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MICHIGAN MUTUAL, INC.

WHOLESALE MORTGAGE LENDING GUIDE TABLE OF CONTENTS

TO GO TO A SPECIFIC SECTION, PLACE YOUR CURSOR OVER THAT SECTION BELOW AND FOLLOW THE DIRECTIONS. YOU WILL BE DIRECTED TO YOUR SECTION.

1.0 INTRODUCTION ............................................................................................................... 3 1.1 LOCATION ..................................................................................................................... 4 1.2 CONTACTS..................................................................................................................... 4 1.3 LOAN SERVICING ........................................................................................................ 5 1.4 HIGH COST LOANS ...................................................................................................... 5 1.5 FEES................................................................................................................................. 5 1.6 HOLIDAYS OBSERVED ............................................................................................... 6 2.0 LOCKS and REGISTRATIONS ......................................................................................... 7 2.1 REGISTRATION............................................................................................................. 8 2.1.1 FLOATING LOANS ................................................................................................ 8 2.1.2 BEST EFFORTS RATE LOCKS ............................................................................. 8 2.1.3 REGISTRATION PROCEDURES .......................................................................... 9 2.1.4 REGISTRATION CONFIRMATIONS ................................................................... 9 2.1.5 DUPLICATE RATE LOCKS................................................................................... 9 2.2 PRICING.......................................................................................................................... 9 2.2.1 RATE SHEET DISTRIBUTION.............................................................................. 9 2.2.2 OVERNIGHT RATE PROTECTION.................................................................... 10 2.2.3 LOCK EXPIRATIONS .......................................................................................... 10 2.2.4 RELOCKS .............................................................................................................. 10 2.2.5 LOCK EXTENSIONS ............................................................................................ 10 2.2.6 LOAN TERM CHANGES ..................................................................................... 11 2.2.7 CHANGE REQUESTS........................................................................................... 11 2.2.8 PRICE AND RATE ADJUSTMENTS................................................................... 11 2.2.9 ESCROW WAIVER............................................................................................... 11 2.2.10 MAXIMUM PRICE/RATE ................................................................................ 12 2.3 DELIVERY DEADLINES ............................................................................................ 12 2.3.1 TABLE FUNDED LOANS .................................................................................... 12 2.3.2 WHOLE LOAN PURCHASES.............................................................................. 12 2.4 EARLY PAYMENT DEFAULTS................................................................................. 13 2.5 EARLY PAYOFFS ........................................................................................................ 13 3.0 UNDERWRITING ............................................................................................................ 14 3.1 UNDERWRITING OPTIONS....................................................................................... 16 3.2 IN-HOUSE UNDERWRITING..................................................................................... 16 3.3 SUBMITTING LOANS TO MMI FOR UNDERWRITING ........................................ 16 3.4 UNDERWRITING DECISIONS................................................................................... 17 3.4.1 INVESTMENT QUALITY .................................................................................... 17 3.4.2 IDENTITY OF INTEREST TRANSACTIONS AND N0N-ARMS LENGTH TRANSACTIONS ................................................................................................................ 18 3.4.3 TITLE TRANSFERS/ADDING AND DELETING BORROWERS FROM TITLE 20

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3.5 QUALITY CONTROL REVIEW.................................................................................. 21 3.6 STACKING ORDER ..................................................................................................... 21 3.7 THIS SECTION LEFT BLANK.................................................................................... 21 3.8 FLOOD CERTIFICATES.............................................................................................. 21 3.9 CONDOS and PUDS ..................................................................................................... 21 3.10 REPAIR ESCROWS .................................................................................................. 22 3.11 SURVEY REQUIREMENTS .................................................................................... 22 3.12 TITLE COMMITMENT/POLICY............................................................................. 22 4.0 COMPLIANCE.................................................................................................................. 24 4.1 LOAN APPLICATION (1003)...................................................................................... 25 4.2 GOOD FAITH ESTIMATE........................................................................................... 25 4.3 TRUTH-IN-LENDING DISCLOSURE ........................................................................ 26 4.4 TRANSFER OF SERVICING DISCLOSURE ............................................................. 26 4.5 ADDITIONAL APPLICATION DISCLOSURES........................................................ 27 4.6 FAIR CREDIT REPORTING ACT............................................................................... 27 4.7 PREDATORY LENDING PRACTICES....................................................................... 27 5.0 CLOSING & FUNDING ................................................................................................... 29 5.1 GENERAL CLOSING/FUNDING GUIDELINES ....................................................... 30 5.2 CLOSING / FUNDING OPTIONS................................................................................ 31 5.3 TABLE FUNDING PROCEDURES ............................................................................. 32 5.4 INSURANCE REQUIREMENTS (Hazard and Flood)................................................. 32 5.5 WHOLE LOAN PURCHASES ..................................................................................... 33 5.6 DELIVERY DEADLINES (Table Funded and Whole Loan Purchases) ...................... 35 5.7 IRS REPORTING (1098)............................................................................................... 36 5.8 HIGH COST LOANS .................................................................................................... 37 5.9 THIS SECTION LEFT BLANK.................................................................................... 37 5.10 THIS SECTION LEFT BLANK ................................................................................ 37 5.11 CLOSING AND SERVICING ADDRESS INFORMATION................................... 37 5.12 POST CLOSING REVIEW........................................................................................ 39 5.12.1 POST CLOSING CHECK LIST......................................................................... 40 6.0 EXHIBITS ­ FORMS AND LISTS .................................................................................. 42

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MICHIGAN MUTUAL, INC.

WHOLESALE MORTGAGE LENDING GUIDE 1.0 INTRODUCTION SECTION 1

1.1 1.2 1.3 1.4 1.5 1.6

LOCATION CONTACTS LOAN SERVICING HIGH COST LOANS FEES HOLIDAYS OBSERVED

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MICHIGAN MUTUAL, INC,

Operating as a regional wholesale mortgage lender, Michigan Mutual, Inc. offers competitive products and pricing and a selected team of mortgage professionals who are dedicated to providing you with the highest level of service possible. Our goal at Michigan Mutual is to establish and maintain mutually satisfying long term relationships with our customers. We are always available to talk to you and discuss your needs. The contents of this Manual are part of the Broker Agreement. All mortgage loans purchased pursuant to the Agreement will be subject to the terms of this Manual. If an inconsistency occurs between the Manual and the Agreement, the provisions of the Manual shall prevail. Michigan Mutual reserves the right to amend or modify the Manual from time to time in accordance with the methods defined in the Agreement.

1.1

LOCATION ADDRESS: Michigan Mutual, Inc. 30300 Telegraph Rd, Ste. 185 Bingham Farms, MI 48025 PHONE: 248-203-1340 General FAX: 248-203-7155 BUSINESS HOURS: 8:30AM to 6:00PM Eastern Time Zone WEBSITE: www.michiganmutual.com

1.2

CONTACTS ext. 2010 [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected]

Underwriting Department

Secondary Marketing/Pricing Closing/Doc Prep/Funding Post Closing Client Relations Web Support

ext. 2012 ext. 2014 ext. 112 ext. 138

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In addition to the above department e-mail addresses, each employee at Michigan Mutual is accessible by email. All e-mail addresses are the person's first initial and last name followed by @michiganmutual.com. For example, John Doe would be [email protected]

1.3

LOAN SERVICING ADDRESS: Michigan Mutual, Inc. P.O. Box 610246 Port Huron, MI 48060 PHONE: 866-218-2411

1.4

HIGH COST LOANS

Michigan Mutual, Inc. will not fund or purchase high cost loans. This includes loans referred to as Section 32 and loans that violate anti-predatory lending or state specific high cost regulations. Please refer to Section 5 of this manual for additional information. 1.5 FEES

Below is the current fee structure: MMI Underwriting or Contract Underwriting Center2 Underwriting Fee Tax Service Fee Flood Cert Fee (Life of Loan) MMI Closing Doc Prep Fee1 Web Closing Doc Prep Fee1 Funding Fee (for all other doc prep)1 Funding/Closing Rush Fee Funding/Closing Redraw Fee Wire Fee

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$550 $803 $10 $110 $90 $110 $50 $25 $25

Only one fee is applicable for closing and funding.

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In North Carolina all applicable fees must be referenced as one cumulative "Commitment Fee". 3 On FHA loans the borrower CANNOT be charged the Tax Service Fee.

1.6

HOLIDAYS OBSERVED

Michigan Mutual, Inc. will be closed on the following days: · · · · · · New Year's Day Memorial Day Independence Day Labor Day Thanksgiving Day Christmas Day

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MICHIGAN MUTUAL, INC.

WHOLESALE MORTGAGE LENDING GUIDE 2.0 LOCKS and REGISTRATIONS SECTION 2

2.1 2.2 2.3 2.4 2.5 REGISTRATION PRICING DELIVERY DEADLINES EARLY PAYMENT DEFAULTS EARLY PAYOFFS

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2.1

REGISTRATION 2.1.1 FLOATING LOANS

Loans registered without being locked are referred to as "floating". When a loan is floating, the broker is assuming the product and price risk. Product parameters and pricing may be different at the time of lock request. 2.1.2 BEST EFFORTS RATE LOCKS

When the broker executes a best effort rate lock, Michigan Mutual, Inc. inherits all price risk. Michigan Mutual, Inc. commits to fund a loan at a specific rate and price, as long as the broker adheres to all product, pricing, and delivery requirements. Having executed a best effort rate lock, the broker commits to using its "best efforts" to deliver the loan, regardless of market conditions. Once the loan closes with the correspondent/broker, delivery of the file is mandatory. Because Michigan Mutual, Inc. assumes inherent market risk in best effort commitments, it is imperative that the broker not cancel a loan with Michigan Mutual, Inc. in order to obtain a better price elsewhere. Your relationship with Michigan Mutual, Inc. may be jeopardized under the before mentioned circumstance or if you do not maintain a satisfactory pull through rate with Michigan Mutual. If a Correspondent closes a loan locked under a Best Efforts commitment, delivery to Michigan Mutual Inc. is mandatory, regardless of whether the commitment has expired. Under a Best Efforts lock, Michigan Mutual Inc. will charge Pair-Off Fees in the event or discovery that the Broker failed to deliver a purchasable loan rate locked with Michigan Mutual Inc. Pull-through is calculated by dividing the value of your Best Efforts locked loans for a rolling period of time, less any of those loans still active in the pipeline, into the closings from those locked loans. The Michigan Mutual Inc. Benchmark for pull-through is 75%. A Best Efforts lock requires the broker to lock the loan in good faith and with the intent to deliver. If a broker consistently performs below the Michigan Mutual Inc. pull-through benchmark of 75%, an escalation plan will be developed that will give Michigan Mutual Inc. the right to outline specific actions that may be taken to correct the poor performance. Actions could include possible suspension of overall registration/funding status or termination. Action plans will be delivered and monitored by your account executive to work with the broker to restore performance within expectations.

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2.1.3

REGISTRATION PROCEDURES

Loans may be registered or locked via web, e-mail or fax. Web www.michiganmutual.com Email [email protected] Fax 248-203-7155 (In the event our website is down) To register a loan with Michigan Mutual, Inc. via the web, upload your 1003 data directly to our website through the 1003 Import feature located in Broker Tools section of the website. Michigan Mutual, Inc. requires the use of Fannie Mae's standard DU 3.2 flat file format. To register a loan with Michigan Mutual, Inc via fax or email, you must send a completed Broker Registration/Lock Form that can be found under Forms in the Documents/Announcements section of the website. A loan should be registered with Michigan Mutual, Inc. before it is submitted for underwriting. A copy of the loan registration confirmation (see next paragraph) should be included in the underwriting package should it be faxed or emailed. 2.1.4 REGISTRATION CONFIRMATIONS

The broker will receive a loan registration confirmation from Michigan Mutual, Inc. within 24 hours. It is the broker's responsibility to contact Michigan Mutual, Inc. within 48 hours if a confirmation contains errors or has not been received. Refer to the Michigan Mutual, Inc. loan number on the confirmation when making inquiries regarding a loan. The confirmation is not to be construed as a loan approval nor does it guarantee that the lock meets program guidelines. The confirmation only reflects pricing terms, not program parameters. 2.1.5 DUPLICATE RATE LOCKS

If a loan is determined to have been locked more than once, having more than one loan number, Michigan Mutual, Inc. reserves the right to retain the loan number containing worse case pricing terms.

2.2

PRICING 2.2.1 RATE SHEET DISTRIBUTION

Rate sheets are distributed at approximately 11:00am ET each day by e-mail, fax or accessed via the website. Michigan Mutual, Inc. reserves the right to change

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prices at anytime without notice. Rate lock requests received after a price change are subject to the new pricing. 2.2.2 OVERNIGHT RATE PROTECTION

Rate locks from the active rate sheet must be submitted to Michigan Mutual, Inc. via our website by 6:00pm ET the same business day. Overnight rate lock protection is allowed only on applications taken after the active rate sheet is distributed. Loans floating with Michigan Mutual, Inc. are not eligible for overnight rate protection. Loans that are eligible for overnight protection must be locked via our website between the hours of 6 PM to 8:00 am ET. Overnight protection is limited to $1,000,000 per company. 2.2.3 LOCK EXPIRATIONS

Loans table funded by Michigan Mutual, Inc. must close and disburse by the lock expiration date. This date can be found on both the lock confirmation sheet and the rate sheet. If a lock expires on a weekend or holiday, it can be extended to the next business day at no cost. Please contact Secondary Marketing should you need to extend a rate lock that expires on a weekend or a holiday. Loans that do not disburse by the lock expiration date will be shifted to a "floating" status and will be subject to relock/extension fee. 2.2.4 RELOCKS

Expired conventional conforming fixed rate and FHA loans may be relocked once for a maximum of 15 days. Pricing will reflect the lower of the original or current price, whichever is worse, for that loan program. Loan types, other than conforming conventional fixed rate and FHA, are negotiated on a case-by-case basis. 2.2.5 LOCK EXTENSIONS

Lock extensions must be requested no later than 6:00pm ET the day of lock expiration. To request an extension, e-mail [email protected] All extensions must be requested in writing or by calling secondary marketing. Conventional conforming and FHA loans can be extended once per the following: Extension Period 0-7 days 8-15 days >15 days Deduction from Price* -0.125 -0.250 negotiated by secondary marketing department

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*If an extension is requested within 7 days of the lock expiration date and the current price is better that the original price, then the lock can be extended for 7 days at no cost. Extensions on loan types other than conventional conforming and FHA are negotiated on a case-by-case basis. Second extension will be granted on a case-by-case basis, depending on market conditions. 2.2.6 LOAN TERM CHANGES

Product change requests, from one product to another, will be negotiated on a case-by-case basis. A change of property for the same borrower constitutes a new loan. All prior lock terms are nullified. Net pricing on a loan may be corrected to reflect changes in loan parameters. These may consist of, but are not limited to, loan amount, LTV, CLTV, occupancy, purpose, etc. All product, rate, term or amount changes on a loan already underwritten require re-submission to the underwriting department for approval. 2.2.7 CHANGE REQUESTS

Loan changes must be requested in writing by one of the following methods: · · · Contact the secondary marketing department or underwriting department Fax a copy of the Loan Registration Form with changes clearly noted Requested through "Rate Lock" section of website

An updated confirmation will be faxed or emailed to the broker once the change has been approved. 2.2.8 PRICE AND RATE ADJUSTMENTS

Attention should be paid to price and rate adjustments on the rate sheet. All price and rate adjustments are cumulative. More than one adjustment may apply. 2.2.9 ESCROW WAIVER

Escrows may be waived on conventional loans if the LTV is 80% or less and Private Mortgage Insurance is not required. Escrow waiver fees are a .250

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deduction in price. Escrow waivers should be requested at the time of lock-in. They may also be requested later by contacting secondary marketing. 2.2.10 MAXIMUM PRICE/RATE

The maximum yield spread premium (YSP) that a broker can net on any loan will be 103.000 (3 points over par) for conventional loans and 104.000 (4 points over par) for FHA loans. A base price above 103.000 (for conventional) or 104.000 (for FHA) may be offered and used, but only if the amount over 103.000 or 104.000 is used towards price adjustments, buydown funds or borrower's closing costs. Michigan Mutual, Inc. may set a maximum rate for any program at the discretion of the secondary marketing department.

2.3

DELIVERY DEADLINES 2.3.1 TABLE FUNDED LOANS

The original closed loan package must be received in our Bingham Farms office by the end of 2 business days after disbursement. If a loan is received late or has serious deficiencies that cannot be cleared within 3 business days of notification, Michigan Mutual, Inc. will assess a late fee of: Number of Days Late 3-5 business days 6-10 business days 11-20 business days 20+ business days Deduction from Price 0.125 0.250 0.500 Reprice at Worse Case Pricing

2.3.2

WHOLE LOAN PURCHASES

The original closed loan package must be received in our Bingham Farms office within 48 hours after the expiration date shown on the "Registration/Lock" form. Loans that are delivered later than 2 business days after lock expiration are considered late deliveries. All late deliveries will be relocked according to Michigan Mutual, Inc re-lock policy. Loans that are delivered prior to expiration date, but contain deficiencies that are not corrected until after the expiration date are subject to the following late fee:

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Number of Days Late 3-5 business days 6-10 business days 11-20 business days 20+ business days

Deduction from Price 0.125 0.250 0.500 Reprice at Worse Case Pricing

2.4

EARLY PAYMENT DEFAULTS If a borrower of a Mortgage Loan fails to pay any of the first three (3) installments due after the closing or the transfer of the Mortgage Loan to Purchaser within thirty (30) days after its regularly scheduled due date, the Seller shall, not later than ten (10) days after Purchaser's written demand, repurchase the Mortgage Loan at a price equal to the sum of the principal balance remaining on such mortgage loan, unpaid interest accruing on the unpaid principal balance to the date of such purchase, the premium, if any, paid to Seller by Purchaser as a part of the price at which Purchaser purchased the Mortgage Loan, and any cost incurred by Purchaser in attempting to collect the Mortgage Loan or foreclose the Mortgage and any advances by Purchaser to protect the Mortgaged Property or the Mortgage.

2.5

EARLY PAYOFFS In the event a Mortgage Loan is prepaid in full within one hundred fifty (150) days after the Mortgage Loan was closed, Seller shall, upon written request by Purchaser, pay to Purchaser an amount equal to the amount Purchaser paid to Seller in connection with the Mortgage Loan excluding that portion of the amount Seller received to reimburse Seller for payments made to settlement service providers, such as an appraiser or credit reporting agency.

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MICHIGAN MUTUAL, INC.

WHOLESALE MORTGAGE LENDING GUIDE 3.0 UNDERWRITING

SECTION 3

3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 3.10 3.11 3.12 UNDERWRITING OPTIONS IN-HOUSE UNDERWRITING SUBMITTING LOANS TO MMI FOR UNDERWRITING UNDERWRITING DECISIONS QUALITY CONTROL REVIEW STACKING ORDER CONTRACT M.I. CENTER UNDERWRITING FLOOD CERTS CONDOS and PUDS REPAIR ESCROWS SURVEY REQUIREMENTS TITLE COMMITMENT / TITLE POLICY

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MICHIGAN MUTUAL UNDERWRITING PHILOSOPHY

Michigan Mutual underwrites and purchases all types of residential mortgages. These programs and products can be found in our Product Guidelines (located on our website) and on our daily price sheet. The Product Guidelines will reference specific product features and requirements (such as maximum Loan-to-Value ratios and minimum credit score requirements, if any). This guide is intended to address unique underwriting situations. Michigan Mutual uses Automated Underwriting Systems (AUS). Generally, Underwriters validate to the conditions set forth by the AUS. However, there are circumstances where underwriters will need to add conditions to a loan. These guidelines are meant to serve as a guide for obtaining adequate documentation to enable us to satisfy those conditions. Michigan Mutual underwrites Conventional and FHA loans. We prudently underwriter to the standards and guidelines of Fannie Mae (FNMA), Freddie Mac (FHLMC) and the US Department of Housing and Urban Development (FHA) as well as other private investors. Because of a multitude of factors are involved in a loan transaction, no set of guidelines can contemplate every potential situation. Therefore, each case is weighed individually on its own merits. Michigan Mutual's underwriting philosophy is to weigh all risk factors inherent in the loan file, giving consideration to the individual transaction, borrower profile and the level of documentation provided and the property used to collateralize the debt. Because each loan is different, and underwriting is an art, not a science, we use professional judgment in make a lending decision. Our commitment to fairness and equal opportunity is clear and unequivocal. The application of fair and consistent underwriting practices is mandated in the underwriting guidelines outlined in this guide. All loans considered for denial will be subject to a second level review prior to a final decision. Michigan Mutual underwrites a borrower's creditworthiness based solely on information that we believe is indicative of the applicant's willingness and ability to repay the debt they would be incurring. Our mission is to provide a superior level of service so that your processing and closing go as smoothly as possible. In return, we ask that you enable us to do our best work by providing complete, well-organized and understandable submissions. Your attention to unusual situations addressed at the time of submission will pave the way for a fast loan decision. As our guidelines and processes are impacted by external market conditions, it will be necessary for us to reevaluate the guidelines in this manual from time to time. Occasionally, revisions will be made. As applicable, corporate written notifications and updates will be provided you and incorporated into these guidelines.

GENERAL UNDERWRITING GUIDELINES

Michigan Mutual, Inc. underwrites loans to FNMA, FHLMC, FHA, and Private Investor Guidelines. If you do not have access to FNMA or FHLMC underwriting guidelines, you may contact one of our underwriters or Customer Support for information regarding companies that provide summaries of these guidelines.

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3.1

UNDERWRITING OPTIONS

All files to be submitted to: Michigan Mutual, Inc. 30300 Telegraph Rd., Suite 185 Bingham Farms, MI 48205 Attn: Underwriting Or E-mailed to: [email protected] Please note that all loans must be registered with Michigan Mutual before they are submitted for underwriting. A copy of the Lock/Registration Form confirmation must be included at the top of the underwriting package. See Section 3.3 below.

3.2

IN-HOUSE UNDERWRITING

Our underwriters are committed to giving you unsurpassed customer service and "common sense" underwriting. You are welcome to call our Underwriting Department or Client Relations Department to discuss a specific file or a possible scenario. Under normal conditions, you can expect a 24-48 hour turn around time for underwriting. Conditions can be faxed to: 248-203-7155, E-mailed to [email protected], or mailed to our office. Under normal conditions, you can expect a 24 hour response (by the end of the next business day).

3.3

SUBMITTING LOANS TO MMI FOR UNDERWRITING

Loans must be run through LP or DU/DO before they are submitted to MMI for underwriting. When submitting loans to our Underwriting Department, please follow the following procedure: 1. Register the loan with Michigan Mutual, Inc. 2. Upload the FNMA 3.2 Flat File through the Michigan Mutual, Inc. website. Registering a loan can also be done through this process. 3. Fax the following to MMI Underwriting Department at 248-203-7155 or e-mail to [email protected] Also see Section 6 for submission checklists. a. Lock/Registration Confirmation b. AUS Findings c. Transmittal Summary (1008) or FHA MCAW & HUD Addendums (if FHA) d. Loan Application (1003) e. Signed Borrower's Certification and Authorization and all compliance and program disclosures. f. Credit packages (All credit, income and asset documentation) 4. Email Original Appraisal to [email protected]

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Please note that these LP & DU findings depend on accurate input of critical data and must be supported by documentation in the file. A positive system decision does not guarantee an approval from Michigan Mutual, Inc.

3.4

UNDERWRITING DECISIONS Upon review of your loan file, an MMI underwriter will e-mail you an Underwriting Report reflecting one of the following decisions: · Clear to Close: file is ready to close and all "at close" conditions must be forwarded to MMI prior to funding for underwriter approval or with the closed loan package as noted on the MMI Underwriting Report "Conditions to be Cleared at Closing." Approved with Conditions: file is "approved" contingent upon satisfactory resolution of the outstanding conditions. Approved: only remaining condition is the interest rate is to be locked with the secondary marketing department. Incomplete: file was submitted without proper documentation (i.e. missing loan application or credit report or AUS findings) and an underwriting decision cannot be rendered until we have received a full loan file. Suspended: there is insufficient information within the loan file to render an approval or denial and additional information is required. Rejected: loan file presented does not meet minimum agency or investor requirements. INVESTMENT QUALITY

· · ·

· ·

3.4.1

It is expected that all loans underwritten, closed and funded are to be salable on the secondary market and have reasonable likelihood of timely repayment. We consider an investment quality loan to be one that: Has been prudently underwritten to the appropriate guidelines; Contains adequate documentation to support the underwriter's decision; Has been reviewed with a diligent approach to any questionable elements of the transaction

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3.4.2

IDENTITY OF INTEREST TRANSACTIONS AND N0N-ARMS LENGTH TRANSACTIONS

The following applies to Conventional and FHA (in addition must also follow FHA guidelines for identity of interest transactions. Please refer to 4155.1 REV5 Chapter 1. Section 2, 1-8 10/03) Certain transactions pose an increased risk and additional precautions must be taken to evaluate and prudently underwrite for that risk. In-depth analysis of transactions between parties with family or business relationships may reveal unsupported values, straw borrowers, non-arm's length or atinterest influences, inflated sales prices, or excessive fees or disbursements. Michigan Mutual uses the term Identity of Interest Transaction to describe these scenarios generally. Definitions A non-arm's length transaction is one where the parties to the transaction are related ­ such as family members, employer/employee, or principal/agent. This relationship may influence the transaction. Common types of non-arm's length transactions include: · · · · Family sales Property in an estate Employer/employee sales Flip transactions

An at-interest transaction involves persons who are not closely tied or related but may have a greater vested interest in the transaction, such as a party who plays more than one role in the same transaction (selling/listing agent and mortgage broker, for example). At-interest transactions carry increased risk due to the greater vested interest in the transaction by one of the parties. Examples of at-interest transactions include: · · · Builder also acting as Realtor/broker Realtor/broker selling own property Realtor/broker acting as listing/selling agent as well the mortgage broker

All non-arm's length transactions are considered at-interest transactions; however, at-interest transactions are not always non-arm's length. Additional Risk Additional risks that may be posed by an Identity of Interest Transaction include: · · · · Absence of equity or down payment Purchase price may not represent actual consideration given Financial bailouts or attempts to hide poor credit Occupancy concerns

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· ·

Financing of unsold builder inventory, especially in soft real estate markets Inflated appraised value

Non-arm's length transactions are allowed with the Full Doc Documentation option only. Non-arm's length transactions with non-family members will be considered only if they are bona fide sales transactions and the borrowers will occupy the property as their primary residence. When a loan is a non-arm's length transaction, risk components are often greater. Additional risks may include the absence of equity or down payment, misrepresentation of the purchase price, bailouts, or occupancy concerns. Family Sales This is a transaction where one family member is selling to another family member. Often there is no real estate agent involved or the agent may also be a family member. These transactions carry the potential for high risk, as they are often bailout situations (i.e. the selling party has financial problems and is unable to refinance). Special Guidelines for Family Sales On a case-by-case basis, family sales may be considered. The following are generally required to consider the loan: · · · · Full documentation of the Borrower's income, employment, and assets. Borrower must provide copies of canceled check(s) to verify that earnest money has been paid to the seller. Verification that the Borrower is not now, nor has previously been, in title to the property. A payment history for the existing mortgage (verification of seller's mortgage) on the subject property must be obtained and show no pattern of delinquency within the past 12 months. Borrower must provide a written explanation that states the relationship to the seller and the reason for purchase. The underwriter must be satisfied that the transaction makes sense.

· ·

If the property is involved in an estate and the Borrower is a beneficiary, the following must also, at minimum, be met: · · · Full documentation of the Borrower's income, employment and assets Verification of the Borrower as a beneficiary of the property. The Borrower may not receive cash back at closing; however, the Borrower's interest, as verified, can be considered as equity. The transaction may be considered a cash-out refinance If a portion of the proceeds is to be used to buy out other beneficiaries' interest, their interest must be verified. Payoffs to the beneficiaries must be a closing condition and shown on the HUD-1 Closing Statement. Allowed on Primary residence property only and if the borrower currently occupies the subject property and is responsible for the current mortgage payment a

·

·

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payment history for the existing mortgage on the subject property must be obtained and show no pattern of delinquency within the past 12 months.

3.4.3

TITLE TRANSFERS/ADDING AND DELETING BORROWERS FROM TITLE A limited cash-out refinance transaction enables a borrower to pay off his or her existing mortgage by obtaining a new first mortgage that is secured by the same property. If there is currently an outstanding lien that will be satisfied through the refinance transaction, there must be at least one borrower obligated on the new loan who was also a borrower obligated on the existing loan that is being refinanced. If no borrower on the outstanding loan that will be satisfied through the new loan is also a borrower on the new loan; the transaction is not eligible as a refinance (except on a case-by case-basis as described below) and must be treated as a purchase (as long as the borrower is not in title to the subject property. The borrower cannot purchase what he already owns). Also see Non-Arms Length Transactions for purchase transactions. If there is not currently an outstanding lien on the subject property, a loan to the property owner secured by the property will be considered a cash-out refinance. When the borrower has been transferred into title and is attempting to refinance a mortgage that is not in his/her name the transaction presents several red flags such as a "bail out" situation. Michigan Mutual does not lend in "bail out" situations. We will on a case-by-case basis review loans if the borrower has been transferred into title and is attempting to refinance a mortgage that is not in his/her name. The loans are not eligible unless:

· · ·

·

The recent title change is due to marriage, divorce or death (must provide legal document); The borrower qualifies under normal underwriting; A 12 month mortgage history (not a VOM but an actual payment history) on the subject property must be obtained and show no pattern of delinquency within the last 12 months; The reason for the title transfer must be explained.

OR

· · ·

Evidence the borrower has been in title for at least six months and was not previously in title to the subject property The borrower qualifies under normal underwriting; A 12 month mortgage history (not a VOM but an actual payment history) on the subject property must be obtained and show no pattern of delinquency within the last 12 months;

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·

The reason for the title transfer must be explained.

In both instances we may require cancelled checks to evidence the borrower is the one making the mortgage payments and/or additional documentation may be required to ensure the loan is not a bailout situation.

3.5

QUALITY CONTROL REVIEW A certain percentage of your loans will be selected for a pre-funding audit and/or post closing Q C review and you will be notified if there is a significant problem with a specific loan or if there are problematic trends in your loan submissions. From time to time, you may be notified to supply a document or respond to a finding.

3.6 · ·

STACKING ORDER See - Conventional Underwriting Stacking Order Form See - FHA Underwriting Stacking Order Form

3.7

THIS SECTION LEFT BLANK

3.8

FLOOD CERTIFICATES Michigan Mutual, Inc. Underwriting Department will order the flood certificate after the appraisal is approved. Life of Loan coverage must be ordered on all loans. If a loan is identified as located in a flood zone, flood insurance will be required. A complete Flood Certificate, including all relevant data and codes, is required. If the loan is underwritten through United Guaranty's Premier Compliance program, the broker may order the flood certificate. See Michigan Mutual, Inc. Fee Schedule (1.6) for fees based on acceptable Flood Certificate vendors.

3.9

CONDOS and PUDS · · · Loans must meet agency and/or private investor guidelines regarding condominium and PUD projects. A "Condominium Certification Form" (see Forms-Section 6) must be submitted to underwriting for approval. Additional documents may be required for detached condos & PUD's.

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3.10

REPAIR ESCROWS · · · Repair or completion escrows must be approved by underwriting. Typically underwriting will not approve an escrow holdback for interior repairs or non-weather related items. And typically they are only approved for FHA loans. Usually the required escrow holdback amount is 1 ½ times the estimated repair cost as determined by the underwriter and based off contractors bids (at least 2 estimates must be provided to underwriting) provided by the broker. The minimum repair escrow holdback is $500.00. Underwriting may require more documentation. Approved escrow holdbacks must include an acceptable fully executed escrow holdback agreement signed at closing. (Include a copy in the closing package.) Escrow funds must be held and disbursed by the closing agent. Upon completion of the repairs a completed Compliance Inspection Report (by the original FHA appraiser) must be provided reflecting all repairs are completed. MMI will inform the title company the funds may be released. The appraiser will be paid first from these funds.

· · ·

3.11

SURVEY REQUIREMENTS A survey will not be required on purchases or refinances if the following conditions are met: · · The title company provides a final policy without survey exception or an ALTA-9 endorsement. The borrowers on refinances or the sellers on a purchase must sign a survey affidavit.

3.12

TITLE COMMITMENT/POLICY TITLE COMMITMENT Underwriting must review and approve the title commitment before issuing a final approval. · The title Commitment must insure that the title is marketable and that the mortgage will constitute a first lien on the property. The final title policy must also list any subordinate liens and state that they are subordinate to our first mortgage lien. The title commitment must include a correct legal description, all taxes and special assessments, all existing liens and easements of record.

·

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·

A 12 month history of ownership of subject property must be provided; either in the title commitment or with copies of all deeds issued for the previous 12 months. The title commitment and title policy must be obtained from a title insurer that meets the specific needs of the secondary market investor. A closing protection letter which is loan specific and provided by the title company underwriter.

· ·

TITLE POLICY Whenever possible, Michigan Mutual, Inc. prefers a short form policy at closing. The policy must not contain a survey exception unless an ALTA-9 endorsement is included. · · · · · · Must be dated no earlier than the disbursement date or the date the Mortgage is recorded, whichever is later. Must contain a complete legal description. Must show coverage in the amount of the loan. Must list borrower's names exactly as shown on the recorded Mortgage. The title policy must contain no exceptions except those for unpaid taxes not yet due and payable and typical easements, restrictions and covenants. Any encroachments or other problems noted on the survey must be "accepted" by the title insurer insuring the mortgagee against any potential loss.

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MICHIGAN MUTUAL, INC.

WHOLESALE MORTGAGE LENDING GUIDE 4.0 COMPLIANCE SECTION 4

4.1 4.2 4.3 4.4 4.5 4.6 4.7 LOAN APPLICATION (1003) GOOD FAITH ESTIMATE (GFE) TRUTH ­ IN ­ LENDING (TIL) TRANSFER OF SERVICING ADDITIONAL APPLICATION DISCLOSURES FAIR CREDIT ACT PREDATORY LENDING PRACTICES

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COMPLIANCE INTRODUCTION

The items discussed in this section cover the primary compliance concerns for which each correspondent/broker is responsible. It is only meant to be a guide, not a comprehensive compilation of all compliance issues. As a lender, you are solely responsible for maintaining compliance with the regulations established by state and federal laws and agencies who supervise your activities.

4.1

LOAN APPLICATION (1003)

· The most current (07/05) loan application must be used for all applications.

· · · The initial application must be signed by at least one of the borrowers who will be on the note. The initial application must be dated to establish compliance with Truth-inLending and RESPA regulations. For applications taken by mail, the application date is the date the application was received by you (not the date the borrower signed the application). This date must be noted by you on page 3 of the 1003 where "by mail" is checked. The government monitoring section of the application must be completed. If the applicant did not complete this section, the interviewer must do so by visual observation or surname. The lender section of the application must be fully completed and executed by the interviewer.

·

·

4.2 · · ·

GOOD FAITH ESTIMATE In all cases, Michigan Mutual, Inc. will hold the correspondent/broker responsible for compliance with RESPA regulations. Fees that will be paid to you must be clearly labeled as such on the Good Faith Estimate (GFE). The (GFE) must be signed and dated by the borrowers and originator at initial application. The GFE must be based on the product and fees discussed and applied for at the initial application and must correspond with the initial Truth-inLending. The HUD booklet "Guide to Settlement Costs" must be given to the borrowers.

·

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·

On all table funded loans, fees paid to you by the table funding lender (Michigan Mutual) must be disclosed as "Yield Differential", "Yield Spread Premium", or "Service Release Premium".

4.3 · · ·

TRUTH-IN-LENDING DISCLOSURE The initial Truth-in-Lending (TIL) Disclosure must be delivered to the borrower within 3 business days of receipt of the written application. The TIL must contain a complete schedule of payments along with an accurate disclosure of Annual Percentage Rate (APR) and the "Amount Financed". The "Annual Percentage Rate" (APR) disclosed on the TIL disclosure, must be within one-eighth of one percent (.125%) of the true APR for loans without mortgage insurance. The tolerance for loans with mortgage insurance is .25%. The "Amount Financed" must be within $100.00 of the correct amount or greater than the correct amount to be considered within tolerance. On loans where mortgage insurance is required, the payment schedule must reflect the mortgage insurance payments until the date when the servicer must automatically terminate coverage. If there are any changes in the terms of the loan that affect the APR or the Amount Financed or there are errors in computation of the initial TIL Disclosure, a corrected disclosure must be delivered to the applicant(s) prior to settlement. The borrower must sign a final TIL at closing.

· ·

·

·

4.4 ·

TRANSFER OF SERVICING DISCLOSURE The Transfer of Servicing Disclosure must be used to describe your past practices and present intention in regards to the servicing of mortgage loans that you originate. The disclosure must show the percentage of loans sold in the previous three years. The disclosure must be updated on a yearly basis to show the most recent past three years. The Transfer of Servicing Disclosure must be signed at application if the interview is face to face. Otherwise it may be mailed within 3 business days of application (application date being the date you received the application in the mail ­ not the date that the borrowers signed the 1003).

·

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4.5

ADDITIONAL APPLICATION DISCLOSURES The following disclosures must be given to the borrower at application: · ECOA Notice - The Equal Credit Opportunity Act (ECOA) is a federal mandate that states creditors must evaluate candidates based on credit worthiness only, not on factors that have nothing to do with their ability to repay the debt. Privacy Disclosure Borrower's Certification & Authorization Certification Required Use Disclosure of Settlement Service Providers IRS 4506 Form (or IRS 8821 Form) Appraisal Disclosure A form executed by the applicants advising them of their rights to a copy of the real estate appraisal. Patriot Act Disclosure - The information requested and observed is for compliance with the requirements of Section 326 of the USA Patriot Act implementing customer identification and verification requirements. Product Narrative Disclosure (i.e. ARM) (if applicable) Any state-specific required disclosures

· · · · · · · ·

4.6 ·

FAIR CREDIT REPORTING ACT Release of information in a credit report is restricted from anyone other than employees of the mortgage company, the investor, the agency or company insuring or guaranteeing the loan. This restriction includes the seller, Realtor or any other third party. It is unlawful for anyone to disclose credit details to the borrower until the borrower has obtained a copy of the report from the reporting agency.

· ·

4.7 · ·

PREDATORY LENDING PRACTICES Michigan Mutual, Inc. is committed to doing all that it can to prevent the practice of abusive lending practices for borrowers who have blemished credit histories. MMI's Closing/Funding Department will review each loan before funding to verify that the total points and fees charged to the borrower do not exceed 5% of the mortgage amount as well as any other Federal or state laws or regulations, as applicable. This review is performed via an electronic third-party vendor to assure accuracy. Please note that the definition of "predatory lending" or "high cost loans" can change at any time.

·

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· · ·

All local, state and/or federal laws must be followed. Section 32 loans are not permitted. (See Section 5 under "High Cost Loans" for more information.). Michigan Mutual, Inc. will not purchase "high cost" loans as defined by any federal or state laws or regulations, as applicable.

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MICHIGAN MUTUAL, INC.

WHOLESALE MORTGAGE LENDING GUIDE 5.0 CLOSING & FUNDING

SECTION 5

5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 5.9 5.10 5.11 5.12 GENERAL CLOSING / FUNDING GUIDELINES CLOSING / FUNDING OPTIONS TABLE FUNDING PROCEDURES INSURANCE REQUIREMENTS WHOLE LOAN PURCHASE PROCEDURES DELIVERY DEADLINES IRS REPORTING (1098) HIGH COST LOANS MICHIGAN REQUIRED ESCROW RESERVES INDIANA REQUIRED ESCROW RESERVES CLOSING & SERVICING ADDRESSES POST CLOSING REVIEW

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5.1 · · · ·

GENERAL CLOSING/FUNDING GUIDELINES A loan must be "clear-to-close" by underwriting before funds can be sent to closing by our funding department. All loans must close in the name of the Michigan Mutual, Inc. If the Broker is preparing their own closing document, then the Broker is responsible for the proper preparation and execution of all closing documents. The Broker is responsible for full compliance with the Real Estate Settlement Procedures Act (RESPA) and Truth-in-Lending Act (Reg "Z") as well as all state and local requirements. All closing documents (notes, mortgages and/or deeds of trust) must be properly signed by the borrowers exactly as their names are printed on the document. Documents with white-out, erasures or lift-off tape will not be accepted. Corrections may be made by drawing a line through the error and having each of the parties who executed the document initial the correction. If there are multiple corrections, each must be initialed separately. Closing documents must be dated the date the last borrower signs unless state regulations dictate otherwise. Any notarization should be no later than the date of the last borrower's signature. Michigan Mutual, Inc. will not purchase loans secured by manufactured homes or Section 32 loans. All loans must close with MERS documentation.

· ·

·

· ·

First Lien Position The secured mortgage must be a valid first lien. Any judgments and/or liens must be satisfied and removed before Michigan Mutual will fund or purchase a loan. Subordinate Financing Subordinate financing must be approved by underwriting and secondary marketing prior to closing. A Subordination Agreement must be recorded with the mortgage and a "true certified copy" must be returned with the closing package. Fees for Third Party Services Charges to the borrower may not be "marked up" on services provided by third parties. The exact cost of the third party service must be shown on the HUD-1. Dower Rights

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A non-purchasing spouse may waive their dower rights if they choose, but will not be required to do so by underwriting. However, a non-purchasing spouse will be required to sign the Mortgage, TIL and Right of Rescission (if applicable). All state and local laws regarding community property, homestead rights, inheritance rights and dower rights must be followed. Power of Attorney The power of attorney must be specific to the transaction (stating the property address or legal description). The power of attorney form must be recorded prior to the mortgage and a "true certified copy" must be returned with the closing package The power of attorney must sign his/her own name as P.O.A. (they may not sign the name of the missing borrower except as included in the typed verbiage). Pre-payment Penalty A pre-payment penalty may not be assessed unless it is specifically allowed in the product description. Lock Expiration Date Please note that loans must close and disburse by the lock expiration date. If a loan does not disburse by the expiration date, it will need to be re-priced. (See Section 2 "Locks and Registrations", for our Relock & Lock Extension policy) Cancelled Closings You must notify Michigan Mutual, Inc. immediately if a closing is cancelled, postponed or will not disburse as scheduled. In addition, please instruct the closing agent to VOID our check and return it to Michigan Mutual as soon as possible. If the cancelled closing was funded via wire, those funds must be returned accordingly. Delivery Deadline All closed loan packages must be received in our Bingham Farms office within 2 business days of disbursement. (Refer to Table Funding & Whole Loan late delivery penalties in this document).

5.2

CLOSING / FUNDING OPTIONS Michigan Mutual, Inc. offers the following two closing/funding options: 1. Table Funding ­ Michigan Mutual prepares the closing package and Michigan Mutual sends the funds to the closing on the day of disbursement. You must close the loan in the name of Michigan Mutual, Inc.

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2. Whole Loan Purchase ­ Correspondent closes and funds the loan; Michigan Mutual reviews the closed loan package before purchasing the loan from the Correspondent. 5.3 TABLE FUNDING PROCEDURES

The following information must be faxed to (248-203-7155) or E-mailed to ([email protected]) at least 2 business days prior to disbursement: · · · · · · · · · Completed "Funding Request for Table Funded Loans" form Endorsed Note Both pages of the HUD-I Truth-in-Lending Disclosure Itemization of Amount Financed Initial Escrow Account Disclosure H.O. Insurance policy (for refinances ­ at least 90 days remaining) Flood Insurance or application (if applicable) Page 1 of Mortgage

Funds are sent by wire or overnight mail (draft) to the closing agent and may not be disbursed until the loan has been closed in accordance with all Michigan Mutual, Inc. funding instructions. (See Section 6, Funding Request for Table Funded Loans). Helpful Hints · · · · · · Be sure to use the nine (9) digit loan number which is on the Michigan Mutual, Inc. registration/lock form for your closing docs. Remember to close all loans with MERs documentation & the 18 digit MIN on the mortgage. Underwriting must approve any changes in the loan before funds can be sent to closing. If the Escrow Waiver Fee is being paid by the borrower, it must be included in the APR on the TIL. Site condos or detached condos must include a Condo Rider. Please make sure that the street address is consistent throughout the file. (We are referring to the words: Road, Street, Circle, N, E, S, W, etc.) INSURANCE REQUIREMENTS (Hazard and Flood) · · Purchase transactions must have a one-year policy along with a paid receipt. On all refinances there must be a minimum of 90 days remaining on the policy from date of disbursement. In the event that the borrower pays monthly we will require proof the policy has been paid for a minimum of 90 days or paid at closing.

5.4

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·

·

· · · · ·

The amount of coverage must be at least equal to the lesser of: o Replacement Cost coverage or similar verbiage as stated in the declaration page or 100% of the insurable value of the improvements as established by the insurer. Insurance policy should cover 100% of the insurable replacement cost of the project improvements, including the individual unit. Coverage does not need to include land, foundations, excavations, or other items that are usually excluded from insurance coverage. Be sure that the borrowers name(s) and subject property address are correct. The declaration page must include the policy number and the insurance company's name, address & phone number. Provide proof that the policy is paid in full through the expiration date. Maximum allowable deductible cannot exceed the higher of $1000 or 1% of the face amount of the policy. Mortgagee clause must read: Michigan Mutual, Inc., ISAOA 30300 Telegraph Rd, Ste 185 Bingham Farms, MI 48025

5.5

WHOLE LOAN PURCHASES

Loan File Submission All required documents must be included in the loan package to comply with the legal and regulatory warranties. The following address is used to submit files and documents: Michigan Mutual, Inc. 30300 Telegraph Rd, Suite 185 Bingham Farms, MI 48025 Attn: Funding Dept. Please include a completed "Whole Loan Funding Request" form (Section 6). If the package is accurate and complete, it will typically be reviewed 2 to 3 business days after receipt. Warehouse Bank Delivery of Notes under Bailee Sellers who fund loan closing transactions utilizing a warehouse line must provide the warehouse bank with the original Note to hold until the loan is sold to an investor. To avoid unnecessary suspension communication, Sellers should request their warehouse bank to ship the note to Michigan Mutual, Inc. on the day before they plan to deliver the loan file to Michigan Mutual, Inc. As a result, the Note and loan file should arrive at Michigan Mutual, Inc. on the same day. Notes shipped from a warehouse bank must be shipped with a Bailee Letter indicating the ABA number, account number, and information for the bank receiving the purchase proceeds wired by Michigan Mutual, Inc.

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MERS Michigan Mutual, Inc. is a participating member of the MERS System with Org ID #1003036 and requires all loans to close on MOM docs. Loans must be registered with MERS System within 24 hours of our purchase notification. The Correspondent must initiate the transfer of servicing and beneficial rights on the MERS System as per MERS guidelines. Note Endorsement The Note Endorsement must read: Without recourse, pay to the order of Michigan Mutual, Inc. · · Endorsements that utilize a power of attorney require a copy of the power of attorney in the file. A letter may be requested from the Correspondent (for non-FHA loans) giving Michigan Mutual, Inc. permission to type in any missing information for the endorsement on conventional loans.

Michigan Mutual, Inc. accepts original Allonges. The Allonge may only be used if there is no room on the front and back of the Note and if applicable state law permits the use of an Allonge. The Allonge to the Note must include the following information: · Borrower Name(s) · Loan Number · Property Address, including the unit number where applicable · Loan Amount · Closing Date Expiration Date Loans must disburse on or before the lock expiration date and be delivered to our Bingham Farms office no later than 2 business days after the lock expiration. (See Delivery Deadlines) Loans that are delivered later than 2 business days after lock expiration are considered late deliveries. All late deliveries will be re-locked according to Michigan Mutual, Inc. relock policy (see page 9 in Section 2 "Locks & Registration" in this manual.). Deficiency Notification Documents that are missing and/or incorrect are identified during the Pre-Purchase Review process. If Michigan Mutual, Inc. identifies that the loan as containing deficiencies, a Deficiency Notice will be sent to the Broker. Deficiency Cure Deadline

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Suspense deficiencies must be cured by the Deficiency Cure Deadline Date (latter of expiration date or 4 business days from notification) to avoid pricing adjustments as stated below: Number of Days Late 3-5 business days 6-10 business days 11-20 business days 20+ business days Deduction from Price 0.125 0.250 0.500 Reprice @ Worse Case Pricing

If loan deficiencies are not corrected after 20 business days, Michigan Mutual, Inc. is not obligated to purchase the loan and the file will be returned to the Broker. Right to Cancel/Right of Rescission Michigan Mutual, Inc. requires a three-business-day right of rescission for all refinance transactions in which it is required by TILA and/or state or local laws. Pre- and Post-Purchase Reviews Michigan Mutual, Inc. will perform reviews on loans delivered for purchase. These reviews can be pre-purchase or post-purchase. With respect to these reviews, and notwithstanding any delegated authority which may have been previously granted, Michigan Mutual, Inc. continues to reserve the right to reject any loan for purchase or demand repurchase, as applicable, if Michigan Mutual, Inc. determines that the loan is not of investment quality or does not otherwise conform to our delivery guidelines. Sellers are also required to repurchase loans intended for Fannie Mae or Freddie Mac if for any reason the intended agency rejects or refuses to purchase the loan. Michigan Mutual, Inc. will only purchase loans that it offers (see Loan Program Descriptions). The Correspondent is responsible for meeting all federal, state, and local high cost and predatory lending statutes and regulations in effect throughout the country, as well as FNMA, FHLMC and other agency guidelines addressing points and fees or other price limitations with respect to agency salable loans and the protections these High Cost Laws provide to further enable homeownership nationwide. Funding for Whole Loan Purchases Once a loan is reviewed and considered in acceptable condition, Michigan Mutual, Inc. will wire net funding proceeds and send a Purchase Advice to the Correspondent. (See Section 6 for the Whole Loan Funding Request form).

5.6

DELIVERY DEADLINES (Table Funded and Whole Loan Purchases)

Table Funded Loans

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The original closed loan package must be received in our Bingham Farms office by the end of 2 business days after disbursement. Loans that are received late or have deficiencies that are not cleared within a 3day grace period after problem notification date are subject to the following penalties: Number of Days Late 3-5 business days 6-10 business days 11-20 business days 20+ business days Whole Loan Purchases The original closed loan package must be received in our Bingham Farms office by the end of 2 business days after the expiration date shown on the "Registration/Lock" form. Loans that are delivered later than 2 business days after lock expiration are considered late deliveries. All late deliveries will be relocked according to Michigan Mutual, Inc. re-lock policy. Loans that are delivered prior to the expiration date, but contain deficiencies that are not corrected until after the expiration date are subject to the following penalties: Number of Days Late 3-5 business days 6-10 business days 11-20 business days 20+ business days Deduction from Price 0.125 0.250 0.500 Reprice @ Worse Case Pricing Deduction from Price 0.125 0.250 0.500 Reprice @ Worse Case Pricing

If loan deficiencies are not corrected after 20 business days, Michigan Mutual, Inc. is not obligated to purchase the loan and the file will be returned to the Broker. 5.7 IRS REPORTING (1098) Michigan Mutual, Inc. will report to the IRS only the interest collected from the borrower at closing (table funded) or the interest collected from the borrower after the loan is purchased from the Broker (whole loan purchases). The Broker is responsible for reporting to the IRS any origination and/or discount points collected from the borrower. In addition, on whole loan purchases, you must also report the per diem interest collected from the borrower at closing and interest from any payments received by you prior to the sale of the loan to Michigan Mutual, Inc.

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5.8

HIGH COST LOANS Loans will not be eligible for purchase by Michigan Mutual, Inc. if the total points and fees charged to the borrower(s) are greater than 5% of the mortgage amount. Please note that the definition of "high cost" loan can change at any time due to the enactment of anti-predatory lending regulations in local, state or federal jurisdictions. Any state or local anti-predatory lending regulations or laws must be followed. Section 32 loans will not be purchased by Michigan Mutual, Inc.

All loans will be tested through a third-party vendor for compliance. Depending on the findings, the amount of fees charged may change to comply with governmental regulations.

5.9

THIS SECTION LEFT BLANK

5.10

THIS SECTION LEFT BLANK

5.11

CLOSING AND SERVICING ADDRESS INFORMATION

Address for payments: MICHIGAN MUTUAL, INC. P.O. Box 610246 Port Huron, MI 48061-0246 Phone: 866-218-2411 Address for overnight payments: MICHIGAN MUTUAL, INC. 800 Michigan Street Port Huron, MI 48060 Mortgagee Clause for hazard & flood insurance MICHIGAN MUTUAL, INC., ISAOA 30300 Telegraph Road, Suite 185 Bingham Farms, MI 48025 Phone: 248-203-1340 Address for tax bills: MICHIGAN MUTUAL, INC.

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30300 Telegraph Road, Suite 185 Bingham Farms, MI 48025

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Return closed packages to: MICHIGAN MUTUAL, INC. 30300 Telegraph Road, Suite 185 Bingham Farms, MI 48025 Phone: 248-203-1340 Address for delivery of Final Docs: MICHIGAN MUTUAL, INC. Attn: Final Docs 800 Michigan St Port Huron, MI 48060

TOLL FREE NUMBER FOR LOAN SERVICING: 866-218-2411

5.12 Note · ·

POST CLOSING REVIEW

Must close in the name of Michigan Mutual, Inc. Must have original signatures (signed as typed) of all borrowers.

Mortgage / Assignment · A fully executed Mortgage or Deed of Trust must be recorded on every loan with a complete true certified copy included in the closing package.

MERS Documents · · Michigan Mutual, Inc. requires that you use either the MERS Mortgage or the MERS assignment (but not both). The MERS Mortgage includes specific language that shows MERS as the Original Mortgagee and is often referred to as a MOM document (MERS as the Original Mortgagee). When using the MERS Mortgagee, do not record an Assignment. Doing so will cloud title. The MERS Assignment contains special language that assigns the loan to MERS as the nominee for Michigan Mutual, Inc. It may only be used when the loan has been closed with a standard Mortgage form.

·

Riders · If a Rider (condo, PUD, ARM, etc.) is required, it must be recorded with the Mortgage. A true certified copy of all Riders must be returned with the original

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closing package. Please note that the applicable "rider box" must be checked on the Mortgage so that the Rider is made a part of the Mortgage. HUD-1 · Must receive original signed by all borrowers and the closing agent. · All P.O.C. items must be expressed on page 2. · Any funds payable to you from Michigan Mutual, Inc. (the amount over par) must be disclosed in the 800 series (page 2) of the HUD-1 as "Yield Spread Premium" or "Service Release Premium". The maximum net Yield Spread Premium allowable is 3 points (103.000) for conventional loans and 4 points (104.000) for FHA loans. · All points collected from the borrower(s) must also be disclosed in the 800 series of the HUD-1. Interest charged at closing Per Diem interest is based on a 365-day year. The per diem interest collected at closing is charged from the disbursement date up to and including the final calendar day in the disbursement month. Interest Credit Michigan Mutual, Inc. will permit an interest credit to the borrower(s) at closing on loans that disburse on or before the fifth (5) calendar day of the month. Escrows An escrow account for the payment of Taxes, Hazard Insurance and Flood Insurance (when applicable) must be established on all loans unless waived by Michigan Mutual, Inc. The amount of escrows collected at closing plus the amount included in the monthly payments must be sufficient to make the payments when they become due. Conventional Mortgage Insurance Do not charge an "up front" payment for mortgage insurance at closing. Do not cushion for mortgage insurance on the HUD-1 or the Initial Escrow Disclosure. Do disclose the monthly premium amount in the 1000 series (page 2) of the HUD-1. Taxes Proof of paid taxes must be provided on all closings that disburse on or after the tax due date. If taxes are due but the tax bill is not available on the date of disbursement, provide proof that sufficient funds are being held by the title company to cover the projected tax bill. A tax information form must be completed by the closing agent and returned with the closing package. 5.12.1 POST CLOSING CHECK LIST

For your information and convenience, a copy of the Post Closing check list for Michigan Mutual, Inc. is included in Section 6 of this document. The check list identifies

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the closing documents and specific requirements that our Post Closing Department will be reviewing when the original closed package is received. If any deficiencies are present you will be notified immediately by phone and by fax. (See Delivery Deadlines in this manual for the allowable time frame to cure deficiencies.)

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MICHIGAN MUTUAL, INC.

WHOLESALE MORTGAGE LENDING GUIDE 6.0 EXHIBITS ­ FORMS AND LISTS

SECTION 6

6.1 6.2 6.3 6.4 6.5 CONVENTIONAL UNDERWRITING STACKING ORDER FHA UNDERWRITING STACKING ORDER FUNDING REQUEST FOR TABLE FUNDED LOANS WHOLE LOAN FUNDING REQUEST POST CLOSING CHECKLIST

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