Pricing and Rate Lock Questions At a Glance
What has been the response from correspondents
regarding the rate change from the even one-eighth
note rate?
Merchants Bank has updated both their retail and
correspondent channels to align with competitors pricing
and rate sheets by moving from the even 1/8th note rate.
The response has been one of mild curiosity and general
acceptance from both channels. Some lenders have even
found that this change has improved their competitiveness
in the market.
Pricing and Rate Lock Questions At a Glance
Why is there a fee for a 90 day lock?
A 90 day lock is more susceptible to volatile market
conditions and has historically had a higher rate of
fallout than any other length of lock. The up-front
fee is requested to cover any loss that Merchants
Bank incurs in the event that the lock cancels and
we are unable to recover due to the market
fluctuation that has taken place. Just a reminder
that the up-front fee is refundable once Merchants
Bank has purchased your loan.
Pricing and Rate Lock Questions At a Glance
What must happen before my lock expires to avoid
re-pricing?
Three things must happen before the lock expires to avoid re-pricing
of the loan.
1. The original note must be delivered to the Purchasing department
on or before the lock expiration date.
2. The closing package must be uploaded to the document cabinet on
or before the lock expiration date.
3. The loan must be submitted to Purchase in Calyx Path on or before
the lock expiration date.
If you cannot meet these three requirements, you
must extend your lock before expiration or the loan
will be re-priced.
Pricing and Rate Lock Questions At a Glance
My lock expiration date falls on the weekend
and I will have my note to you on the following
Monday. Do I need to do anything?
You must extend your lock on or before the
lock expires to avoid re-pricing of the loan.
Pricing and Rate Lock Questions At a Glance
Can you please review the extension options
(number of days option, cost/day, number of
extensions) on any one loan?
All locks are allowed a one-time extension.
Pricing and Rate Lock Questions At a Glance
FREDDIE MAC
Extension Fee
Calendar Days to Extend
2 days
10 days
11 days or more
Free
.250
Worst Case Pricing
FANNIE MAE
Extension Fee
Calendar Days to Extend
2 days
7 days
15 days
20 days
30 days
31 days or more
Free
.125
.250
.375
.500
Worst Case Pricing
Pricing and Rate Lock Questions At a Glance
How do I extend a lock?
• You may request an extension to your lock
through the Lock screen located in Calyx Path.
• Please choose the number of days you would like
to extend and push the Extend button.
• The pricing desk will review, apply the appropriate
fee, confirm the request and upload a copy of the
extension to the document cabinet
Pricing and Rate Lock Questions At a Glance
What if I have to change the product, interest rate
or investor (Fannie to Freddie)?
Any change to the investor, interest rate or product
will require canceling the current lock and
re-locking at worst case pricing.
Pricing and Rate Lock Questions At a Glance
How do I cancel a lock?
You may request a lock cancellation through the
Lock screen located in Calyx Path which will send
automatic notification to the pricing desk.
The pricing desk will review and confirm the lock
cancellation request. Your lock status will change to
Canceled and a copy of the canceled lock will be
uploaded to the document cabinet.
Pricing and Rate Lock Questions At a Glance
Is the lock cancellation mandatory or best efforts?
Am I charged a fee?
All 1st time lock cancellations are best efforts.
There is no lock cancellation fee for a 1st time lock
cancellation.
If your loan was underwritten and approved to
close by the underwriting department, you may be
subject to remittance of the underwriting fee.
Pricing and Rate Lock Questions At a Glance
What is the process to re-lock a loan?
If you would like to re-lock a loan, you may
utilize the Relock button located in the Lock
screen of Calyx Path.
This will automatically cancel your existing lock
and submit a new lock request to the pricing
desk.
Pricing and Rate Lock Questions At a Glance
If I relock a loan, what pricing do I receive?
Worst case pricing is the lesser between pricing
from the original lock-in date and the current
market price with a minimum of a 0.125 base price
difference from the original lock-in price.
Pricing will never improve from your original lock-in
price. All re-lock periods must be for the same
length as the original lock period or longer.
The longer period will be used when reviewing the
pricing between the original lock-in date and the
current market price.
All re-locks past 60 calendar days of the later of the
lock expiration or cancellation may re-lock at current
market pricing with no base pricing penalties. All
previous extension and over/under-delivery fees will
not apply.
For example: A lock that expired on June 1 can relock on July 31 or later with no penalties.
If a loan is re-locked within 60 calendar days of
the lock expiration it will be calculated at worst
case pricing. All previous extension and
over/under-delivery fees will apply.
For example: A lock that expired on June 1 and
re-locks between June 2 and July 30 will be
subject to worst case pricing.
Pricing and Rate Lock Questions At a Glance
What is the best practice when re-locking a loan?
Merchants Bank highly recommends your loan
being approved to close prior to re-locking.
This prevents any unnecessary lock
cancellation fees should the loan be withdrawn
or denied after re-locking.
Pricing and Rate Lock Questions At a Glance
What happens if I cancel a re-lock?
If you re-lock your loan at worst case pricing
and cancel for a second time, you will be
subject to any lock cancellation fees as they
apply.
This includes extension fees, loan amount
over-delivery fees and partial pair-off fees.
Pricing and Rate Lock Questions At a Glance
How is a lock cancellation fee calculated?
All lock cancellation fees are provided live, directly
from the Fannie Mae and Freddie Mac selling
systems. Market movement between your original
lock in date and the cancellation date will have an
impact on the total fees.
There is no simple equation to calculate what your
fees may be until you request a lock cancellation
during open market hours, which are Monday
through Friday 7:30 a.m. to 4:00 p.m. central time,
excluding holidays.
CRG
CRG Questions at a Glance
What does CRG do?
a) Liaison between our Correspondent Lenders
and our Underwriters
b) Make all files submitted to Underwriting
c) Track and maintain all conditions submitted to
Underwriting
d) Point of contact for Correspondents for
questions on files and condition statuses.
CRG Questions at a Glance
What does CRG look for when a file has been
submitted?
a. Findings
i. Final status
ii. Approve/Eligible
iii. Standardized and input addresses match
iv. Credit report associated to Findings matches the credit
report uploaded
b. Activate credit monitoring
c. Check the SSA89 to make sure it is correct and has not been
altered
d. Check FHLMC / FHFA SCP Exclusionary List
e. Appraisal/XML and successful SSR
CRG Questions at a Glance
What fields under the “Appraisal Tab” need to be
completed?
CRG Questions at a Glance
When does CRG reject a file?
a.When Findings are not in Final status
b.Missing the FHLMC / FHFA SCP
Exclusionary List
c. Refinance file is missing the appraisal
d.Correct credit is not associated to
Findings
CRG Questions at a Glance
Are there any tips when uploading Documents?
a. Keep all “like documents” together
b. Make sure pages are not sideways or
upside down
c. Upload as one large package versus
multiple smaller packages
CRG Questions at a Glance
Are there any tips for Submitting Conditions?
a. If a condition requires immediate
attention, email CRG separately to let us
know
b. Upload conditions under the “Conditions
Tab” as opposed to uploading them under
the “Documents tab”
c. CRG will not receive notice of any
conditions uploaded if you do not submit
them properly
CRG Questions at a Glance
What if my file needs to be Cancelled or
Withdrawn?
a. If the file has not been submitted to
Underwriting yet, you can cancel the file
yourself by clicking on the “Cancel” button
under the “Submission Summary” tab.
b. If the file has already been submitted to
Underwriting, email CRG the file name and
number and we will disposition the file
UW/QA
Miscellaneous
Manufactured Homes
What can you tell us about the
changes in the requirement of
having an engineer inspection on
any structural additions to
manufactured homes?
Manufactured Homes
• Manufactured homes that have an addition
or have had a structural modification are
eligible under certain conditions (attached
garage, additions).
• If the state in which the property is located
requires inspection by a state agency to
approve modifications to the property,
documentation must be obtained to show
that the property has met the requirement.
Manufactured Homes
• If the state in which the property is located does
not have state level inspection requirements,
the property must be inspected by a licensed
professional engineer who can certify that the
addition or structural changes were completed
in accordance with the HUD Manufactured
Home Construction Safety Standards.
• In all cases, the satisfactory inspection must be
provided.
Manufactured Homes
MINNESOTA
• MN does have state level requirements for the
inspection of additions/modifications.
• State of MN Department of Industry & Labor’s
website provides a search feature to locate an
inspector in your local jurisdiction.
• For more information:
– http://www.dli.mn.gov/ccld/official.asp
– Phone: (651)284-5092
Manufactured Homes
WISCONSIN
• Wisconsin does not have state level requirements for the
inspection of additions/modifications.
• Local municipalities will issue permits based on one of
two documents:
– Engineer’s certification
– Alternate Construction Letter (letter issued by the
manufacturer stating the structure can withstand
updates/changes).
• For more information, contact WI Department of Safety &
Professional Services
- Phone (608) 266-2112
Manufactured Homes
NORTH DAKOTA
• No state level inspections required.
• Some local jurisdictions have certified
inspectors.
• North Dakota Association of Counties website
can be utilized to obtain county information
(http://www.ndaco.org). Click on “Interactive
Map” under Action Center and select
applicable county for contact information.
Manufactured Homes
SOUTH DAKOTA
• No state level inspections required.
• Requirements vary by jurisdiction.
• Contact local Planning & Zoning
Department.
Manufactured Homes
IOWA
• No state level inspections required.
• Requirements vary by jurisdiction.
• Contact local Planning & Zoning
Department.
Manufactured Homes
ILLINOIS
• No state level inspections required.
• Requirements vary by jurisdiction.
• Contact IL Department of Public Health at
(217)782-5830 or IL Manufactured Housing
Association at (217)528-3423.
UCDP/SSR Certificates
What is the effective date that
correspondents need to be set up
to submit appraisals through
UCDP (Uniform Collateral Data
Portal)?
UCDP/SSR Certificates
• All correspondents must submit the
appraisal through UCDP by 5/1/15.
• A detailed UCDP setup guide is available in
the “Manuals” tab on the Merchants Bank
landing page. The guide also contains tips
on hardstops and messages.
• The successful SSR (Submission Summary
Report), along with the XML appraisal,
should be included with your underwriting
package.
UCDP/SSR Certificates
Are you aware of any more
automation coming in the future
and can you explain how you are
addressing the findings in the
UCDP reports?
UCDP/SSR Certificates
• Information on how to get signed up for
Collateral Underwriter (CU) is available
in the UCDP setup guide located in the
“Manuals” tab on the Merchants Bank
landing page.
• CU training is available through FNMA.
Refer to FNMA website.
UCDP/SSR Certificates
• CU is currently only available to FNMA
Seller/Servicers. Correspondents will
have access to the web-based
application of CU later in 2015.
• Appraisals will be submitted to CU on a
case by case basis by Merchants Bank
underwriters.
UCDP/SSR Certificates
What will your approach be with
Collateral Underwriter (CU)?
UCDP/SSR Certificates
• Effective the weekend of April 18th, DU (Desktop
Underwriter) will be updated to reflect UCDP
findings.
• The following fields are required in DU in order for
messages to be obtained from CU and UCDP:
– The Actual vs. Estimated Appraised Value Indicator must
be submitted as Actual
– Document File Identifier (Doc File ID) assigned to the loan
from UCDP
– Property Appraised Value and Property Zip Code (must
match the information submitted through UCDP when
Doc File ID obtained) If they do not match, DU will be
unable to return any messages from CU.
UCDP/SSR Certificates
• Read the feedback on the SSR certificate and
the findings (included after DU Version 9.2
April Update)
• Correct any hardstops prior to submitting to
underwriting.
UCDP/SSR Certificates
Can we get training on the
UCDP process?
UCDP/SSR Certificate
• See the document called “How
to run an SSR?” in the “Manuals”
tab on the Merchants Bank
landing page.
Appraisals
If you have an initial construction
loan appraisal that is over 1 year
old, do you need to have a new
full appraisal completed or can
you still just do a 1004D?
Appraisals
• A new full appraisal would be
required if your initial
construction loan appraisal
exceeds 12 months.
Construction Loans
What other examples and tips can
you provide regarding
construction loans?
Construction Examples and Tips
There is a document that shows common
construction scenarios that is available
under the manuals tab on the Merchants
Bank landing page titled “Construction
Examples and Tips”. These guidelines do
not apply to manufactured homes.
Construction Examples and Tips
1) Purchase lot and construction loan
• End loan done as a construction to permanent – Fannie
• End loan as no cash out - Freddie
• Original appraisal ok if < 12 months old and not in a
declining market
2) Purchase of existing home with renovations
• End loan as ltd C/O- Fannie (use appraised value)
• End loan no C/O – Freddie ( use appraised value)
• Original appraisal ok if < 12 months old and not in a
declining market as long as the original appraisal reflects the
renovations.
Construction Examples and Tips
3) Own lot for >12 months and construction
• End loan as construction to permanent- Fannie (use
appraised value)
• End loan as no C/O – Freddie (use appraised value)
• Original appraisal ok if < 12 months old and not in a
declining market
4) Own lot for < 12 months and construction
• End Loan construction to permanent- Fannie (use appraised
value)
• End loan no C/O – Freddie (use appraised value)
• Original appraisal ok if < 12 months old and not declining
market
Construction Examples and Tips
5) Own Existing home > 12 months with remodel
• End loan ltd C/O- Fannie (LTV based on appraisal)
• End Loan no C/O – Freddie (LTV based on appraisal)
• Original appraisal ok if <12 months and not in a declining
market as long as the original appraisal reflects the remodel
6) Own Existing home < 12 months with remodel
• End loan ltd C/O- Fannie (LTV based on appraisal)
• End loan no C/O – Freddie (LTV based on appraisal)
• Original appraisal ok if <12 months old and not in a
declining market as long as the original appraisal reflects the
remodel
Construction Examples and Tips
• File should be entered as “construction to permanent” if the
end loan is Fannie, you are paying off interim construction
financing and the subject is new construction.
• Transactions should be structured as two-time closings.
• Cash out vs limited cash out
If we are paying off loans other than the lot loan or the
1st mortgage with the construction loan, the end loan would
need to be treated as a C/O, or we must have at least a 6
month period between the construction note and the end loan
application (new application and disclosures would apply).
Recertification of value is required if appraisal is > 120 days
old.
Construction Examples and Tips
• Use of appraisal for subsequent transaction
The transaction must be a ltd c/o
The Borrower/Client must be the same on the
original and subsequent transaction.
• MI
Follow MI guidelines and order quotes as
construction perm if new construction (order
quotes as limited cash out or cash out for
remodels/renovations as applicable)
MGIC, Genworth and UG allow use of appraised
value plus findings.
Construction
• Builder carried construction financing
Freddie does not allow the builder to carry
the construction financing. See Freddie guide
section K33.6(a) and K33.7.
Fannie allows this.
• Modifying the mortgage for the end loan
Fannie and Freddie both allow for the
modification of the mortgage for the end
loan. This applies to both the constructionperm and renovation loans. A new note is
required.
Appraisal If/Then Scenarios
Are there any common appraisal
items that can be addressed to
help minimize appraisal conditions
prior to submitting the file to
underwriting?
Appraisal If/Then Scenarios
IF
THEN
1. Multiple Parcels
1. Appraiser needs to comment as to
whether these are contiguous
2. Findings address "Standardized
Address" is different than application or
purchase agreement
2. Appraisal HAS to match the Fannie
standardized address- can add addendum
with actual address if mailing and physical
address are different.
3. If house is currently vacant
3. Must comment on whether utilities are
turned on and functioning
4. If acreage (5 or more)
4. Need to comment on land use- are any
acres tillable, is it income producing? Is
current use ag? Residential? Describe
current use and highest and best use in
type of use terms.
Appraisal If/Then Scenarios
IF
THEN
5. If well and septic
5. Is it private or shared? Comment on
market acceptance of well and septic.
6. If purchasing single family investments
property
6. Order 1007 if using rental income in
file.
7. If there are out buildings
7. Provide photos and comment on use of
outbuildings.
8. Unusual property typeBerm/Dome/Log/Earth Home
8. Provide similar comps for type. If none
available and using typical design comps,
need comments on why those comps are
similar and market acceptance of unique
property
Appraisal If/Then Scenarios
IF
THEN
9. Unusual amenity- Pool/No
basement/One bedroom/all bedrooms
below grade
9. Provide similar comps for amenity
present. If none available- comment on
why comps are similar and on market
acceptance of these amenities. Describe
how arriving at value of amenity.
10. If private road/offsite access
10. Provide comps with similar access and
or/comment on market acceptance of this
access.
11. If zoning is "legal non-conforming"
11. Need to comment whether this type
of property can be rebuilt if destroyed.
12. Guest quarters or mother-in-law unit
12. Provide similar comps, and/or
comments as to use of this additional
living unit space and market acceptance
or resistance.
Appraisal If/Then Scenarios
IF
THEN
13. Manufactured home
13. Need 3 comps or minimum 2 with
explanation as to why can’t provide 3rd,
cost approach must be provided.
14. If mandatory HOA
14. How much are the dues.
NOTE: This information is also available in
document format in Bulletin 2015-1
Verification of No Liens
What is acceptable
documentation for verification
of no liens?
Verification of No Liens
• County website
• Title search (some title companies offer a lien
search at no charge)
• Contact insurance agent (if property includes
structure)
• Verification of No Liens form is available on
the Merchants Bank landing page in the
“Documents” tab.
Assets
What are some helpful tips for
verifying and sourcing assets?
Assets
• Cash is not an acceptable asset source.
• VOD showing large difference in current
balance vs. 2 month average
– For example, if the funds were proceeds from a
HUD from sale, a copy of the HUD is required as
well as proof of deposit into borrower’s account
• Gifts
– Make sure the entire sum requires no repayment
Assets
• Anytime we are documenting
receipt of funds, best practice is to
obtain the bank statement showing
that the funds have been deposited.
Large Deposits
What is considered a large
deposit?
Large Deposits
• If a deposit is greater than 50% of total
monthly qualifying income,
documentation to source the funds must
be obtained
• Merchants Bank requires large deposits be
documented for purchase and refinance
transactions
Student Loans
What do I use for a monthly
payment for student loans when
selling to either FNMA and
FHLMC?
Student Loans
FNMA
• Greater of 1% of the outstanding balance or the
actual documented payment amount must be
utilized for monthly payment.
• However, if the actual documented payment is
less than 1% of the outstanding balance and it
will fully amortize the loan over its term with no
payment adjustments, the lower fullyamortizing monthly payment can be utilized.
• Effective with applications taken on or after
3/1/15.
Student Loans
FHLMC
• Additional provision to our contract allows
1.5% of the balance in lieu of obtaining
documentation to show the actual payment
amount for those student loans that are
deferred or in forbearance where no
payment is shown on the credit report.
• Effective with applications taken on or after
3/1/15.
Change Requests
If you have to change a loan from FNMA
to FHLMC loan, do you need to start a new
application or can you just change your
current loan?
What information is required when a
change request is submitted?
Change Requests
• You can use the same loan file when
changing investors; however, the
process will vary depending on what
status the loan file is in.
• For any items that must be changed,
details need to be provided (i.e. details
of transaction, funds to close, payoffs,
loan amount changes, interest rate,
etc.).
Application and Documentation
How do I insure that my loan file goes
smoothly through the Underwriting
and Quality Assurance processes?
Application process
• Applications
– Get a complete application (include institution name and full
account numbers, two year employment and address history,
letters of explanation, etc.)
– Get as much documentation as possible up front
– Remind borrowers to disclose all debts, including co-signed
loans
– Ask questions again at closing (Include any changes in
employment, any additional debt obtained, etc.)
• DU & LP Findings
– Read your findings carefully as they indicate what is required.
– Verify your input is accurate to get valid findings.
– Manually verify debt ratios and LTV, CLTV, and HCLTV.
Accurate and complete information
upfront will create an efficient
process as well as minimize
conditions and repurchases.
Merchants QA Structure
Will Laura Connor Behling be
replaced?
Merchants QA Structure
• Laura Connor Behling will not be replaced at
this time.
• Quality Assurance staff is reporting to Cindy
Harrison, Senior Vice President Credit
Administration
• Members of the Quality Assurance team are
Susan Blagsvedt and Alyssa Rood
Quality Assurance
What are the current top pre-funding
topics for discussion?
Top Prefunding Topics
• Asset Documentation
• Self-employed Verbal Verifications of
Employment
• Exclusionary List Form
• Form W-2s
• SSA-89
Quality Assurance
What are the current top post-closing
topics for discussion?
Top Postclosing Topics
•
•
•
•
Driver’s license/Passport
Form W-2s
Form 4506-Ts
Real Estate Taxes
SSA 89 tips
• SSA89s
–Review for completed form
–Absolutely no cross outs or
overwrites
–90 day expiration
4506-T Tips
• Use address from tax returns on
Form 4506-T.
• Form 4506-T for businesses
–ensure a proper and acceptable
title is under borrower's
signature
Acceptable Titles for Business 4506Ts
• 1120/1120S Series:
–
–
–
–
President
Vice President
CEO
Owner
• 1120/1120s LLC:
–
–
–
–
–
President
Vice President
CEO
Owner
Member
• 1065 LLC:
–
–
–
–
–
President
Vice President
CEO
Owner
Member/Managing
Member
– Partner
– Shareholder would be
listed as Member
FNMA/FHLMC Guidelines
FNMA and FHLMC guidelines can be
accessed via the Merchants Bank landing
page,
https://www.merchantsbank.com/merch
ants-bank-mortgage.htm under the
“Links”.
Purchasing
Purchasing Questions & Answers
What documentation is required to be provided for
a verbal verification of employment (VVOE) if I use
the Work Number?
A fully completed signed and dated VVOE
form is required with the work number
information attached.
Purchasing Questions & Answers
When do I need to record a POA?
A POA must be recorded if it is utilized by the
borrower(s) to sign the note and mortgage. A
POA must also be recorded if it is utilized by
the seller(s) to sign the warranty deed.
Purchasing Questions & Answers
When should I use FKA or AKA language and
how should it be typed throughout the
closing documents?
FKA or AKA language should only be used if required by
the title company or if the borrower holds title with a
different last name than how docs are typed and signed.
All other variations may be covered by a fully executed
name affidavit.
FKA or AKA language must be used on the signature line
of the note, preamble of the mortgage, signature line of
the mortgage, notary section of the mortgage, and the
assignment.
Purchasing Questions & Answers
Where do I find examples of trust language and
instructions for how to prepare closing
documents?
The purchasing chapter of the manual does include
instructions for the note, mortgage, and settlor
paragraph that appears on the mortgage.
The purchasing department is willing to review trust
documents prior. We do request a 48 hour notice in
order to process your request.
Purchasing Questions & Answers
How do we know what lines you prefer we place
certain fees on a Good Faith Estimate?
Merchants Bank asks that you please refer to
your compliance department or officer for
guidance regarding the completion of the GFE,
TIL, and HUD.
For items we review on the HUD, please see the
Correspondent Pre-Purchase Review on the
Landing Page.
Purchasing Questions & Answers
Jolyn’s Tech Help Tips
Common calls we receive
on the Help Desk and
what to do about them
What is the difference
between a correspondent
processor role and a
correspondent loan
originator role?
Originator: You can only see your
loans
Processor: You can see all loans in all
branches you have access to
I don’t see all the loans?
If you are in the Processor role,
click ACTIVE in the pipeline view
to see the entire pipeline
Quick Alerts Tip:
If you want to quickly see what needs to
be done on your file “hover” over the
icon and you can see what the issue is.
Does your loan app match
your lock screen?
Fill out as much of the loan application data
as possible. The loan application and the lock
screen communicate somewhat, but once
you lock a loan, the connection between the
two is done, so any changes you make on the
application after the rate is locked does not
sync between the app and lock screen.
These differences can cause VALIDATION
ERRORS that prevent you from submitting
your loan to underwriting or purchasing, so
try and ensure they match when you lock.
On the next slide are some common
discrepancies we see.
SOME THINGS COMMONLY MISSED ON THE
PRODUCT SCREEN
What do we need to complete
on the Pricing screen?
Key items on the Property
screen:
Employment Screen
If you have “other income” it won’t be
included in qualifying ratios unless:
OTHER ASSETS:
If you don’t check the “Liquid Asset”
the other assets won’t be counted in
Cash-to-Close
REO LIABILITIES:
Subordinate Financing
Reading DO “Errors”
Before CRG will accept your file
for underwriting, it must be in
final submission status. If it says
“interim” your file will be
rejected by CRG
Submit DO in FINAL STATUS
Putting your loan in
“FINAL” in LP
Tip:
You will know your credit is associated
correctly if the credit report is referenced
here.
If not – you will have issues?
An Important Note About the Seminar Contents
While every effort has been made to insure the
reliability of the session contents, FNMA and FHLMC
Selling and Servicing Guides and updates including
announcements and release notes are the official
statements of FNMA and FHLMC policies and
procedures and will control in the event of
discrepancies between information in this seminar and
the guides.