digits Mail-To Lock Box Location Customer Zip Code Beginning 3 Digits Mail-To Lock Box Location 005 Los Angeles, CA Los Angeles, CA Dallas, TX Dallas, TX Los Angeles, CA Los Angeles, CA Dallas, TX Dallas, TX Los Angeles, CA Los Angeles, CA Dallas, TX Dallas, TX Los Angeles, CA Los Angeles, CA 155 Dallas, TX Dallas, TX 156 Los Angeles, CA Los Angeles, C Dallas, TX Dallas, TX Los Angeles, CA Los Angeles, CA Dallas, TX Dallas, TX 169 Los Angeles, Los Angeles, CA Dallas, TX Dallas, TX 177 Los Angeles, Los Angeles, CA 178 Dallas, TX Dallas, TX Los Angeles, Los Angeles, CA 215 Dallas, TX Dallas, TX Los Angeles, 492 Los Angeles, CA Dallas, TX Dallas, TX Los Angeles, Los Angeles, CA Dallas, TX Dallas, TX 260 Los Angeles, Los Angeles, CA Dallas, TX Dallas, TX Seller Guide Update: Chapter 1 Overview, 1A Notice 3

4 Credit Fair and Accurate Credit Transaction Act Procedures Nationstar Correspondent has expanded our Conventional Underwriting/Credit Section to include the various policies regarding Fraud Alerts and Identity Theft as follows. The Fair and Accurate Credit Transaction Act (the FACT Act), which amends the FCRA establishes numerous requirements that provide protection for the victims of identity theft, provide more information to consumers about credit reports and credit scoring, limits sharing of information with affiliates, and protects consumer medical and other information. The purpose of the Fair Credit Reporting Act (FCRA) is to protect consumers from the reporting and subsequent continued maintenance of inaccurate or obsolete credit information. Under the act, credit bureaus and other consumer reporting agencies must follow certain procedures relating to the manner in which credit information is obtained, maintained, and disseminated. In addition, users of credit information are subject to certain requirements and responsibilities. Identity Theft - Defined as a fraud committed using the identifying information of another person without lawful authority. Identifying information is any name or number that may be used, alone or in conjunction with any other information, to identify a specific individual. Fraud Alerts and Active Duty Alerts - FACT Act Section 112, FCRA Section 605(A) - Fraud Alerts are placed by credit reporting agencies (CRA). All alerts place limitations on the extension of credit to the consumer who had an alert in his or her file. A fraud alert is a statement in the file of a consumer stating that the consumer may be a victim of fraud, including identity theft. An active duty alert is a statement in the file of a consumer stating that the consumer is an active duty military consumer. An active duty military consumer means a consumer in military service who is on active duty, or who is a reservist performing duty under a call or order to active duty, and who is assigned away from his or her usual duty station. The FACT Act establishes three types of fraud alerts: Initial Fraud Alert: If a nationwide CRA is notified by a consumer, or by someone acting on behalf of a consumer, that the consumer suspects he or she has been or is about to become a victim of fraud, identity theft, or related crime, and if that consumer requests a fraud alert, the CRA must include a fraud alert in the file of that consumer and with any credit score generated using that file, for a period of 90 days beginning with the date of the request. Extended Fraud Alert: If the consumer or representative doesn t just report a suspicion, but actually presents the CRA with an identity theft report, and if the consumer or representative requests a fraud alert, the CRA must include the fraud alert in the file of the consumer with any credit score generated using that file, for a period of 7 years beginning with the date of the request. Active Duty Alert: Upon the direct request of an active duty military consumer, or someone acting on behalf of such a consumer, a CRA must include an active duty alert in the file of that consumer and with any credit score generated using that file, for a period of 12 months beginning with the date of the request. Security Freeze A credit decision cannot be rendered without receipt of a borrower's credit information, and Credit information under a security freeze must be unblocked by the borrower for full disclosure to the Underwriter. Many states have enacted legislation to allow consumers who are victims of identity theft to place a security freeze on their credit report accounts. A consumer may elect to place a security freeze on his credit report by notifying a consumer-reporting agency and requesting a security freeze on their credit record. If the consumer has requested a freeze, the 4

5 bureaus cannot release the consumer's credit report or any information from it without the consumer's express consent. Although Nationstar respects the consumer's right to place a security freeze on their credit information, a credit decision cannot be rendered without receipt of the consumer's credit information. Frozen credit information must be unblocked by the borrower for full disclosure to the underwriter. For complete details, please refer to the sections of the Seller Guide, as listed below. Seller Guide Update: Chapter 10 Conventional Underwriting, 10E Credit, Chapter 15 Loan File Submission Delivery, 15WW Credit Reminders Disaster Area Lending Policy As noted in the Correspondent Seller Guide, in the event of a disaster, Correspondent s are reminded to reference the Nationstar Correspondent s Disaster Area Lending Policy for lending on properties located within designated disaster areas. To that end, Federal Emergency Management Agency (FEMA) issued Emergency Declarations on September 14, 2013 in the following counties due to flooding in Colorado: Adams County, Arapahoe County, Boulder County, Clear Creek County, El Paso County, Jefferson County, Larimer County, Logan County, and Weld County. It is necessary that all loan submissions contain adequate information to ensure that there was no damage or reduction in value or marketability of a property, located within a major disaster area, prior to the closing or funding of a loan. It is necessary that these procedures be followed once FEMA announces a Major Disaster Declaration with Individual Assistance, or earlier when a Correspondent becomes aware of a disaster. It is the Correspondent s responsibility to follow this procedure and not to rely on Nationstar Mortgage to inform them of designated areas. Seller Guide Update: Chapter 9 - Property, 9M - Disaster Area Lending Policy Loan Eligibility Standards Borrower Requirements As a reminder, Nationstar Mortgage does not lend to business entities; it is required that all Borrowers be individuals. Any person who signs the application is to be considered a Borrower and all Borrowers must sign the Note. In order to verify a borrower has the necessary Permanent Resident card ("green card"), a copy of the Form I-551 is required. Borrower must have a valid social security number. Seller Guide Update: Chapter 8 Loan Eligibility Standards, 8C Borrower Requirements Property Planned Unit Development (PUD) A Planned Unit Development (PUD) is a project or subdivision that consists of common property and improvements that are owned and maintained by a homeowners' association (HOA) for the benefit and use of the individual PUD units. In order to qualify as a PUD, each unit owners' membership in the HOA must be automatic and non- severable, and the payment of assessments related to the unit must be mandatory. As a point of clarification, if a subject property is considered a PUD, regardless of whether it is attached or detached, it must be processed through AUS as a PUD. Seller Guide Update: Chapter 9 Property, 9F Planned Unit Development (PUD) 5

6 Clarifications Principal Reductions Note the following guidelines regarding Conventional and FHA loans defined as acceptable principal reductions. Product Type Circumstance Examples A reduction may be applied to refund the overpayment of fees or charges paid by the borrower, in any amount, in accordance with applicable regulatory requirements (e.g. RESPA cure tolerances and excess premium pricing). If the borrower receives more cash back than is allowed for the product, the lender can apply a principal reduction to reduce the amount of cash back to the borrower to bring the loan into compliance with the maximum cash-back Conventional requirement. The maximum amount of the curtailment cannot exceed the lesser of $2,500 or 2% of the original loan amount for the subject loan. If the borrower received $5,000 cash back at closing on a loan amount of $400,000 which included excess premium of $500, the lender could apply a $3,000 reduction at closing ($2,500 for excess cash out plus $500 for excess premium). This would result in net cash back to the borrower of $2,000 or less, thus meeting the limited cash-out refinance requirement on a standard GSE loan. For a HARP transaction, if the borrower received $3,000 cash back at closing on a loan amount of $400,000, which included excess premium of $250, the lender could apply a $2,750 reduction at closing ($2,500 for excess cash out plus $250 for excess premium). This would result in net cash back to the borrower of $250, thus meeting HARP cash-out requirements of $250 or less. Per Diem: All per diem on the payoff past the 5-day point from the funding date is considered cash out and must be included in the cash out limitations in this policy. FHA If the amount of excess cash out in the above examples had exceeded $2,500, the loan cannot close. The loan amount must be reduced, new AUS run if applicable and reapproved by underwriting to eliminate the cash out and principal reduction to the borrower. The HUD-1 settlement statement must clearly identify the refund with a notation for the reason of the reduction. A reduction may be applied to refund the overpayment of fees or charges paid by the borrower, in any amount, in accordance with applicable regulatory requirements (e.g. RESPA cure tolerances and excess premium pricing). If the borrower receives more cash back than is allowed for product, the lender can apply a principal reduction to reduce the amount of cash back to the borrower to bring the loan into compliance with the maximum cash-out requirement. The maximum amount of principal reduction cannot exceed $500. If the borrower received $1,350 cash back ($1,000 for excess cash out and $350 for excess premium), the lender could apply an $850 reduction at closing ($500 for excess cash out plus $350 for excess premium). This would result in net cash back to the borrower of $500 or less, thus meeting the maximum cash out requirement. If the borrower received $1,000 cash back ($500 for excess cash and $550 for excess premium), the lender could apply a $550 principal reduction at closing ($550 for excess premium). This would result in net cash back to the borrower of $500 or less, thus meeting the maximum cash out requirement. If the amount of the principal reduction in the above examples had exceeded $500 for excess cash out, the loan cannot close. The loan amount must be reduced, new AUS run if applicable and reapproved by underwriting to eliminate the cash out and principal reduction to the borrower. The HUD-1 settlement statement must clearly identify the refund with a notation for the reason of the reduction. Seller Guide Update: Chapter 15 Loan Submission Delivery, 15W HUD-1 Settlement Statement 6

7 Conventional Underwriting Appraisal Requirements (Age of Appraisal) Please note the following Age of Appraisal requirements based on the Product Type and whether the loan is an Existing or New Construction: Product Type Existing Construction New Construction Fannie Mae 4-months 4-months Freddie Mac 120-days 120-days USDA 180-days 180-days FHA: Appraisal Validity Periods The term of the appraisal begins the day the home is inspected by the FHA-approved appraiser and the date appears on the URAR. This table lists appraisal validity periods based on the property type being appraised. If the... And the... Then the appraisal validity period is... property is existing, proposed or under construction property is existing, proposed or under construction property is HUD Real Estate Owned (REO) appraisal is not updated using the Appraisal Update and/or Completion Report appraisal is updated using the Appraisal Update and/or Completion Report if a loan has not closed 120 days for the original appraisal plus a 30 day extension. Important: The 30 day extension period cannot be used for cases where the original appraisal is updated using the Appraisal Update and/or Completion Report. FHA will not insure a loan if it is not closed within 150 days from the effective date of the appraisal report. 240 days, and consists of 120 days for the original appraisal, plus 120 days for the Appraisal Update Report. Important: FHA will not insure loans that have not closed within the 240 day appraisal validity period. The Appraisal Update and/or Completion Report must be completed prior to the expiration of the initial 120 day period. 120 days from the effective date of the appraisal. Important: If the buyer is financing the purchase with an FHAinsured mortgage, a valid HUD REO sales contract must be ratified within 120 days of the appraisal effective date or the lender must order a new appraisal or an appraisal update to support the mortgage transaction. Reference: For information on second appraisals for Real Estate Owned (REO) properties (with the exception of 203(k) as repaired appraisals which are exempt), see HUD n. If the appropriate HOC determines that soft market conditions exist in certain areas or markets, it may shorten the term of appraisals for substantial rehabilitation upon advance notice to lenders. VA: Existing or New Construction A notice of value for property appraised as existing or new construction is valid for six months from the date of the appraisal. Rapidly fluctuating real estate market conditions may temporarily dictate the use of a shorter validity period. Seller Guide Update: Chapter 10 Conventional Underwriting, 10I Appraisal Requirements 7

8 Questions If you are an approved Correspondent and need to speak with us, please note the following options: Main Correspondent Lending Toll-Free Number: , then: Option 1 - Mandatory Option 2 - Operations o Sub-option 1 This option allows Correspondents to enter their 3-digit client number to be transferred to the appropriate new region-specific Correspondent Operations team. If you do not know your 3-digit client number, you will be prompted to please select from one of the following team sub-options: Sub Option Number/Name Address Account Executive(s) Sub-option 2 Team Arch corr.arch@nationstarmail.com Colleen Flynn, Amy Hutchins, Dana Galiano Sub-option 3 Team Lone Star corr.lonestar@nationstarmail.com Jon Hodge, Page Woodall, Sara Ward Sub-option 4 Team Summit corr.summit@nationstarmail.com Tracy Whipple Sub-option 5 Team Golden corr.golden@nationstarmail.com Mauricio Perez Option 3 Pre-Purchase Pricing Option 4 - Post-Purchase Reconciliation Option 5 - Dial Your Party's Extension If you are not yet an approved Correspondent, we would welcome the opportunity to become a valued partner in helping you grow and sustain your business. Please visit our website at nationstarcorrespondent.com and click on Approval Process to learn how you can Join The Team. Thank you again for choosing Nationstar Correspondent. 8