FHA Processing Checklist

Transcription

1 FHA Processing Checklist DU/LP Findings PLEASE NOTE: AT THIS TIME, FHA ARMS ARE NOT AVAILABLE DUE TO RECENT FHA MI CHANGES. FHA ARM s ARE NOW CLASSIFIED AS HPMLS. Read DU Findings thoroughly and document accordingly! Provide documentation requested. Re: Paystubs/W-2 s, SS/Retirement earnings, bank statements, tax returns, do ratios on Findings and Transmittal match, gap of employment letters, 401k used as reserves can funds be withdrawn for financial hardship, etc. If property has HOA dues, has the property type been corrected to PUD and DU run correctly? Does the appraised value on the AUS findings match the value on the appraisal? If DU findings have other assets or other income listed in the findings, have these items been corrected to reflect the asset type or income type with the corresponding correct DU populated condition? Does the credit report reference # on the DU findings match the reference # of the credit report in the file? If not, delete the old reference # from DU and pull in the new credit report, as the reference # s must match. Does DU Reflect a Red Flag Value Warning? If there are concerns after the appraisal has been reviewed the UW will forward a copy of the appraisal for review. Do not automatically send the appraisal to appraisal review. Is the file fully processed? If missing documents are the difference between a suspended file, a file with a multitude of conditions and an approved file, the file is not ready to be submitted. CCMC s standard is to have all files approved at time of initial submission with 5 conditions or fewer. Checklist Is the checklist the top item on the right hand side? Have the line items been checked off if the item is in the file or N/A d, if not applicable? Have you made notes to address missing items? Does the file contain the most recent File stacking order and are the documents stacked in the order as listed on the Stacking order checklist? 1003/FHA Transmittal Do the ratios on the Transmittal match the ratios on the DU Findings? Do the assets, income, liabilities and appraised value on 1003 match DU? Does the new proposed payment have the actual monthly amounts for ins, taxes and MI and HOA dues, if applicable? Does the cash to close on the final 1003 match the cash to close on the DU findings? Has the appraised value been updated in point/relay to match the value given in the appraisal? Is the loan number on page 1 of the 1003 and on the DU Findings? Year Built completed? Ages of Dependents listed? Do the # of dependents on the 1003 match the tax transcript/transcripts? Source of Settlement/Down Payment completed and correct? Is there a complete 2 year employment and address history on the 1003? Please remember: P.O. Boxes are not legitimate employer addresses or borrower addresses, must have the actual street address for both the employer and where the borrower resides. Is the rent/mortgage payment listed in the current housing expense? If no rent, is your file noted or documented? Does the property address on the 1003 match the address on the contract, appraisal and USPS? Does the address in Relay match the address exactly as it appears on the USPS printout? Do the social security numbers match through out the file? Re: credit report, paystubs, W-2 s, tax returns/ tax transcripts? For borrowers that own other real estate, has the Real Estate section of the 1003 been completed in full? Have the declarations been reviewed? Are they complete for both borrowers? Are they completed correctly? Re: if credit report shows a BK/ Foreclosure/Open Judgment or the borrower pays child support /alimony are the questions answered Yes? Permanent Resident Alien Is a copy of the unexpired resident alien card in the file? Are both the government monitoring and the interview type completed for all borrowers and have the borrowers and the LO signed and dated the 1003? Is the LO Originator ID and the Company ID on both the Initial and the Final 1003? If not, they will need to be manually added to both 1003 s. FHA transaction Is the 92900a (Addendum to 1003) in the file with both the initial and final the 1003? Have all areas on both the initial and final 92900a been completed in full? Is the correct lender ID number on the form? Is the correct case number on the form? Have all applicable sections been completed in full and has it been signed and dated by both the LO and the borrowers? Do the borrower s names in the section Title to be held in what Names of the final 1003 match the names as they appear on the contract/title work? GFE/TIL/IFW/Disclosures

2 Are the fully completed, signed and dated, GFE Disclosure History and GFE Submission Checklist in the file.? Are all copies of the GFE, Cert of receipt of GFE, TIL, Fee Worksheet in the file and in the correct order as required by the disclosure stacking order? Include legible copies of each GFE, IFW and TIL along with the signed copies each time the file is disclosed.. Are all copies of the GFE, Fee Worksheet and TIL in the closing package, in the correct order? Your closer needs the same copies in the same order as in the UW package. If file has been re-disclosed numerous times, has each set of re-disclosure docs been numbered and are they in numerical order? TILs Review in full Have all of the boxes at the bottom of the page been completed in full and have they been completed correctly? Does the application date appear at the top of the Cert of Receipt of GFE? Does the Re-disclosed date appear at the top of the Cert of Receipt of Re-Disclosed GFE? Are both of the date lines complete at the top of the Change of Circumstance? Was the file disclosed within 3 days of application? If not, is the LOX from the loan officer in the file stating why? Was the file locked at time of initial disclosure? If not, provide a copy of the change of circumstance, cert of re-disclosure, new GFE and new Fee Worksheet and TIL, if applicable. Does the file contain the signed and dated Risk Based Disclosure? Also, was it provided to the borrowers within 3 days of loan application to meet RESPA Requirements? If loan is an ARM, is the fully executed ARM Disclosure in the file? If file was re-disclosed due to a change of circumstance, are the following documents in the file: 1) Change of Circumstance form from custom forms dated at the top, 2) Cert of receipt of re-disclosed GFE, 3) New GFE, 4) New Fee Worksheet, 5) New TIL and 6) New Compliance Transmittal to indicate new docs sent and the day they were sent? CO only also need CO Compensation Disclosure and CO Lock in Disclosure. Do all of these re-disclosed forms have the correct re-disclosed date at the top? Are all of the disclosures in the file completed in full? Are they signed and dated by both the LO and the borrowers? Is a copy of the service provider s list with the Fee Worksheet and GFE? PLEASE NOTE: Colorado loans All IFW s in the file must be signed and dated by both the borrowers and the LO. If the property is a Condo that requires approval from Barb Weade, has the Approval fee bee disclosed in Section 1, Our Origination Charges? If loan is a CHFA loan, has the 1% LN Origination fee and the $1500 Processing Fee been disclosed? NOTE: Must be a loan origination fee. Cannot be disclosed as a discount point. All of the CHFA programs are priced at par. Have all disclosure and re-disclosure documents been uploaded into X-Docs for review and acceptance and has an e- mail been sent to disclosures as notification of a new set of disclosures are available for review. Lock Is the loan locked? Loan must be locked at the time of submission. Is the closing date within the lock period or is an extension needed? Is a copy of the lock sheet/lock confirmation in the file? Now required by investors. Is your loan locked under the correct program? Does the loan number on the lock sheet match the loan number in Point/Relay? If the loan was not locked at the time of initial disclosure, has it been re-disclosed at the locked rate? Do you have all of the required forms needed for a change of circumstance? If the loan was locked with discount points, do the discount points disclosed match the discount points on the Lock Sheet? If discounts disclosed on the transaction are less than those on the lock sheet, has an been sent to Secondary to approve the concession? If discounts disclosed on the transaction are more than those reflected on the lock sheet, has the loan been re-disclosed? Cannot charge more discounts than the amount reflected on the lock sheet. If the loan was locked with premium pricing, does the amount of the credit disclosed match the credit on the lock sheet? The disclosed credit can be less than the amount on the lock sheet, it cannot be more. Have all the fees being paid by the lender with the credit been marked on the IFW as Paid by Lender? Credit Does your loan meet the minimum FICO of 640? Fico - exception may be allowed with Capital Market and Underwriting Department approval. 640 for Streamlines, HUD Repos with automated finding of approve/eligible must have 640 FICO and go to Chase or PHH. Bond must have a FICO of 620. CHFA credit score is 620 with reservations made as of 1/1/2012. CHFA Risk Score Analysis to be completed on all files, when the FICO is between and the DTI exceeds 43%. Do the Fico s and the credit report number appearing on the credit report match the Fico s and the credit report number on the DU Findings? Are all pages of the credit report in the file and are all pages legible? Has the transaction been reviewed to make sure a Joint credit report is acceptable? If separated credit reports are required, have these been pulled and has the loan been run thru DU/LP properly? Payoff of revolving debt if revolving debt is being paid off to qualify and the account is closed, a credit supplement will need to be provided showing account closed and the debt can be paid off prior to or at closing. If the debt is paid in full and the account is not being closed, a $10.00 payment will need to be taken against the borrower on each trade line that has been paid off.

3 Student loans Government loans - If no payment listed or payments deferred, is a copy of the actual statement in the file? Credit supplements cannot be used to document information on deferred loans or confirm payments, if no payment is on the credit report. Must have a copy of the statement in file to show deferment of over 12 months or the amount of the actual payment when repayment starts. Website that can be utilized to calculate payments is Finaid.org. Authorized user accounts must be reviewed to make sure we have a viable credit score. Please see Ops tips Credit Authorized user accounts for further detail and guidance. Open or 30 day accounts Please review AUS findings and current Ops Tips for further detail and guidance. Does the borrower have an outstanding monthly IRS installment agreement in effect to pay their Federal taxes? If so, does the file contain a copy of the IRS payment plan information and has the debt been taken against the borrower(s)? With the payment plan arrangements, the borrower must provide evidence of a minimum of 3 monthly scheduled payments have been paid on time. The borrower cannot prepay in order to meet the requirement of having made 3 monthly payments. Have the real estate debts been matched to the properties listed on the initial application and the tax returns? If they do not match, has the borrower provided the back up documentation? Re: HUD to show property sold or refi d, newly purchased rental or 2 nd home. If the mortgage is a privately held mortgage, do you have a copy of the Note, Deed of Trust/Mortgage and the most recent 12 months of cancelled checks for the mortgage rating? Collection accounts FHA has recently updated their stance on open collection accounts (Mtgee Letter ). If the aggregate outstanding balances on collections is greater than $2000 the underwriter must perform a capacity analysis as described by FHA. Medical collections and charge offs are excluded from this guidance. For Community Property State unless excluded under state law, collection accounts of the non purchasing spouse are included in the cumulative balance. Capacity analysis includes any of the following: 1) paying the collections in full, 2) setting up a payment plan and taking the payment into consideration when qualifying or 3) If payment arrangement cannot be made, a 5% payment must be calculated and taken against the borrower(s). Please see current Ops Tips for further detail and guidance. Please see current Ops Tips for further detail and guidance. Judgments FHA has recently updated/clarified there requirements on judgments. (Mtgee letter ) All judgments must be paid in full and released. If the judgment is to be paid at closing, provide a copy of the payoff and the UW will condition for title to be responsible for obtaining the release and having it recorded. An exception to paying in full is if the judgment is set up on a payment plan. The payment must be taken against the borrower and the borrower must make at least 3 scheduled monthly payments. The borrower cannot prepay the account to meet the scheduled 3 monthly payment requirement. Please see current Ops Tips for further detail and guidance. Does the credit report reflect a BK/Foreclosure? See Ops Tips for time frame information. Has the appropriate time elapsed to purchase a home? Has the borrower provided a copy of the BK Discharge and/or a copy of the Public Trustee s Deed? Do you have a signed and dated LOX from the borrower if there were late payments/collections after the BK? Does the file contain a borrower signed and dated LOX to explain each inquiry individually in the past 120 days and each account with derogatory credit within the past 24 months, to include the BK/Foreclosure/and public record line items, name variations and address variations appearing on the credit report? Does LOX on inquiries also address whether or not any new credit has been opened? If any of the inquiries were a result of CCMC pulling credit, is a copy of that report included in the submission with all of the appropriate documentation? Example: if borrower paid off debt, have the funds been sourced? If a rapid rescore was done, is all the information provided to the credit agency included? Does the credit report indicate a SSN discrepancy, Fraud Warning or OFAC Warning that needs to be cleared? If there is a SSN Discrepancy, order SSN verification thru Corelogic. Does the credit report indicate an address discrepancy? If so, does the file contain a borrower signed and dated LOX to explain? Does the credit report show disputed accounts? Either open or closed? If DU and LP are both reading the disputed account, has the borrower provided the letter to remove the dispute? Has new credit been pulled and file rerun thru DU or LP? FHA Disputed account(s) See Ops Tips and speak to your UW for further detail and guidance. Does the credit report show a short sale on a previous mortgage? Does the report indicate any accounts that were settled for less than owed? If this statement is listed under a mortgage, please review current Operation Tips to see if your borrower is eligible for financing at this time! Gov t Loans if the borrowers are retaining a property that has a HELOC, the payment on the credit report is used for qualifying. If borrowers are retaining their current home, does the file contain a signed and dated letter of intent to address what they intend to do with the property? Subordinated 2 nd Is a copy of the signed subordinated 2 nd Note or Loan Agreement in the file? This is an investor requirement. If borrowers are retaining their current home or have rentals, are copies of the mortgage statements along with a current tax statement, ins and HOA information, if applicable, in the file for each property.. A Credit Report Supplement indicating the taxes and insurance are escrowed does not satisfy this requirement. If not escrowed, are copies of the current tax statements, ins and HOA Dues, if applicable, in the file? If current home or rental is Free and

4 Clear, do we have the paid in full note or released Deed of Trust/Mortgage in the file, current tax statement, ins and HOA information, if applicable.? Have the taxes, ins and HOA dues, if applicable, been taken against borrowers? Does the borrower have outstanding debts that do not appear on the credit report? Has the borrower provided the information/documentation on the debts? Have they been added to the credit report with a rating? FHA Manual underwrite Have you completed the Risk Information Checklist? Does your loan meet the minimum criteria for the loan to be approved? Are your ratios over 31/43? Do you have compensating factors? Please see current Ops Tips for further detail and guidance for manually underwritten loans. Manual Underwrite File must contain a 12 month rental rating. VOR is acceptable if it is from the Apt Complex or a Management company. If the rent is paid directly to the owner of the home being rented, file must contain 12 months of cancelled checks. Have the LDP/GSA s been checked on all parties? Does the file contain the actual LDP/GSA printouts? Have the CAIVR # s been requested on all borrowers. Please see current Ops Tips for the complete list of parties that will need to have LDP/GSA checked, for both purchases and refinances. Has Mavent/Compliance Eagle been run? Have all Fails been corrected and Warnings addressed or corrected? Are all required pages included in the submission package? Non purchasing spouse Community property state File must include non purchasing spouses credit report and a signed and dated borrower s authorization signed by the non purchasing spouse. All open debts to be taken against our borrower. All open federal debt, open judgments/liens of non purchasing spouse to be satisfied prior to closing. See March Ops Tips for more detail. Time Share debts on the credit report these debts are treated as installment debts. Time shares do not need to be listed as a property in the Real Estate section of the Support orders/separation agreement/divorce decree if these document are required Do the documents provided show either the recording information or show evidence that the documents have been filed with the court system. Assets Have the bank statements been reviewed in full for any non-payroll deposits and/or overdraft fees? Have all atypical (atypical is a deposit of 25% or more of the combined earnings of the borrowers income) deposits been documented and explained? These can no longer be backed out. Does the address on the bank statements match the address on the 1003? Are the bank statements expired? If quarterly statements, does file contain the most recent quarterly statements? Have any accounts recently opened? If there is a party other than our borrower on the bank statement, do we have the signed and dated LOX from that party indicating the funds in the account can be utilized for this transaction unless the other party is the borrower s spouse and the file contains documentation to support the relationship? If borrower provided on line bank print outs, do they include the borrower s name, account number, the bank name and URL address and a running balance? If a bank printout is utilized for documentation, file must always contain a copy of the actual bank statement. Printouts only to document assets are not acceptable. Have the borrowers provided all pages of all bank statements, investment account statements and/or 401k/retirement statements? Have all transfers from other checking and savings accounts been properly documented with all pages of all bank statements. If the transfer is coming in from an investment account, re: ING, Fidelity, etc, does the file contain a copy of the corresponding statement for the both institutions? If file contains a VOD, are the corresponding bank statements in the file? If the current balances on the VOD are greater than the ending balance on the bank statement, have the deposits been documented and explained? If money for closing is coming from proceeds of sale of current home, are the assets listed on both the 1003 and in DU? Does the file contain a copy of the contract for the sale of current home? Did the realtor provide an estimated net proceeds sheet or did the title company provide a prelim HUD reflecting estimated proceeds? Does the file contain a copy of the earnest money check, evidence it has cleared the borrower s account and an updated bank statement/printout with no gaps between statement in the file and the bank printout to reflect the current balance in the account? If the earnest money was a promissory note, does the file include a copy of the promissory note marked redeemed and a copy of the borrower s cancelled check? If it has not been redeem, when will it be redeemed or is it being removed from the contract? Have the 401k/retirement accounts been valued at 60% of balance? Stock accounts/mutual Funds valued at 70% of balance? If being used for assets to close, has the borrower provided proof of liquidation? If needed for reserves, has borrower provided documentation on the 401K that indicates the account allows hardship withdrawals? The evidence of Hardship Withdrawal must be from the borrower s employer not the company that manages the 401k. Is a gift being used for closing? Is the correct gift letter in file? Gift letters should have the 1010 warning listed on it. Is the gift letter fully executed? Does the amount of the gift on the letter match the gift check? Does the UW file contain a copy of the gift check(s)? Does the file contain a copy of the Donor s bank statement to reflect the withdrawal/clearing of the gift funds? Do we have the updated bank statement/printout with no gaps, to show the gift has been deposited and the new balance in the account? If the cashier s check/wire is going to closing, this will now be a PTF condition.

5 Are assets for closing from personal accounts or business accounts? If the business is a Sole Proprietor (Schedule C), S Corp (1120S) or a Full Corporation (1120) the file must contain 6 months of business bank statement and the UW must do a cash flow analysis on the business to conclude that the withdrawal of funds will not affect the daily operation of the business. Businesses other than those listed above need additional documentation above and beyond the 6 months bank business statements. That additional information is a Letter from the CPA or tax attorney stating that the borrower has full personal use of the funds and it will not affect the viability of the company. If the CPA is unable to provide the Letter, 2 years of personal & business returns plus 24 months of business bank statements must be provided for review as the UW will then need to do a 2 year cash flow analysis If this is a CHFA Loan, does the borrower have $1000 into the transaction? Borrower cannot have any money back at the time of closing. Any monies back to the borrower will be applied as a principal reduction to the 2 nd mortgage. Sale of a Personal asset for cash to close. File must contain the following documents for the funds to be used at closing: 1) Proof of ownership of the asset, 2) Blue Book value of the asset, 3) Bill of sale on the asset being sold and 4) Proof of receipt of the funds from the sale with deposit tickets, bank statements or a copy of the purchaser s cancelled check. Income Have all of the paystubs been reviewed? Are they dated within 30 days of application? Do the paystubs cover the most recent 30 days? Does the address on the paystubs/w-2 s match the address on the 1003? How is the borrower paid? Monthly, Semi-monthly, Bi-weekly, Weekly? Has income been calculated? Are the YTD earnings low? If so, has the borrower s employer explained why? Did the borrower change jobs during the year? Does the file contain the last paystub received from the prior employer? If borrower(s) have a large increase in income from 2011 to 2012 and that income is need to qualify, does the file contain a copy of the 2012 W-2 and tax transcripts? Is there a job gap of 30 days or more that requires a fully signed and dated LOX from the borrower to address the situation? Are the income calculation forms, provided by CCMC, completed in full and included in the submission package? Have all of the appropriate boxes been marked so the income calculates to the bottom of the pages? If 2106 expenses, was this section completed? Self-employed borrower is the Self-employed Analysis form completed in full and in the file? Has Point/Relay income been updated to match the income on the calculation form? If borrower has rental properties, has the Schedule E/Rental income/loss been calculated. FHA allows the rental calculation of income less expenses plus depreciation divided by 12. This figure is then input in Relay as the rental income or loss. Has income been broken down as Base, OT, Commission and Bonus in Relay? This must be done for the AUS conditions to populate correctly. Do we need the OT, Bonus, Commission to qualify or can it be a comp factor? For the average of these 3 income types, is the fully completed VOE in the file? If using Bonus and Commission, have the boxes on the VOE been checked that this income will continue? If paystubs show commission earnings and bonus earning are over 25% of total income, are the tax returns in the file? Have they been checked for 2106 Expenses and/or ownership in the company? If 2106 expenses, has income been reduced by the average of the 2106 expenses? If mileage is being added back in, current 2012 IRS guideline is 23 cents per mile. Rate for 2011 was 22 cents. If a VOE was needed, was it sent to HR or Payroll? Cannot be sent Attention to a specific individual. If VOE was faxed back, has the fax header info been checked to make sure it was faxed back from our borrower s employer? If 2 different hand writings on the VOE, have both parties signed and dated the VOE? Have all corrections and areas of whiteout been initialed? Are the verbal VOE s in the file? Have the dates on the 1003 been updated to match the dates on the VVOE or Full VOE? Does file contain a true, full 2 year employment history? Are the verbals fully completed with the source utilized to confirm the employer s phone number, the phone number, person spoke to and title, start date and current position? For a self-employed borrower copy of business license, letter from CPA, Evidence of Good Standing from the Secretary of State. Business phone and address to also be confirmed with a 3 rd party source. If borrower does not have a CPA, speak to your UW about ways to document the existence of the company. RE: Letters of reference, current invoices from suppliers, etc. Have the tax return/tax transcripts been reviewed? If tax returns are required, does the file contain the complete return with all pages and schedules? Is the completed Self-employed analysis in the file with the income calculated? Do the line items of the tax returns/tax transcripts match? 2106 Expenses? Is there a schedule C, E or F listed in the returns? If a Schedule E, do the properties match the properties listed on the 1003? Read DU Findings! Supply only the returns and transcripts as required by the DU Findings. RE: 1 year returns, the same year s transcripts. If borrower has filed Amended returns, file must contain a copy of the original return and transcript, a copy of the amended return and a transcript of the amended return. If the return was amended after the application was taken and that income is needed to qualify, a written explanation must be submitted and approved thru Underwriting Management. Please see the current Ops Tips for further detail and guidance. Do the addresses on the tax transcripts match the 2 year address history on the 1003? If not, have the borrowers provided a signed and dated LOX to explain? If applicable, has the address history on the 1003 been updated? If the tax returns reflect a Partnership or S Corp on the Schedule E, Have the K-1 s for each business listed on the Schedule E been provided?

6 If income from the business is being used to qualify or if business returns are required per the AUS findings, file must also contain a copy of the business transcripts. Self-employed Have borrower(s) been self-employed for more than 2 years? If self-employed less than 2 years, loan may not be approvable at this time. This is an investor suspense item. Speak to you UW. Employed by a Family Member or Family owned company Provide most recent 2 years of tax returns and transcripts, most recent 30 days of paystubs, written VOE and payroll ledger from the company CPA. If the spouse is not on the loan and the tax returns show a self-employed business for the spouse, has the borrower s income been reduced by the loss taken by spouse s business? Does file show declining income? Does the file contain a letter from the CPA explaining why? If declining income, speak to your underwriter, file may have to go to the investor for underwriting? See Ops Tips for more detail. Have you provided the 4506T transcript or W-2 transcripts? If the borrowers are straight W-2 employees, 2 years of W-2 transcripts may be provided in lieu of 2 years tax transcripts. Streamline Refi s do not need transcripts. See current Ops tips for further detail and guidance. Social Security income If the borrower s Social Security benefits are taxed, the income cannot be grossed up. SS income can be grossed up only if it is not federally taxed. SS Award letters are required to be in the file as they now show if the benefits will stop in the next 3 years. School Teacher Is borrower paid for 9 mos or 12 mos? Does contract show how paid or has a fully completed VOE been provided with the number of months paid detailed in section 20? Annuity/IRA distribution NEW DISTRIBUTION Annuity or IRA must be set up with regular monthly disbursements and verified receipt of income with a minimum of 2 months of bank statements. Distributions which have a history of receipt may be used by conservative averaging of the distributions appearing on the tax returns. Must show 3 years continuance. Contract Does the Sales price on contract match Relay? Does the property address match Relay/USPS/Appraisal? Do the borrower names on the contract read exactly as Relay? HOA dues? Seller contributions? Personal property? Is contract complete with all amend/extends/addendums? Is the contract in the file legible? Are all parties on the loan listed on the contract? Have all parties signed the contract? Is the seller on the contract, the seller of record on title? If a LLC, is there property Flipping? Do we have evidence of the LLC s authorized signor? If bank owned, are all of the POA s in the file, do we have the name of the person signing the contract and evidence they are an authorized signor? Remember: Owner of Record is not a legitimate seller. If contract has owner of record listed as the seller, this will need to be corrected to reflect the name of the actual seller. All personal property listed in the contract to be conveyed via Bill of Sale at Zero value at time of closing. If transaction is a Short Sale, are the lender acceptance letters in the file from the 1 st and 2 nd lender, if applicable? FHA Purchase If not in the contract, provide signed and dated Real Estate Cert and Amendatory Clause. The Real Estate Cert and FHA Amendatory Clause are not required on FHA REO properties, 203k s and New construction Appraisal Has the appraisal been reviewed? Has the appraised value in Point/Relay been updated to match the value given on the appraisal? Re: Seller contributions? Private Road? Well and Septic? PUD/HOA dues? Did home appraise or is there a value issue? Borrower & Seller name correct? Termite state/termite inspection? Appraised As Is or are there repairs? Is case number on the FHA appraisal? Has appraiser stated the home meets minimum property standards per HUD and the crawl space/attic was inspected? Is zoning legal or legal non-conforming? Does the sales history match the chain of title? Final Inspection FHA finals can be on either the 1004D or FHA form (compliance inspection report). If the 1004D is utilized, is the box in the middle (Certification of Completion) checked? Our investors are checking for this. Photos are also required. Please Note: Some of our investors are requiring the final to be on the FHA Form Does the appraisal contain a copy of the appraiser s license? Are all comp photos included? Are there pictures of all of the bathrooms, the kitchen and living area? If home remodeled or renovated, are there pictures included to document? Well and Septic -- Is the property located in an area where there is availability to connect to public water and sewer and the cost to connect is 3% or less of the sales price? If so, the home must be connected to the public system. If cost to connect is over 3%, the existing on site system is acceptable. If subject is on well and septic, has the appraiser commented that the well and septic meet FHA minimum property standards? Does your property have a Cistern? These are considered on a case by case basis with the approval coming from the ruling HOC Center. If property has been vacant, Well needs Potability Test and the Septic will need a Dye Test. Termite inspections If a termite inspection is required, have all pages of the inspection been provided and included in the submission package? All loan types - If the home was bank owned or winterized, was the water on at the time of inspection?

7 If property is attached have you provided a copy of the recorded party wall agreement? If not recorded, have you provided a copy of the party wall that is being recorded at closing? Party wall agreements are not required in the state of California. When your FHA Case number was ordered, were the borrower names typed in exactly as they appear on the contract/title commitment? Has the case number been typed into Point/Relay and does it appear on the appraisal order? When typing case number in point, was the correct ADP code included with the case number? FHA Condo Appraisal order screen along with the correct ADP code, has the PUD/Condo indicator been marked Condo and the Condo ID and submission field completed? The condo Id and submission number are on the condo approval that is pulled from FHA connection. Has the FHA appraisal logging been completed? Does it reflect Success? FHA Flipping Has current seller been in title for 90 days? If days, has the sales price increased 100%? If so, provide 2 nd appraisal. 91 days to 12 months FHA reserves the right to have a 2 nd appraisal if the resale price is 5% greater than the lowest sales price in the past 12 months. See Property Flipping in the Ops Tips for more info. If the transaction requires a 2 nd appraisal it needs to be ordered thru the appraisal department. Please let them know the request is for the 2 nd FHA appraisal to meet the flipping guidelines. The 2 nd appraisal has to be a full FHA appraisal with case number. 2 nd appraisal will need to have the appraisal logging completed. WELLS FARGO will now do loans if property is being sold less than 90 days and the sales price is 20% or more than the seller s acquisition price. Loan must be locked investor specific (F303B62). 2 nd appraisal is required, has to be ordered thru the appraisal department, with note indicating FHA 2nd appraisal, please order with RELS Valuation. See Capital Market Alert and ops tips for more detail. HVCC compliance - To meet compliance on FHA, was the appraisal sent to the borrower within 3 days of closing? Was the appraisal acknowledgement sent with the appraisal? Have the borrowers returned the signed acknowledgement? The fully executed appraisal acknowledgement will now be a PTC requirement. Is the method of delivery complete? Transfer in FHA HVCC Appraisal Is the appraiser on our approved list? If not, has the Appraiser Contact Information sheet been pulled from the intranet site and has the appraiser supplied the documents so he/she can be added to our approved list for this transaction? If home has repairs, was the final ordered? If ordered directly with the appraiser, was the appr dept notified? HUD REO If using the HUD appraisal, was the case # ordered with the Processing Type in the appraisal order screen marked as real estate owned w/o an appraisal? (No appraisal logging required). If the HUD appraisal is expired, has a new HVCC appraisal been ordered with the processing type marked as real estate owned with an appraisal? (Appraisal Logging will need to be completed) A copy of the HUD expired appraisal will also need to be in the file. HUD REO The appraisals on HUD REO s are good for 120 days. If the contract if fully ratified prior to the 120 day expiration of the appraisal, the UW can extend the appraisal expiration a maximum of 30 day as long as the UW deems the appraisal to be acceptable. If the appraisal is close to expiring, please order a new HVCC Compliant Appraisal thru the CCMC appraisal department. The case # assignment will need to be updated with the Processing Type corrected to Real Estate owned with an appraisal and the new appraisal has to be logged. Both a copy of the appraisal supplied by HUD and our new appraisal have to be in the file. FHA Is the upfront MI correct? Is the monthly amount correct? If not, APR may be wrong and file will need to be redisclosed. Please see current Ops Tips for full detail. Does the case number assignment show Success with full borrower validation? If not, update the case number assignment before submitting to UW? Do the property address and the borrower s names match or do you need to do a borrower or property address update? Does your file contain a valid CAIVR number for all borrowers? Please Note: if the logging or case assignment still has boxes around all of the information on the form when printed, this is not a successful assignment or logging. Must go to the bottom of the page and click the send button. Does the case number assignment show the LO Name and their NMLS#? NOTE: When ordering the case number do not use CCMC s NMLS# as the LO s NMLS#. FHA Case # s are good for 6 months based on FHA Connection Activity. If your case # is close to the 6 month time frame, please make sure the case # will not expire. Expired case # s are creating issues when trying to get closed loans insured. Has the mortgage reject screen from connection been printed and included in the submission file? If the mortgage reject results indicate our borrower s loan was rejected by the other lender, please speak to your UW as we will have to overcome the reject reason(s) to be able to approve and close the loan. After completing the appraisal logging, has case query been pulled in connection and does the file contain a copy of the case query? FHA Full Qualifying Rate and Term Refi Has the appropriate worksheet been completed and in the file? Is the payoff with the worksheet? Is the MIP Refund Authorization in the file and if there is a refund, is it on the worksheet? If paying off a HELOC at closing, does the file contain a 12 month transaction history to show there have been no total draws in excess of $1000 in the past 12 months? A credit report supplement will not satisfy this requirement. FHA Is there a non-occupant co-borrower? Do you have a signed and dated relationship letter in the file?

8 FHA Condos Has the condo complex been checked in Connection for approval-current HRAP/DELRAP list? Is the approval in the file? Have all the required documents been scanned and ed to Barb Weade and Trudy Kidd to complete the required certification? If the complex is not on the current HRAP/DELRAP approved list, have you contacted Barb Weade to get the list of items for the project to be approved by FHA? Appendix B has to be signed and dated by Barb on the day of closing to confirm that the condo project is still approved. Appendix B will be a PTF condition. FHA Condos Review condo questionnaire in full. Does questionnaire reflect any litigation? If so, contact Barb Weade immediately! With outstanding litigation, Barb may not be able to provide condo approval/warranty. A copy of all documentation sent to Barb Weade now needs to be in the file when submitted to UW FHA Condos FHA REO s with new FHA financing do NOT require condo approval by Barb Weade. Title Do our borrower(s) show as the insured on the prelim? Is the seller listed on the prelim, the seller that signed our contract? Do you have the completed prelim with wiring instructions, tax cert, deeds for a 12 month chain of title and closing protection letter? Does the mortgagee clause include its successors and/or assigns? If property is an REO, do the deeds for the chain of title include the amount the property was purchased for at the public trustee s sale? Have the monthly taxes been updated in proposed housing expense? Has the title commitment been reviewed in full? Are there issues? Is there Flipping? Do we need a 2 nd appraisal if transaction is a FHA loan? Does the chain of title match the sales history on the appraisal? Is the tax cert in the file for this property? Refi Are both borrowers on the title commitment? Do we need a Quit Claim? Is a copy of the Quit Claim in the file? Insurance Does the file contain a copy of the actual insurance declaration page showing the actual premium? This is now a requirement and will not be a PTC condition. Does the effective date on the ins match the closing date? If not, has it been corrected? Is there sufficient dwelling coverage? Are the borrower s names, property address, mortgagee clause, zip code and loan number correct? Does the mortgagee clause include its successors and/or assigns? Has the premium been paid and is a paid receipt in the file? Has the monthly ins been updated in the proposed housing expense? Is the insurance a full replacement cost polcy? Please see current CCMC Hazard and Flood Guidance, last updated February 2013 for full detail and guidance for required coverage requirements and deductible requirements. Refi Does the ins show the premium, and the effective thru date? Is it currently due? Walls in insurance is the coverage (building coverage not personal property coverage) reflect a replacement cost policy. This is now an investor requirement. Is the premium included in the proposed housing? Gov t loans HO-6 ins required and will be escrowed on all Condos and attached PUDS. A copy of the Master Ins dec page will also need to be in the file. Are the borrower s names, property address, the mortgagee clause and the loan number included and correct on both the master and HO-6 insurance? Is the property in a Flood Zone? Do you need Flood Ins? If so, has the monthly flood ins amount been included in the proposed housing expense? Flood certs are valid for 6 months. If the property is in a flood zone, did the borrower sign and date page 2 of the flood cert at least 10 days prior to closing. This is an investor suspense item. Compliance and Misc. Are all documents in the file legible? Please review and darken or request clearer copies before submitting. Please remember Documents have to be scanned to deliver the file to the investor. Have they been read and thoroughly reviewed? Are all documents right side up? Have you put a cover letter on the file? Is the flood cert and USPS verification in the file? Processor Certs are no longer acceptable to our investors to explain issues or circumstances. Borrowers will need to provide signed and dated LOX s. FHA Condos have all of the items been scanned and ed to Barb Weade to complete the condo approval? Have all of the items sent to Barb been included in the UW submission package? FHA Condos Review condo questionnaire in full. Does the questionnaire reflect any litigation? If so, contact Barb Weade immediately! With outstanding litigation, Barb may not be able to provide the condo approval/warranty. CHFA First Step Program Does the file contain the most recent 3 years of tax returns and were these sent to CHFA? Are the ORIGINAL CHFA forms 401, 402 and 404 in the underwriting package? This is a PTC condition as underwriting files are now uploaded to CHFA. The originals have to be sent to your underwriter to be in the file at time of final approval. CHFA - is the CHFA Scorecard form in the file? Required on both the First Step and the Home Opener products. This is required when the FICO is between and the DTI is over 43%. CHFA if the property has a Well and Septic, does the file contain an ILC to show the location of both the well and septic on the lot? This is a CHFA requirement. CFHA does not accept the appraisers comments on the appraisal indicating the well and septic meet FHA guidelines.

9 Both CHFA & CHFA with MCC If 1 st mtg is a CHFA 1 st with a MCC, 2 packages have to go to CHFA. 1 for the CHFA loan and 1 for the MCC. There is a separate CHFA MCC stacking/submission order on their website. Effective 1/1/2012, CHFA 1 st Step and Homeowner, 1 st mortgage and 2 nd mortgage require a package for both the 1 st and 2 nd. There are new submission forms on the CHFA website. Rate and Term Refis The appraisal, current payoff, title work, ins must be in the file when submitted to underwriting. Loan must also be locked and a copy of the lock sheet to be in the submission package. Have the tax and ins been reviewed and the correct amount of escrows been collected for? Is there a 2 nd lien on the property? Is it to be paid in full or subordinated? If subordinated, the completed subordination agreement must be in the file. Is there a prepayment penalty on the payoff? If the borrower makes a payment after the loan is approved, provide an updated payoff, new Refinance Worksheet and re-disclosure documents for loan to be re-approved. If spouse is not on the loan but is going to be on title, have you provided the spouse s full name on the closing transmittal? Was any color of highlighter, other than Yellow used on any documents in the file? If so, please make a new legible copy of those documents and put in the file, as during scanning these areas will be blacked out. Has all pertinent information in the file been circled? RE: Sales price, seller paid costs, atypical deposits that have been explained, etc. Are all borrower LOX s in letter form or in an ? If in an do NOT use. Borrower will need to provide signed and dated LOX s to address each individual situation. Are all documents in the file in date order, most recent document on the top? RE: Counter proposals and amend/extends on top of the contract, 2012 transcripts on top of the 2011 transcripts, paystubs and bank statements in date order with the most recent on top of the older documents. HUD REO $100 down utilizing AUS approvals, the total loan amount including the finance MIP cannot exceed the asis appraised value. POA cannot be used to sign initial documents. POA can be used at time of closing as long as one borrower involved in the transaction signs the closing documents. The only exception to this is if the borrower is an Active Duty Service Member that is currently deployed. In this instance, both the initial and final documents can be signed with a POA. See current Ops Tips for further detail and guidance. Last update: 8/23/201

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