Section 1.19 - Fraud Prevention Guidelines In this Section This section contains the following topics. Overview... 2 General... 2 Correspondent Lender s In-House Fraud Review... 2 Related Bulletins... 2 Social Security Validation... 3 Income Validation Certification... 3 Verbal Verification of Employment... 4 MERS Fraud Tools... 4 MERS Process... 5 General... 5 Understanding the MERS Fraud Report... 6 General... 6 MERS Options... 6 General... 7 Exclusionary Lists... 8 General... 8 SunTrust Ineligible List Certification... 10 General... 10 Correspondent Fraud Prevention Guideline Page 1 of 10
Overview General In an effort to align with industry and current market conditions, SunTrust has implemented fraud guidelines designed to protect lenders from industry participants engaged in complex fraudulent schemes. These guidelines will assist lenders in taking the necessary steps to mitigate risk due to misrepresentation as a result of fraud. Correspondent Lender s In- House Fraud Review The fraud review of the mortgage is performed in-house, or, with SunTrust Mortgage s written consent, the fraud review may be performed by a third party. Related Bulletins General Related bulletins are provided below in PDF format. To view the list of published bulletins, select the applicable year below. 2016 2015 2014 2013 2012 2011 2010 2009 Note: There were no related bulletins in 2015. Continued on next page Correspondent Fraud Prevention Guideline Page 2 of 10
Social Security Validation Overview The borrower(s) identity must be verified by validating that borrower(s) Social Security Number (SSN) reflected on the application was issued to the borrower and is consistent on all credit documentation. SunTrust is not currently pulling Social Security verifications from the Social Security Administration at this time. A vendor or the SSI Administration will be able to provide verifications to lenders with an applicable fee. Reference: See General Section 1.36: Social Security Validation Guidelines of the for additional information on validating the Social Security Number. Income Validation Certification Overview Agency Loan Programs Reference: See General Income Information in the Income topic outlined in Section 2.01 Agency Loan Programs of the for guidelines. Non-Agency Loan Programs The IRS Form 4506-T is used to validate the income documentation that the borrower has provided and to validate that the income the borrower is using to qualify for the loan is reasonable compared to the borrower s prior earnings. An IRS 1040 transcript must be obtained by using the IRS Form 4506-T for ALL borrowers. These guidelines apply to ALL occupancy types and all SunTrust non-agency loan programs. Reference: See General Section 1.37: Income Validation Guidelines of the for additional information on validating the Social Security Number. Correspondent Fraud Prevention Guideline Page 3 of 10
Verbal Verification of Employment Overview Agency Loan Programs See General Income Information in the Income topic outlined in Section 2.01 Agency Loan Programs of the for additional information on validating the borrower s employment. Non-Agency Loan Programs A verbal verification of employment (VVOE) is required on ALL loan transactions (conventional and government) for ALL borrowers in order to verify that the borrower s employer or self employed business exists and that the borrower is actively employed as of the date of performing the VVOE. Reference: See General Section 1.38: Verbal Verification of Employment Guidelines of the for additional information on validating the borrower s employment. MERS Fraud Tools General Correspondent lenders are required to be an active member of MERS to sell loans. Active members create unique MIN numbers for each transaction and should deliver loans on MOM documents using a MIN that they have generated. MERS active members must not use the MIN that is automatically assigned by SunTrust at loan registration/lock-in. Correspondent lenders are responsible for registering the loan with MERS using their company name, NOT SunTrust as the lender. MERS Fraud Tools (accessed either directly through MERS or through Interthinx, CoreLogic, DataVerify, or Kroll Factual Data) must be utilized within 15 days of the date of the Note to confirm no undisclosed liabilities identified under each borrower s social security number. A printout of the search results must be included in the loan file. MERS members have the ability to navigate from the main page of the website to this section to access this look-up tool. A log in and password are required. The output can be printed out and should be included in your file for purchase. Note: The MERS website is http://mersinc.org. Location: 1818 Library Street, Suite 300, Reston, VA 20190. Phone number is (800) 646-6377 and fax is (703) 748-0183. MERS must be utilized separately to screen for undisclosed real estate liabilities to be acceptable to SunTrust. Reference: See the Correspondent Closing Checklist (COR 0013) for placement of all applicable MERS documentation in the loan file to be delivered for purchase. Correspondent Fraud Prevention Guideline Page 4 of 10
MERS Process General Correspondents must accurately register all loans closed with MERS as Original Mortgagee (MOM) Security Instruments within seven (7) calendar days of the close date (Note date). The information registered on MERS must match the information reflected on the closing documents and the locked information on STMPartners. Enter the originating ORG ID into the MERS system at registration. Note: MOM loans require the originating ORG ID to be entered into MERS at registration or within 90 calendar days of registration. Property addresses must match exactly. MERS requires a new indicator in their system. Set the owner occupied flag in MERS as Y or N on any active MIN, not just on owner-occupied loans. Notes: If any discrepancies are found between the information registered on MERS and the information on the closing documents, the loan will be pended until the discrepancy is corrected. For escrow states and refinances, the loan must be registered within seven (7) calendar days of the disbursement date. SunTrust Mortgage will pend the loan if the loan has not been registered with MERS prior to purchase. Once SunTrust Mortgage has notified the Correspondent lender of the purchased loan, the lender will transfer the Beneficial and Servicing Rights to SunTrust Mortgage on the MERS system. The transfer must be completed within five (5) calendar days from execution. Notes: Update the assignment Sent Date in MERS within five (5) calendar days of execution. Name MERS as the Assignee in MERS in accordance with MERS document standards in the county land records. SunTrust Mortgage Correspondent Operations will pursue any transfers outstanding after the loan purchase with your company s MERS Administrator. The Correspondent lender must enter assignment and security instrument information within sixty-(60) calendar days of the effective transfer date, Note date, or assignment date. The Correspondent will need to create a Transfer of Servicing (TOS)/Transfer of Beneficial (TOB) to transfer both the servicing and investor rights to #1000104. If Fannie Mae, Freddie Mac or Ginnie Mae are listed as the investor, then only a TOS will need to be created to transfer the servicing rights to #1000104. The appropriate Option 1 Investor should be listed as the current investor in the transfer. Correspondent Fraud Prevention Guideline Page 5 of 10
Understanding the MERS Fraud Report General It is possible the MERS undisclosed liability check will reflect a mortgage liability that does not appear to belong to the borrower. In order to clear the borrower from a mortgage debt that does not belong to them, the client should take the following steps: Check the SSN on any supporting income documents to make sure they match. Check for fraud alerts for the borrower s social security number in the credit report. If the credit report does not verify the debt, and/or confirm it has been paid or refinanced, the borrower should provide evidence that the borrower is not liable for the debt disclosed by MERS for their SSN. Have the title company do a search and confirm the borrower is not on the Note or the Mortgage disclosed by MERS. MERS Options A brief summary of available options with access to the Fraud Tool Set are reflected below: MERS Active MERS Lite MERS Link Reference: See the subtopic MERS Fraud Tools under the MERS Topic in General Section 1.08: Loan Delivery and Purchase Review of the Correspondent Seller Guide, for more detailed information on the MERS options available. Continued on next page Correspondent Fraud Prevention Guideline Page 6 of 10
Third Party Originated Loans (TPO) Delivered to SunTrust General All SunTrust approved Third Party Originating (TPO) Correspondent lenders must ensure loans sold to SunTrust Mortgage follow all published MERS rules. Correspondents approved to sell third party transactions to SunTrust Mortgage originated by a third party may: Have the originator become a MERS member, or Have the originator become a MERS TPO member. The approved Correspondent lender would facilitate MERS for the originator. Note: MERS TPO Membership is not an option for our Correspondent lenders. Our approved Correspondents must register as a full MERS or MERS Lite member. All SunTrust approved TPO Correspondent lenders are required to complete the Loan Originator Compensation Certification on Third Party Originated Transactions (COR 0014) for all TPO loans delivered to SunTrust Mortgage. Correspondent Fraud Prevention Guideline Page 7 of 10
Exclusionary Lists General Agency Loans Reference: See Validation of Parties to the Mortgage Transaction in the Eligible Transactions topic outlined in Section 2.01 Agency Loan Programs of the for guidelines. Key Loan and Jumbo Solution Second Mortgage Loans The lender is required to document and implement as part of its hiring process a procedure for checking all employees, including management, involved in the origination of mortgage loans (including application through closing) against the U.S. General Services Administration (GSA) Excluded Parties List (EPL), the HUD Limited Denial of Participation List (LDP List), and the Federal Housing Finance Agency s (FHFA) Suspended Counterparty Program (SCP) list. Allowing individuals on these lists to manage or perform origination functions may increase the lender's exposure to fraud. Therefore, SunTrust Mortgage requires that if, at the time of hire, the lender has determined that an individual is on the GSA, LDP, or SCP list, the lender may not permit that employee to manage or perform origination functions on loans funded or purchased by SunTrust Mortgage. Note: An individual confirmed to be on one of these lists for any reason may not be permitted to manage or perform origination functions on any loans funded or purchased by SunTrust Mortgage. For example, an individual who is excluded from participating in HUD multifamily programs should be excluded from involvement in the origination of any SunTrust Mortgage loans. Lenders can access the GSA, LDP, and SCP lists via the links provided below: GSA EPL available through GSA s System for Award Management website. The review of GSA EPL must include a search for actions taken across all federal agencies. HUD s LDP List available through HUD s website. FHFA s SCP List available through FHFA s website. The GSA and LDP lists are also available via AllRegs. In addition to the requirements listed above, for all transactions, it must be confirmed, as of the note date, that all borrowers and all parties that played a role in the origination of the mortgage or the underlying real estate transaction are not found on the GSA EPL, HUD LDP, or SunTrust Ineligible Lists. If a party whose name is on the GSA EPL, HUD LDP, or SunTrust Ineligible List is the borrower on the mortgage or played a role in the origination of a mortgage or the underlying real estate transaction, the mortgage is not eligible to be funded or purchased by SunTrust Mortgage. Continued on next page Correspondent Fraud Prevention Guideline Page 8 of 10
Exclusionary Lists, Continued General, (continued) Notes: Name variations (AKAs) including maiden names, etc. shown on the credit report, in addition to the borrowers names must be checked. Parties to the transaction must be checked prior to the loan closing, but not rechecked after the closing documents have been returned. If a positive result for any of the parties to the transaction is returned, additional due diligence and investigative measures are required to ensure that the applicable party to the loan is not the party found on the exclusionary list (using information such as prior addresses and employment checks). Documentation Requirements Certification of exclusionary list results must reflect the date checked, validate that all parties to the transaction are not reflected on any lists, and retained in the loan file. Reference: See the SunTrust Ineligible List Certification topic in Section 1.19: Fraud Prevention Guidelines of the for additional information. FHA and VA Loans The U.S. General Services Administration (GSA), Excluded Parties List (EPL), HUD Limited Denial of Participation (LDP List), and SunTrust Ineligible Lists must be reviewed to determine whether, as of the note date, a person or entity whose name is on any of these lists, was the borrower on the mortgage or has played a role in the origination of the mortgage or in the underlying real estate transaction. If a party whose name is on the GSA EPL, HUD LDP, or SunTrust Ineligible List is the borrower on the mortgage or played a role in the origination of a mortgage or the underlying real estate transaction, the mortgage is not eligible to be funded or purchased by SunTrust Mortgage. Reference: See the SunTrust Ineligible List Certification topic in Section 1.19: Fraud Prevention Guidelines of the for additional information. Correspondent Fraud Prevention Guideline Page 9 of 10
SunTrust Ineligible List Certification General The SunTrust Ineligible List contains confidential information and is only for use by SunTrust Mortgage employees and/or Correspondent lenders of SunTrust Mortgage, Inc. in connection with transactions with SunTrust Mortgage, Inc. Due to the confidential nature of the information contained therein, the SunTrust Ineligible List is password protected and distribution of the SunTrust Ineligible List is strictly prohibited. By accessing or using the SunTrust Ineligible List, the user agrees to indemnify SunTrust Mortgage, Inc. for any loss, damage, or expense resulting from the user s failure to maintain the confidentiality of the information it contains. Correspondent lenders will be required to check the SunTrust Ineligible List for appraisers and/or appraisal companies that are not eligible to perform appraisals. Any Appraiser or Appraisal Companies identified on the SunTrust Ineligible List are not eligible to perform appraisal assignments, either directly or indirectly, on properties that secure loans to be funded or purchased by SunTrust. Correspondent lenders will also be required to check the SunTrust Ineligible List for settlement agents and/or companies that are not eligible to perform loan closings or provide title services, either directly or indirectly, on real properties that secure loans to be funded or purchased by SunTrust Mortgage, Inc. Reference: See General Section 1.07: Appraisal Guidelines and 1.39: Ineligible Settlement Agent Guidelines of the, to access the SunTrust Ineligible List. Correspondent Fraud Prevention Guideline Page 10 of 10