Mini-Correspondent Seller`s Guide
Mini-Correspondent Seller’s Guide |Table of Contents Mini-Correspondent Seller’s Guide | Michigan Mutual, Inc. 1 Mini-Correspondent Seller’s Guide |Becoming a Mini-Correspondent Table of Contents Becoming a Mini-Correspondent ........................................................................................................4 Financial Requirements ......................................................................................................................5 Net Worth ................................................................................................................................................. 5 Required Documentation ...................................................................................................................6 Correspondent Sales Agreement.............................................................................................................. 6 Current financial statements .................................................................................................................... 6 Corporate Resolution ............................................................................................................................... 6 Articles of Incorporation........................................................................................................................... 6 Proof of Fidelity Bond ............................................................................................................................... 6 Resumes ................................................................................................................................................... 6 Mortgage Lending License ........................................................................................................................ 6 Master Bailment Letter ............................................................................................................................ 6 Provide Non-Sanctions letter ................................................................................................................... 6 Branch Approvals...................................................................................................................................... 7 Mini-Correspondent Business Standards.............................................................................................7 Branch or Sister Parties associated with Correspondent ......................................................................... 7 Guarantee Agreement .............................................................................................................................. 7 Maintaining Approval Licensing Certificates ............................................................................................ 7 Insurance Standards ................................................................................................................................. 7 Compliance with Agency requirements ................................................................................................... 7 Remaining a Mini-Correspondent of Michigan Mutual, Inc. .................................................................8 Good Standing .......................................................................................................................................... 8 Fraud ......................................................................................................................................................... 8 Mortgage Electronic Registration System (MERS): .................................................................................. 9 Wire Instructions in Each Loan ................................................................................................................. 9 Material Changes ...................................................................................................................................... 9 Availability of Seller’s Records and Information ...................................................................................... 9 Breach of Agreement................................................................................................................................ 9 Pre-Purchase Delivery ...................................................................................................................... 10 Pre and Post Purchase Conditions .......................................................................................................... 10 Required Validation on all Loans: ........................................................................................................... 11 Validation of Social Security Number................................................................................................. 11 Borrower Occupancy .......................................................................................................................... 11 Validation of Qualified Parties to the Transaction ............................................................................. 11 Borrower Credit-Undisclosed Liabilities ............................................................................................. 11 Property Address ................................................................................................................................ 11 IRS Tax Transcripts ............................................................................................................................. 11 Michigan Mutual, Inc.’s Internal Due Diligence Requirements: ........................................................ 12 Home Mortgage Disclosure Act (HMDA) ................................................................................................ 12 Appraisals ............................................................................................................................................... 12 Mortgagee Clause................................................................................................................................... 12 Short Form Title Policy ........................................................................................................................... 13 Closing Protection Letter ........................................................................................................................ 13 Funding Source ....................................................................................................................................... 13 Escrow/ Impound Accounts.................................................................................................................... 13 Government and USDA Rural Development loans: ........................................................................... 13 Conventional loans that exceed 80.00 LTV, all loans unless: ............................................................. 13 Conventional loans less than or equal to 80.00%, all loans unless: ................................................... 13 Disclosure of Finance Charges ................................................................................................................ 14 | Michigan Mutual, Inc. 2 Mini-Correspondent Seller’s Guide |Becoming a Mini-Correspondent Good Faith Estimate ............................................................................................................................... 14 Special Requirements....................................................................................................................... 16 Conventional Loans ................................................................................................................................ 16 FHA Loans ............................................................................................................................................... 16 VA Loans ................................................................................................................................................. 16 Rural Development (RD) Loans............................................................................................................... 16 MERS Delivery......................................................................................................................................... 17 Original Mortgage Note.......................................................................................................................... 17 Note Corrections .................................................................................................................................... 17 TIL Material Disclosure Errors ................................................................................................................ 18 Where to Send Final Docs ...................................................................................................................... 18 Final documents include: ................................................................................................................... 18 Loan Purchase Advice ............................................................................................................................. 18 Interim Payment Process........................................................................................................................ 19 Amortization Procedures........................................................................................................................ 19 Seasoned Loans - Purchase Limitations.................................................................................................. 19 File Retention ......................................................................................................................................... 19 Mini-Correspondent Responsibility ........................................................................................................ 19 Rights of Michigan Mutual, Inc. .............................................................................................................. 20 Contacts & Resources....................................................................................................................... 21 Loan Process & Mini-Correspondent/Wholesaler Responsibilities: .................................................... 22 (Remainder Intentionally Left Blank) Back to top | Michigan Mutual, Inc. 3 Mini-Correspondent Seller’s Guide |Becoming a Mini-Correspondent Becoming a Mini-Correspondent A Mini-correspondent is a lender that closes and funds their own loans; however, the purchasing wholesale lender (Michigan Mutual, Inc.) underwrites and conditions the loans. As a MiniCorrespondent, it is easier to originate Qualified Mortgages and you have more flexibility and control over the closing process. Michigan Mutual, Inc. accepts only those who are duly qualified and maintain the level of superior loan standards as set forth and those accepted must remain in good standing with Michigan Mutual, Inc. as stated in this Michigan Mutual, Inc. Mini-Correspondent Seller’s Guide. Michigan Mutual, Inc. reviews each application thoroughly and holds each applicant to the following eligibility requirements. The Mini- Correspondent must: Be an independent… Mortgage Banker, Credit Union or be a Savings and Loan Association acceptable to Michigan Mutual, Inc. A Savings Bank, Commercial Bank, or a similar institution which is supervised or examined by a Federal or State authority, that was, at the time of origination of the loans, either approved by the Secretary of Housing and Urban Development (HUD), Veteran Affairs (VA), United States Department of Agriculture (USDA), pursuant to Section 03 and 211 of the National Housing Act, or an approved Fannie Mae or an Freddie Mac Seller/Servicer. An organization, which is, accustomed to making Conventional and/or FHA, VA, USDA one-four (1-4) family residential mortgages following acceptable practices and prudent lending guidelines. Be duly organized entity in “good standing” under the laws of the State of its organization. Not be listed on any exclusionary lists provided by the agencies. Not be listed on any public or non-public commercial watch list or database (such as MIDEX) which reports cases of misrepresentation or failure to honor contractual obligations. Act as an independent contractor, and not as a representative or agent of Michigan Mutual, Inc. Maintain satisfactory facilities in which to originate real estate mortgages. Have a warehouse line of credit. The Mini-correspondent must maintain its approval if qualification as an RHS Lender is based on approval by HUD, VA, Fannie Mae or Freddie Mac including maintaining the minimum allowable net capital, acceptable levels of liquidity and any required fidelity bond and/or mortgage servicing errors and omissions policies. Hold all applicable federal, state and other licenses: Must maintain the appropriate licensure, including (without limitation) the authorizations and approvals of FHA, USDA, and VA. Must be responsible to perform its obligations under the MiniCorrespondent Agreement within compliance of applicable law and secondary market requirements, and must not be in any violation of the requirements of any such licenses, authorizations and approvals. Have and maintain acceptable written operations quality control procedures that are acceptable to Michigan Mutual, Inc. and have the ability to provide reports on the loans purchased by Michigan Mutual, Inc. upon request. Maintain a financial position that is acceptable to Michigan Mutual, Inc. Maintain policies in full force for Errors & Omissions, and Fidelity Bond. Execute the applicable Loan Purchase and Sale Agreement, as well as any other Agreement required by Michigan Mutual, Inc. for the level of approval being requested by the Seller. Seller should have a Quality and Fraud system in place to ensure that debts are properly disclosed and to provide copies of both of these reports to Michigan Mutual, Inc. Michigan Mutual, Inc. requires the Seller to have a Compare Ratio of less than 150% Back to top | Michigan Mutual, Inc. 4 Mini-Correspondent Seller’s Guide |Financial Requirements Financial Requirements Net Worth The applicant must satisfy the Michigan Mutual, Inc. net worth requirements for approval: A minimum Tangible “Generally Accepted Accounting Principles” (GAAP) Net Worth of $250,000 exclusive of related party receivables, as evidenced by the most recent audited financial statements. The applicant must also meet any agency requirements for which they will be delivering loans. Michigan Mutual, Inc. will carefully take into consideration the applicant’s overall financial condition as it relates. The following are the required financial documents and requirements to be submitted and considered by Michigan Mutual, Inc. for standard approval: The reports must be prepared in accordance with (GAAP) and must include the ‘Unqualified Opinion’ of an independent Certified Public Accountant (CPA) who is a member of the American Institute of Certified Public Accountants. https://www.yahoo.com/ Corporate Financial Statements for the most recent two (2) years: o If, at the time of application, more than 90-days have passed since the completion of the financial statements, updated financials for that period are also required. o If the Applicant is FHA-approved, they must provide audited financials to Michigan Mutual, Inc. o If the applicant is a subsidiary corporation, audited financial statements for its parent must also be provided. o In the event the applicant has completed a merger since the date of the last financial, audited financial statements for the merger company are also required. o Current financial statements, including balance sheet, income statement and two years of tax returns or audited financials. Must meet applicable state minimum required net worth. o Completed endorsed IRS form W-9 certifying the taxpayer identification number. o Completed Corporate Resolution if a corporation or Written Consent of LLC, if an LLC, authorizing execution of the Agreement (page 4 and 5 of Broker/Correspondent Application Package). o Resume(s) of owners, principal officers o Print Screen of broker NMLS license & licensing for each state you plan to originate loans in. o Print screen of all loan officers NMLS ID & Applicable state licenses o Completed list of Authorized Branches (page 6 of Broker/Correspondent Application Package) o List of key personnel authorized to request add/delete web users & branches The Financial Statements must include, but are not limited to: (These statements must be comparative with the previous year) Balance sheet Income statement Statement of retained earnings Statement of additional paid-in capital Statement of changes in financial position In lieu of audited statements, the following are acceptable for the specific entity: Banks – Form FFIEC034 Savings & Loans – FHLBB1313 Credit Unions – NCUA5300 Back to top | Michigan Mutual, Inc. 5 Mini-Correspondent Seller’s Guide |Required Documentation Required Documentation The following documents are to be submitted to Michigan Mutual, Inc.: Correspondent Sales Agreement Received from Michigan Mutual, Inc. and signed by a Correspondent’s parent, Affiliate Company or other guarantor. Current financial statements Refer to the Financial Requirements section Completed endorsed IRS form W-9 certifying the tax payer identification number Corporate Resolution A fully executed Resolution of the Board of Directors that identifies the authorized officers of the company. Articles of Incorporation For applicants that are not Banks or Credit Unions, a copy of the company Articles of Incorporation, Articles of Organization (LLC) and/or the Partnership. Agreement must be included in the Application Package. Proof of Fidelity Bond The applicant must provide proof of current Fidelity Bond and Errors & Omissions Insurance (and/or Surety Bond) in compliance with the current regulations of the state in which the company does business. Resumes The most current resume from each principal officer that addresses his/her mortgage experience. Additional resumes may be required dependent upon requests for additional authority levels. Mortgage Lending License A copy of each license held is required by Michigan Mutual, Inc. If the state requires it, the correspondent must forward a copy of the annually updated license upon receipt each year to maintain good standing with Michigan Mutual, Inc. Print Screen of the Correspondents’ NMLS license & licensing for each state the Correspondent plans to originate loans in Print screen of all loan officers NMLS ID & Applicable state licenses Master Bailment Letter A copy must be submitted for each warehouse bank used by the Applicant For Self-Funding Correspondents, a copy of the Applicant’s wire instructions must be included. Provide a Copy of the Correspondent’s Quality Control plan, most current QC Reports, and Management Response. Provide Non-Sanctions letter A letter from senior officer, certifying that no officer or employee has ever been debarred or sanctioned by a Deferral, State, or Agency Regulator. Back to top | Michigan Mutual, Inc. 6 Mini-Correspondent Seller’s Guide |Business Standards Branch Approvals Michigan Mutual, Inc. approves the corporate office of the Correspondent Company: Proof of additional branch locations may be applicable. Additional branch locations may require additional approval and identification. Completed list of Authorized Branches List of key personnel authorized to request add/delete web users & branches. Mini-Correspondent Business Standards Branch or Sister Parties associated with Correspondent Michigan Mutual, Inc. requires that a Satellite Office (SO) has a primary place of business (brick and mortar office) in a commercial location with ample/visible signage, even if SO also has satellite origination offices. Guarantee Agreement Michigan Mutual, Inc. reserves the right to require, at the time of initial application or thereafter, the submission of a guaranty, in form prescribed by Michigan Mutual, Inc., from a Mini-Correspondent or parent, Affiliate Company or other guarantor. Maintaining Approval Licensing Certificates Michigan Mutual, Inc. requires that each applicant be and remain duly licensed and approved to do business in each state for which it will sell loans and requires a copy of each license held. Insurance Standards Applicants are required to provide, and existing Mini-Correspondents are required to maintain, Blanket Fidelity/Errors and Omissions insurance coverage at all times that meets the current published Fannie Mae/Freddie Mac requirements. The Errors and Omissions Policy must at least protect the lender against negligence, errors, and omissions. Compliance with Agency requirements If a Mortgage Loan is intended to be insured by a government agency, Michigan Mutual, Inc. requires that the Mini-Correspondent to provide a service in accordance with all regulations set forth by the government agency associated with the specific loan type. The Mini-Correspondent shall not violate any laws, ordinances, requirements, rules, regulations, or order applicable to its business or properties. Any violation on the Mini-Correspondent’s behalf will affect the Mini-Correspondent’s ability to do business with Michigan Mutual, Inc. as stated in this Seller’s Guide. (Remainder Intentionally Left Blank) Back to top | Michigan Mutual, Inc. 7 Mini-Correspondent Seller’s Guide |Remaining a Mini-Correspondent of Michigan Mutual, Inc. Remaining a Mini-Correspondent of Michigan Mutual, Inc. Good Standing All approved Mini-Correspondents must remain in good standing with Michigan Mutual, Inc. to maintain eligibility to sell loans. Failure to remain in Good Standing could result in termination of Agreement with cause. To remain an approved Seller in good Standing, the Mini-Correspondent must: Actively participate in the Loan Programs and Products described in this Seller Guide. Be in full compliance with all of the Terms of Agreements within this Seller Guide, which is contractual document by reference in the agreements. Complete and submit (within required timeframes) all requested documents in the Annual Recertification Package. Updated information requirements include, but are not limited to: o Providing the most recently updated annual financial statements. o Supplying copies of the renewed, updated Fidelity Bond and/or E&O Insurance o Furnishing copies of the completed and updated list of State Licenses. When reviewing performance for good standing, determination is made entirely at Michigan Mutual, Inc.’s discretion and includes, but is not limited to the following: The Lender’s execution or pull-through percentage with Michigan Mutual, Inc.: o Secondary - > 75% o Closing - > 70% Credit Quality, based on review of FICO credit scores, number of loans held from sale or returned by an investor due to credit issues. Early payment default, based on incidence of loans purchased by Michigan Mutual, Inc. For HUD/FHA, the Seller must maintain a compare ratio of 150% or less. Provide outstanding final documentation Receipt and review of current financial statements Adherence to Michigan Mutual, Inc. guidelines and loan programs Compliance with Michigan Mutual, Inc. Loan Sale and Purchase Agreement Prepayment of purchased loan statistics, based on volume. Type of product mix Fraud It is the Mini-Correspondent’s responsibility to inform Michigan Mutual, Inc.: If fraud or misrepresentation is discovered in a loan sold to Michigan Mutual, Inc. If the Mini-Correspondent is involved in any investigation resulting from fraud or misrepresentation. Discovery of undisclosed fraud or misrepresentation of any file element in connection with the delivered loan file is cause for termination of the correspondent’s approval with Michigan Mutual, Inc. Back to top | Michigan Mutual, Inc. 8 Mini-Correspondent Seller’s Guide |Remaining a Mini-Correspondent of Michigan Mutual, Inc. Mortgage Electronic Registration System (MERS): Every loan sold to Michigan Mutual, Inc. must be closed on a MOM (MERS as Mortgagee) security instrument: The Mini-Correspondent must be a member in good standing with MERS and comply with all applicable policies and procedures required by MERS; including but not limited to, the proper and timely registration and transfer of the mortgage asset and associated servicing rights. Michigan Mutual, Inc.’s Loan Origination System (LOS) will automatically generate the MIN number and MOM on the Mortgage/Deed of Trust. Wire Instructions in Each Loan To ensure that Michigan Mutual, Inc. wires funds for loan purchase to the correct warehouse bank or operating account (for self-funding Correspondents), a copy of the Master Bailee or the self-funding wire instructions must be included with each Note forwarded to Michigan Mutual, Inc.. Material Changes To maintain eligibility and remain in good standing, the Mini-Correspondent is responsible for informing Michigan Mutual, Inc. of any material company changes. Notification to Michigan Mutual, Inc. must be made in writing no later than seven (7) calendar days after the legal finalization of any material change. Availability of Seller’s Records and Information The Mini-Correspondent is required to retain a complete copy of the loan file sold to Michigan Mutual, Inc. for a minimum of five years. It is the Mini-Correspondent’s responsibility to provide Michigan Mutual, Inc. with copies of documents not included in the Delivery File that may be requested by agencies, end investors and/or Michigan Mutual, Inc. in routine audits. The Mini-Correspondent must comply with Michigan Mutual, Inc.’s periodic review of agency certifications. Breach of Agreement Michigan Mutual, Inc. considers the following to be a Breach of Agreement: Failure to provide all acceptable financials on an annual basis within 90 days of request (typically after the end of the mini-correspondent’s fiscal year). Failure to repurchase a loan as requested. Failure to remit payment for fees due to Michigan Mutual, Inc. within the requested time limits. Failure to maintain good standing, as defined above in this Seller Guide. If Michigan Mutual, Inc. determines that a Mini-Correspondent has breached the agreement, Michigan Mutual, Inc. reserves the right to: Deduct outstanding fees from Servicing Released Premiums (SRP) due on the current loan purchase, funding or any other payments due to client, and/or place the Mini-Correspondent’s account in a terminated status for breach of agreement. Cease accepting registration or commitment of loans Determine that registered loans are not eligible for commitment based on suspension or termination of the eligibility to sell loans. Back to top | Michigan Mutual, Inc. 9 Mini-Correspondent Seller’s Guide |Pre-Purchase Delivery Pre-Purchase Delivery The Mini-Correspondent, by delivery of a mortgage loan for sale to Michigan Mutual, Inc., warrants that the loan was originated and closed in full compliance with all federal, state, municipal and regulatory requirements; meets all guidelines and requirements outlined in this Michigan Mutual, Inc. Seller Guide. In addition, the Mini-Correspondent must satisfy all conditions of Underwriting Approval and ensure conditions have been delivered in accordance with the standards and requirements stated in this Seller Guide. The Mini-Correspondent warrants, by the sale of a loan to Michigan Mutual, Inc., that the loan complies with Fannie Mae Quality and/or all HUD requirements. All files are reviewed by Michigan Mutual, Inc. prior to purchase and funding. It is critical that delivery files are complete with all exhibits and instruments properly executed. To facilitate the purchase of a Mini-Correspondent loan, the loan package must meet these Delivery Guidelines: Ensure that all documentation noted on the Michigan Mutual, Inc.’s Submission Checklist has been stacked in accordance with the checklist format, and is complete and accurate. Verify the documentation contained in the loan delivery file supports the AUS findings and meets Michigan Mutual, Inc. guidelines. Michigan Mutual, Inc.’s underwriting guidelines can be found at www.michiganmutual.com Ensure decisions, including variances/compensating factors, are notated and fully documented. Include in the delivery file all reports or findings from any in-house fraud or quality assurance systems. Ensure that all prior-to-close (doc) conditions and stipulations are cleared with supporting documentation included in the loan file. Ensure all “At Closing” requirements are accurate and acceptable (as these will appear on the closing instructions sent to the closing agent). Pre and Post Purchase Conditions Michigan Mutual, Inc. will suspend deficient loans from funding pending resolution of the defect. Loans will not be funded or purchased until the pre-purchase conditions have been resolved to the satisfaction of Michigan Mutual, Inc. To facilitate the review process, please send all outstanding conditions together. (Remainder Intentionally Left Blank) Back to top | Michigan Mutual, Inc. 10 Mini-Correspondent Seller’s Guide | Pre and Post Purchase Conditions Required Validation on all Loans: Validation of Social Security Number Michigan Mutual, Inc. accepts only those borrowers with valid Social Security Numbers. Michigan Mutual, Inc. will require that the SSN is validated and that this validation be a part of the Seller’s submission. Borrower Occupancy Michigan Mutual, Inc. will require that the borrower occupancy be validated (borrower occupancy certification) on all loans. This validation must be a part of the Seller’s submission. Validation of Qualified Parties to the Transaction Michigan Mutual, Inc. requires that each loan contain documentation (copy of screen printouts) that each party to the transaction has been checked and validated against the LDP/GSA lists. The following qualified parties must be checked: Borrowers Property Sellers Title Company Appraiser Attorney Loan Originator Processor Listing and Selling Agents Settlement Agent Full and partial names must be checked against these lists. Borrower Credit-Undisclosed Liabilities Seller should submit each file through an appropriate fraud system. Michigan Mutual, Inc. requires a copy of the following reports: The Seller should utilize a fraud system to ensure that all parties of the loan are properly verified, and have a quality system in place to ensure that all debts are properly disclosed. Seller warrants that all debts and liabilities have been validated prior to close. If Michigan Mutual, Inc. or another investor subsequently determines that any debts were not adequately disclosed on the application, nor included in the debt-to-income ratio such that the loan would not have met Michigan Mutual, Inc. eligibility requirements, the mortgage loan will be subject to repurchase by the Seller. Property Address For each loan, the subject property address must be validated through the USPS. For any property that is identified by a unit or suite number, that number must be included as part of the property address and be present on all applicable loan file documents. Seller must provide proof that address has been validated through USPS and all addresses in file must match accordingly. IRS Tax Transcripts Michigan Mutual, Inc. to order 4506T Request of Tax Transcripts and the last two years of Tax Transcripts, for all the borrower(s) associated with loan. Back to top | Michigan Mutual, Inc. 11 Mini-Correspondent Seller’s Guide | Pre-Purchase Delivery: (Continued), HMDA, Appraisals & MTG Clause Michigan Mutual, Inc.’s Internal Due Diligence Requirements: Execute the Verbal Verification of Employment within 10 days of the loan closing, to ensure the borrower(s) is still actively employed Order a “soft pull” in-file credit report within 10 days of loan closing, to ensure no major changes to the borrower’s credit profile (Conventional loans only). Verify the Loan Officer and Mini-Correspondent are registered and in good standing, with the Nationwide Mortgage Licensing System (NMLS). Verify the borrower’s identity and subject property Verify there are no hits on LDP/GSA and OFAC Watch lists. Home Mortgage Disclosure Act (HMDA) It is the Mini-Correspondent’s responsibility to provide Michigan Mutual, Inc. with HMDA-reportable information for each loan, as determined by Michigan Mutual, Inc., to complete the HMDA Loan Application Register (LAR). Loans missing the applicable HMDA-reportable data fields will be suspended from funding pending receipt of the information. Appraisals To meet ULDD and HUD requirements, Michigan Mutual, Inc.requires an electronic (Adobe/PDF) version of the appraisal that meets UAD standards. The Mini-Correspondent must ensure compliance with Appraiser Independence with one of the following options: Utilizing an Appraisal Management Company (AMC) to obtain the appraisal. If the Mini-Correspondent does not have an AMC, they must utilize Michigan Mutual, Inc.’s AMC. Regardless, the Mini-Correspondent must provide documentation to prove the appraisal complies with the Dodd Frank Interim Rule. Conventional Only: The Mini-Correspondent must provide validation that the appraisal file has successfully been submitted to and accepted by both Fannie Mae & Freddie Mac Appraisal Portals. The ‘Portal Success Certificate’ must be included in the loan submission package. Mortgagee Clause The “Mortgagee Clause” appearing on the borrower’s homeowner insurance must read: Michigan Mutual, Inc. 800 Michigan Port Huron, MI 48060 OR (Mini-Correspondent’s Name) “It’s Successors and/or Assigns” (Mini-Correspondent’s full address) Back to top | Michigan Mutual, Inc. 12 Mini-Correspondent Seller’s Guide | Pre-Purchase Delivery: Short Form Title, CPL, Funding Source & Escrow Accts. Short Form Title Policy Michigan Mutual, Inc. strongly recommends customers deliver “short form title policies” on all residential loans. These are a shorter version of the long form final title policy used to satisfy the loan's documentation requirements. With the short form, all of the title documentation needs are taken care of with one form that is issued at closing, thereby eliminating the need to wait for the final title policy to be issued well after closing. The most important thing to remember about the short form -- it must be delivered on the ALTA form. "Short Form Residential Policy", guarantees the Mini-Correspondent will receive all the coverage afforded under a true short form policy, including all applicable endorsements. Regardless of what the policy is technically referred to in the Mini-Correspondent’s region, the MiniCorrespondent will be completely protected and not subject to any further requirements from Michigan Mutual Inc. Closing Protection Letter A copy of the Closing Protection Letter (CPL) and/or Insured Closing Protection Letter from the title company insuring the settlement entity is required. The letter must be transaction-specific. Funding Source Michigan Mutual, Inc. maintains for each Mini-Correspondent, a listing (wire instructions of record) of the Michigan Mutual, Inc. accepted warehouse banks (and master bailee letters), or the MiniCorrespondent’s wire instructions (if self-funded). Michigan Mutual, Inc. validates the MiniCorrespondent’s funding source prior to loan purchase. If for any reason, a Mini- Correspondent adds or changes the funding source, the Mini-Correspondent must notify Michigan Mutual, Inc. in advance and provide either the new/updated master bailee letter or an executed request to change wire information on company letterhead signed by an officer of the company. Escrow/ Impound Accounts Escrow (reserve/impound) accounts to adequately provide for taxes and insurance (hazard, flood, and mortgage insurance) are required on all loans as follows: Government and USDA Rural Development loans: All loans, regardless of LTV and state requirements Conventional loans that exceed 80.00 LTV, all loans unless: The subject property is in a state that, by statute, requires impounds at a higher LTV, such as 90.00% in California. Conventional loans less than or equal to 80.00%, all loans unless: The Mini-Correspondent has paid the applicable fee to waive impounds. Back to top | Michigan Mutual, Inc. 13 Mini-Correspondent Seller’s Guide | Pre-Purchase Delivery: Disclosure of Finance Charges & Good Faith Estimate Disclosure of Finance Charges Michigan Mutual, Inc. reviews loans to ensure compliance with applicable Federal and State laws and regulations during the pre-purchase and post-purchase quality control audits. Documents reviewed include, but are not limited to, the Settlement Statement (HUD 1) and the TruthIn-Lending Statement (TIL). Amounts charged to the borrower on the HUD-1 must be disclosed on the Itemization of Amount Financed on the TIL that affects the Annual Percentage Rate (APR). Michigan Mutual, Inc. requires that a separate written itemization of fees from the Final HUD-1 Settlement Statement be included in each loan file. Sellers may choose their preferred format for providing the itemization of fees from the Final HUD-1 including, but not limited to, one of the options below: o The Itemization of Amount Financed as outlined in Reg Z, Section 226.18(c) o Seller’s system-generated Itemization of Fees form. This Itemization of Amount Financed must be an attachment to the Final HUD-1 and is not to be confused with any type of itemization included with the TIL. Michigan Mutual, Inc. requires a copy of the loan amortization schedule, to assist in the Michigan Mutual, Inc. pre-purchase loan validation. The loan amortization schedule must be a document separate from the TIL (and the loan amortization is not permitted to be included in the new TIL form). Loans received without the separate amortization schedule will be delayed in loan purchase. Good Faith Estimate The Good Faith Estimate (GFE) must be sent to the borrower within 3 days of the application. The following information is not legal advice on compliance with regulations, but is the minimum requirements that Michigan Mutual, Inc. will validate as part of the due diligence process. Additional documentation may be required based on individual circumstance. Michigan Mutual will require a minimum of the following GFEs: 1. Initial GFE- Within three days of Application. 2. Lock Event GFE- If not locked at time of Initial GFE. 3. Final GFE- If changes exist subsequent to the lock event. Change in Circumstance Policy: Michigan Mutual requires a change in circumstance when fees are added to Boxes 3 – 7. Fees in Box 1: include but not limited to 4506-T fees, Processing fee, Application fee, Administration fee, Underwriting fee, Doc Prep, 203k Supplemental Originations fees, or Lender Inspection fees. Box 2: Fees in this box would include any Yield Spread Premium from the lender or discount points paid by the borrower. Once the loan is locked, this section must match the final rate lock. The 1st check box is only used by Mini-Correspondent lender. This box is checked when all charges for the loan are reflected in block 1 and no additional charges will be added or subtracted. The 2nd check box is not applicable for the Mini-Correspondent lenders and must not be checked. The Mini-Correspondent may only check the 3rd box, if the borrower is paying a discount at closing. Boxes 3 – 7: Will have an aggregate tolerance of 10%. For example, fees can increase at settlement by 10% of the sum of Boxes 3 through 7. Back to top | Michigan Mutual, Inc. 14 Correspondent Seller’s Guide | Pre-Purchase Delivery: Good Faith Estimate (Continued) Box 3 (Required services that we select): Has a ten (10%) tolerance. These are fees that cannot be shopped by the borrower and are required by the Mini-Correspondent. These fees include but are not limited to appraisal fee, condo questionnaire fee, credit report, flood cert, PMI, UFMIP and VOD & VOE Fees. Box 4 (Title services and lender’s title insurance): Has a ten (10%) tolerance. Fees may include charges for title searches, examinations, endorsements, closing fee, title company wire and courier fees. Box 5 (Owners title insurance): Has a ten (10%) tolerance. For all purchase transactions, the originator must provide an estimate of owner’s title insurance, regardless of whether the fee is paid by the seller, borrower, or lender. Box 6 (Required services that the Mini- Correspondent can shop for) : Has a ten (10%) tolerance. May include fees for roof certification, septic & well inspections, pest inspection and survey. Realtor fees are not required to be shown on the GFE. However, if the fees are listed, they must be included in Box 6. Box 7 (Government recording charges): Has a ten (10%) tolerance. Fees in this sections include state and local government recording charges for mortgages, assignments, deeds, or deed of trust. Box 8 (Transfer Tax): Has a zero (0%) tolerance. Fees in this section include state and local government taxes and fee such as state tax stamps on mortgage, taxes on home sale transfers. This amount must be show the full amount of taxes due or zero (if paid by seller). This box is not required if the loan is a refinance. Box 9 (Initial deposit for the Mini-Correspondent’s escrow account): Carries an unlimited tolerance. The amount of the reserve or escrow account at settlement would go in this box. This would include property taxes, homeowners insurance, flood insurance, mortgage insurance or other similar insurance. Box 10 (Daily Interest Charges): Carries an unlimited tolerance. The originator must indicate the estimated interest per day; numbers of days charged and estimate a closing date. Box 11 (Homeowner’s Insurance): Carries an unlimited tolerance. For all purchase transactions, there must be an estimated premium amount for any hazard, flood, fire, or other similar insurance. (Remainder Intentionally Left Blank) Back to top | Michigan Mutual, Inc. 15 Mini-Correspondent Seller’s Guide | Special Requirements: File Retention, Corr. Responsibility & Rights of Michigan Mutual, Inc. Special Requirements For all loans, Michigan Mutual, Inc. will underwrite the loan file, including re-running the AUS findings and preparing closing docs in Mini-Correspondent’s Name. Conventional Loans For all Conventional loans submitted to Michigan Mutual, Inc. for underwriting and insuring, Michigan Mutual, Inc. will: Obtain Private Mortgage Insurance (PMI) if the Conventional loan has an 80% or higher LTV. The type of payment (lender or borrower paid) will determine the responsibility for the (PMI) payment. FHA Loans For all FHA loans submitted to Michigan Mutual, Inc. for underwriting and insuring, Michigan Mutual, Inc. will: Require the FHA Case Number Assignment to be in Michigan Mutual, Inc.’s name (Sponsor) and the Mini-Correspondent to be assigned as the Sponsored Originator. Validate FHA Case Number Assignment Ensure that the monthly MIP payment on the First Payment Letter to the borrower matches the information on all the documentation in the loan file, (FHA Transmittal, AUS Findings, etc.) Submit the loan for insuring, remit UFMIP to HUD and obtain a Mortgage Insurance Certificate (MIC). VA Loans For all VA loans submitted to Michigan Mutual, Inc. for underwriting and insuring: The appraisal must be ordered as LAPP Michigan Mutual, Inc. will issue the NOV (Notice of Value) Michigan Mutual, Inc. will validate the VA Loan Identification number Michigan Mutual, Inc. will submit the loan for insuring, remit the Guarantee Fee to VA and obtain the Loan Guarantee Certificate (LGC). Rural Development (RD) Loans For all USDA loans submitted to Michigan Mutual, Inc. for underwriting and insuring, Michigan Mutual, Inc. will: Obtain the Conditional Commitment from the local RD Office in Michigan Mutual, Inc.’s name. Ensure that the monthly MIP payment on the First Payment Letter to the borrower matches the information on all the documentation in the loan file, (Loan Transmittal, GUS Findings, etc.) Submit the loan for insuring, remit Guarantee Fee to USDA and obtain the Loan Note Guarantee (LNG). (Remainder Intentionally Left Blank) Back to top | Michigan Mutual, Inc. 16 Mini-Correspondent Seller’s Guide | Special Requirements: File Retention, Corr. Responsibility & Rights of Michigan Mutual, Inc. MERS Delivery Michigan Mutual, Inc. requires all loans to be closed and delivered in the name of MERS. MERS is an electronic registry system designed to eliminate the need to physically prepare and record assignments. Michigan Mutual, Inc. offers two options for Mini-Correspondents: To close in the name of MERS and register in the Mini-Correspondent’s name, then transfer to Michigan Mutual, Inc. upon delivery of the loan. To close in the name of MERS and do not register the loan, then Michigan Mutual will register the loan upon delivery of the loan. In essence, MERS requires the MIN # on both the Mortgage Deed of Trust and the Note. Michigan Mutual Org. ID # 1003036 Original Mortgage Note Each loan funding is subject to the receipt of the acceptable original Note. The original mortgage note must be executed by the borrower. The Mini-Correspondent lender will endorse the note as follows: Pay to the order of: Michigan Mutual, Inc. Without recourse ____________________ (Lender’s Name) By: _________________ Its _________________ Note Corrections Generally, Michigan Mutual, Inc. attempts to resolve defective Note issues using industry-accepted correction methods without returning the Note. However, if a Note does need to be returned for correction Michigan Mutual, Inc. will: Return the Note(s) under a separate cover (in a package containing only Notes) using an overnight delivery service at the Mini-Correspondent’s expense. Return the Notes subject to the bailment letters directly to the warehouse bank. Defective loans that are not purchased by Michigan Mutual, Inc. by the payment due date will require the Mini-Correspondent to collect the payment(s) from the borrower(s). It is the Mini-Correspondent’s responsibility to manage their funding suspense pipeline to ensure that all outstanding loan issues are resolved and the loans are purchased/funded in a timely manner. (Remainder Intentionally Left Blank) Back to top | Michigan Mutual, Inc. 17 Mini-Correspondent Seller’s Guide | Special Requirements: File Retention, Corr. Responsibility & Rights of Michigan Mutual, Inc. TIL Material Disclosure Errors When a material error in the TIL occurs as a result of an understated APR or Finance Charge, Michigan Mutual, Inc. requires full restitution to the consumer. Michigan Mutual, Inc. requires the following actions by the Seller to cure TIL defects and make the loan eligible for purchase: For both rescindable and non-rescindable loans, upon receipt of a TIL discrepancy suspense, the MiniCorrespondent must complete the following: Correct the Truth in Lending Disclosure. Send a letter and the corrected TIL to the consumer stating the reason for the corrected TIL Disclosure. o This Letter must be on company letterhead and be signed by the Mini-Correspondent. The MiniCorrespondent must also send a copy of this letter, its proof of delivery and the corrected TIL to Michigan Mutual, Inc. to retain in the loan file. For rescindable loans, the Mini-Correspondent must complete all of the following, in addition to the previous requirements: Provide the consumer with a new rescission period. o A copy of the new recession disclosure sent to the consumer must be provided to Michigan Mutual, Inc., as well as the copy of the mail confirmation showing proof of delivery. Provide Michigan Mutual, Inc. a fully executed Lender Attestation attesting to the fact that the consumer did not exercise their right to rescind during the new rescission period. The attestation cannot be dated prior to the expiration of the consumer’s three-day rescission period. Where to Send Final Docs Final documents include: Recorded mortgage / deed of trust (including MIN #) Final title policy, including Short Form All applicable riders or addenda Any and all required assignments Note: Assignments are not applicable for loans closed properly in the name of MERS. Please deliver all final documents within 180 days of closing in an envelope clearly labeled “Final Documents” to: Michigan Mutual, Inc. 800 Michigan Street Port Huron, MI 48060 1-800-700-5839 Loan Purchase Advice The Michigan Mutual, Inc. funding department will prepare and deliver the ‘Correspondent Purchase Advice’ to the Mini-Correspondent before funds are wired. The wire date is the loan purchase (funding) date. The “net proceeds” is the final funding amount issued to the Mini-Correspondent after all required additions and deductions have been made. Back to top | Michigan Mutual, Inc. 18 Mini-Correspondent Seller’s Guide | Special Requirements: File Retention, Corr. Responsibility & Rights of Michigan Mutual, Inc. Interim Payment Process For all new customers, payments should be mailed with their temporary coupon to: Michigan Mutual, Inc. 800 Michigan Street Port Huron, MI 48060 Failure to send payment to the correct address could delay processing. Defective loans that are not purchased by Michigan Mutual, Inc. by the payment due date will require the Mini-Correspondent to collect the payment(s) from the borrower(s). Once the loan is eligible for purchase, it will be purchased with adjusted amortization procedures. Amortization Procedures Michigan Mutual, Inc. calculates the unpaid principal balance (UPB) based on the Michigan Mutual, Inc. purchase/funding date. “Amortization” is the reduction of the principal balance of the loan by the principal and interest and applicable escrows. The first payment is due at time of loan purchase; there must be a minimum of 14 calendar days prior to first payment date: Loans purchased between the 1st and 14th of the month; Michigan Mutual, Inc. will collect the first payment Loans purchased between the 15th day and the end of the; Seller must collect the first payment. Payment Histories are required for all amortized loans. All loans that are purchased at a reduced balance must have a payment history showing that the payments collected by the Correspondent were made in a timely manner by the borrower. Seasoned Loans - Purchase Limitations Michigan Mutual, Inc. does not purchase “seasoned” loans. All loans submitted for purchase must be purchased no later than 45-calendar days after the Note date. File Retention The Mini-Correspondent is required to retain a complete copy of the loan file sold to Michigan Mutual, Inc. It is the Mini-Correspondent's responsibility to provide Michigan Mutual, Inc. with copies of documents not included in the delivery file that may be requested by agencies, end investors and/or Michigan Mutual, Inc. in routine audits. Mini-Correspondent Responsibility While Michigan Mutual, Inc. makes every effort to inform the Mini-Correspondent of its requirements for documents, forms, and/or disclosures, it remains the Mini-Correspondent’s responsibility to use current correct documents. Back to top | Michigan Mutual, Inc. 19 Mini-Correspondent Seller’s Guide | Special Requirements: File Retention, Corr. Responsibility & Rights of Michigan Mutual, Inc. Rights of Michigan Mutual, Inc. Michigan Mutual, Inc. retains the right to perform certain pre-funding quality/salability audits for each loan delivered for purchase. (i.e., Verbal Verification of Employment and/or assets, and/or Social Security Number, etc.) If Michigan Mutual, Inc. determines significant discrepancies exist in the loan documentation during any pre-funding audit, we retain the right to refuse purchase of that loan, regardless of commitment. By sale of the loan to Michigan Mutual, Inc., the Mini-Correspondent warrants that the loan is fully marketable, free of deficiencies and misrepresentations or fraud. If, after purchase, it is discovered that the loan is not marketable or is deficient, the Mini-Correspondent is expected to cooperate fully and timely to correct the loan to make it fully marketable to Michigan Mutual, Inc. or the investor. If the Mini-Correspondent does not cure the deficiency within the stated timeframes as requested, Michigan Mutual, Inc. retains the right to request repurchase of the loan. Misrepresentation/Fraud - If, after purchase, it is discovered that the loan is subject to misrepresentation or fraud (in the sole determination of Michigan Mutual, Inc. or subsequent investors), the loan is subject to repurchase. (Remainder Intentionally Left Blank) Back to top | Michigan Mutual, Inc. 20 Mini-Correspondent Seller’s Guide | Contacts and Resources Contacts & Resources Michigan Mutual, Inc.’s Address 100 Galleria Officentre Suite 210 Southfield, MI 48034 Telephone (248) 203-1340 Toll Free (866) 218-2411 Fax (248) 203-7155 Hours of Operation Monday-Friday 8:30am-6:00pm, EST Website Department Customer Care Client Relations Team 203K Disbursement Team Registration Team Secondary Team Closing Team Post-Closing Team Funding Team www.michiganmutual.com Type of Assistance Contact Information All inquiries Web Access Account Approval Re-Certifications FHA/VA Approval DO/DU Approval 203K Questions after Closing of loan Change order request Borrower/Contractor Issues Work Completed/Final Inspection Process New Submission Inquiries 1003 Import Questions DU/Credit Import Issues Daily Rate Sheet Pricing Rate Locks Rate Extension and Relocks Questions pertaining to Pricing Online Doc Request Form Questions & Assistance Changes to the Closing Date HUD Approval Inquiries Post-Closing Condition Questions Note and Allonge Inquiries Wire tracking Inquiries Correspondent Funding Review Process & Loan Purchase Advice Telephone Number: 877-683-6934 [email protected] Telephone Number: (248) 203-1340 Ext. 22020 [email protected] Telephone Number: (855) 322-9314 Fax Number: (248) 485-0109 [email protected] [email protected] Telephone Number: (248) 485-0153 [email protected] [email protected] [email protected] [email protected] [email protected] Back to top | Michigan Mutual, Inc. 21 Mini-Correspondent Seller’s Guide | Special Requirements: File Retention, Corr. Responsibility & Rights of Michigan Mutual, Inc. Loan Process & Mini-Correspondent/Wholesaler Responsibilities: The broad overview of Michigan Mutual Inc.’s loan process is below. Generally, the process is that the Mini-Correspondent will take the application, but Michigan Mutual Inc., as the investor, will underwrite the loan. The loan will then close in the name of the Mini-Correspondent and will fund on the MiniCorrespondents warehouse line. Once closed, the loan should be submitted to Michigan Mutual for purchase. Client Submission Registration Underwriting Client Submission (Conditions) Underwriting Clear to Close Closing Michigan Mutual Prepares Closing Docs. Client closes and Funds loan Loan Process and responsibilities: Registration: Mini-Correspondent is required to submit all minimum file requirements and meet the Qualified Mortgage (QM) Rule. Below is the list of minimum file requirements to onboard a loan: Michigan Mutual, Inc. Submission Form Fee Detail Worksheet Initial 1003 signed within 3 days of GFE and TIL o Ensure DU Findings in Michigan Mutual, Inc. name Initial GFE dated within 3 days after 1003 Income Documents (within 45 days of submission) o Salaried borrower – paystub & W2 – 2YRS 1040’s w/ all schedule Purchase Agreement (Seller’s name legible) Certificate of Eligibility (VA Only) Assets (Current statements w/ all pages to be within 45 days of submission) Payoff (FHA streamline Only) All 203K Documents (Bids / Contractor Agreement) o 203K Maximum Mortgage Worksheet o Michigan Mutual, Inc. Contractor Approval Form fully executed and all requested forms The Michigan Mutual, Inc. Registration Department will complete the following: Review all minimum file requirements for completeness and accuracy Test the fees on the loan to ensure loan meets the QM rule Complete the request for FHA case assignment, CAIVRS, and case query. MERS/Michigan Mutual Inc., requires all Mini-Correspondents to have a unique MERS Org ID issued by MERCORP, Inc. to close loans in their institution’s name Michigan Mutual Inc., require a special TPO membership or greater to participate Michigan Mutual Inc., will auto-generate a MIN# for each locked loan Michigan Mutual Inc., performs all transactions in the MERS system to include MIN registration and servicing/beneficiary transfer Ensures MIN# and MOM language for each loan is on security instrument as required Back to top | Michigan Mutual, Inc. 22 Michigan Mutual purchases loan off Client’s Warehouse lin Mini-Correspondent Seller’s Guide | Loan Process and Mini-Correspondent Responsibilities Processing : As a Mini-Correspondent, you have the disclosure benefits of acting as the lender in the transaction. You are required to complete the following: Submit all State and Federal Disclosures o Disclosures to be in the name of the Mini-Correspondent o You are required to re-disclose the GFE and TIL Not required to disclose lender-paid compensation on line 1 of the GFE o The Anti-Steering disclosure is not required on Mini-Correspondent loans Properly disclose the GFE and TIL and meet the QM rule Submit all conditions as requested The Michigan Mutual, Inc.’s Processing Department will complete the following: Review and monitor various compliance rules that include APR, TILA, high cost, RESPA and GFE approval Complete verbal VOE within 10 days of closing Deliver copy of all valuation tools used in the transaction to Borrower(s) Order FHA case assignment, CAIVRS, Case Queries and refinance authorization Obtain Mortgage Insurance Obtain previous 2-years tax transcripts Obtain Flood Certificate Underwriting Michigan Mutual, Inc’s Underwriting Department has the sole responsibility to underwrite the loan according to Michigan Mutual, Inc.’s guidelines and standard agency guidelines Closing: As a Mini-Correspondent you have the advantage of greater flexibility and control over the closing process. You are required to complete the following: Request closing documents from Michigan Mutual’ Website Close loan in Mini-Correspondent company name Use your own funds from your warehouse line to fund loan Closing package to be sent overnight to Michigan Mutual Inc. and Michigan Mutual Inc. will execute the note endorsement with POA signed by the Mini-Correspondent OR Mini-Correspondent executes the note endorsement and will overnight closing package to Michigan Mutual Inc.?? Michigan Mutual’s Inc.’s Closing department will be responsible for the following: Preparing closing documents and approves HUD-1 in Mini-Correspondent company name Michigan Mutual Inc. purchases the loan and wires proceeds/Correspondent receives purchase advice Back to top | Michigan Mutual, Inc. 23
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