Helpful Hints – Processors Cheat Sheet This sheet may help you to have fewer conditions. Here is a Cheat Sheet to help you understand what our underwriters are looking for when they review a file. They have to address many items that, if are not already completed, will need to be conditioned for. Cover Letters – a cover letter can clear up misunderstandings and also explain the scenario or anything out of the ordinary. The strengths and weaknesses of the file should be addressed upfront. This action gives you the opportunity to “paint a picture” for the underwriter. Make the story personal and “sell” the loan. I promise underwriters have a heart. Letters of explanation – It will make a big difference on the first impression if the underwriter can see the letters of explanation on the first pass. This will help the underwriter get the whole picture without having to guess, speed up the underwriting process and get you that clean approval you are looking for.
Credit Report Credit Report is only good for 90 days Credit Report Alerts: Addresses on the Credit Report Cross-Referenced: Checked for Social Security Alerts: Did you verify that the Social Security Number on the Application is Correct? A letter of Explanation is required for recent inquiries on credit A letter of Explanation is very useful to the underwriters for any derogatory credit Check for pre-foreclosure sale of previous property
1003 Does the 1003 have the borrower’s primary address for 2 years? Home Telephone number? Date of Birth? Do the Social Security Numbers match the credit report? Employment for a 2 year period? Employment position and Type of Business? Employment with physical (local) address for the borrower, not P.O. Box or corporate address? Business Telephone number? Does the occupancy make sense? Are the assets the same on the 1003, 1008 and AUS? Self-employed borrower: yes or no? How did you verify the existence of the company? Copyright – 2011 – MortgageCurrentcy.com
Declarations Did you review the Declarations? Is the HMDA information complete? Is the HMDA information consistent throughout the file?
Income If you are looking at a pay stub, do the income and calculations make sense? Did you separate the bonus and/or commissions in the AUS? Is the income the same on the 1003, 1008 and AUS? If you have overtime, and/or bonus did you use last year’s W-2 and YTD to calculate income? Is the bonus/overtime consistent and ongoing? (Must have worked for same company minimum 2 years.) Did you request a VOE? Looking at the base, YTD and W-2 income, is the income declining?
Ratios Do the ratios fit the loan parameters? (These are ever changing 36/41 is the standard for MI anything over this amount will need compensating factors regardless of findings) Do they make sense with the assets, debts, credit scores and income? Do the ratios match the AUS findings?
Purchase Contract Did the seller, listed on the prelim, sign the purchase contract? Did all the borrowers, and only the borrowers on the note, sign the purchase contract? Are the seller contributions in line with the loan program/occupancy? The seller contributions will be listed as a condition on the approval.
Appraisal Is the borrower/seller the same on the Purchase Contract (if applicable), title and appraisal? A minimum of two Comparables within 90 days are required or an appraisal review will be required. Are the comparables within the required distance? In suburban, within 1 to 2 miles. In Rural, within 5 miles. Also, at least 1 current listing or pending sale must be provided. Are they the same age? For Example, a property1 year old needs 1 year old comps. A property 15 years old needs 15 year old comps. Is the property listed as suburban, but really rural? If property is legal non-conforming, has a re-build letter been requested? Is the price per square foot for the property and comps similar? Did you check the line adjustments (10%), net adjustments (15%) and gross adjustments (25%)? (Any across-the-board adjustments will be questioned) Check appraisal address with the U.S. Postal Service Copyright – 2011 – MortgageCurrentcy.com
Mortgage Insurance Requirements Fannie/Freddie – • Submit for MI coverage immediately • Check LTVs • Monthly or Paid up front? FHA – MIP VA – Funding Fee • Is veteran exempt?
Internal QC Requirements Borrower Identity • Excluded Parties List • Patriot Act List • Copy of Driver’s License • Valid Social Security Card/Tax ID • 4506T Form • SS Security Number Matched Credit Report • Duplicate SS numbers • Different names (maiden names) on Credit Report Borrow Occupancy Makes sense Validation of Qualified Parties to the Transaction Borrower – Recheck for Undisclosed Liabilities Validation of Social Security of Tax ID Number Fannie LTV Rules Federal Government
1008 Conventional/Loan Analysis VA/MCAW FHA Make sure it is in the file and matches the 1003. Sale price, Appraised Value and Loan amount are accurate Compliance (make sure in file signed and dated within RESPA guidelines) TIL GFE ECOA/Fair Lending Servicing Disclosure Copyright – 2011 – MortgageCurrentcy.com
Borrower’s Authorization
FHA Requirements: Important Notice to Homebuyer Notice to Homebuyer FHA Case # CAIVR LDP/GSA Initial 92900a Informed Consumer Choice Disc. FHA Amendatory
VA Requirements: Original COE Assumption Notice to VA loan borrower VA Interest Rate Disc DD214 CAIVR VA Indebtedness (if exempt) 1880 Reinstatement Child Care letter Nearest Relative statement processor – Lender Cert
This information is intended for broker use only and is not intended for distribution to the general public. All rates, terms and parameters are subject to change without notice. Please refer to branch for more underwriting details and full product guidelines.
Copyright – 2011 – MortgageCurrentcy.com