Wholesale Partner Announcement
At MSI…Your Interest Is Our Priority! Issue Date 1/07/09 Effective Date Varies WPA 2009-002
Pull Through Policy, Tax Transcripts, Appraisal Forms and Closing Protection Letter
Purpose This communication announces the following: New Pull-Through Policy Revision to minimum appraisal form requirements Revision of our 4506-T and Tax Transcript policy Clarification regarding Closing Protection Letters See the individual topics for details.
Effective Date
Pull-Through Policy
MSI is pleased to announce, effective 1/01/09 a new Pull-Through Policy that provides incentives for those Sellers that sell at least $1 Million in loans to MSI during the “tracking period” and exceed MSI’ s Pull Through benchmark of 85.00%. The following policy will be added to the Pricing Chapter of the Wholesale Seller Guide. Contact your Account Executive with questions: Definitions MSI defines fall-out as any loan locked (committed) and not delivered for any reason. Pull-Through is the percentage of the dollar amount of loans committed that are delivered as promised. Pull-Through is calculated as the percentage of the dollar amount locked in any calendar month against the dollar amount funded/purchased. MSI may charge a per-loan price adjustment based on the Seller’s monitored pull-through.
Benchmarks The following matrix outlines the Pull-Through benchmarks and resulting fee/incentive structure. The Tracking Period is calendar quarters. The program pays current for past performance. See Pull-Through Program Fee/Incentive Example for details.
Pull Through Percentage ≥ 85.01% 55.01 – 85.00 50.01 – 55.00% ≤ 50.00%
Price Adjustment Per Loan + 0.125 – Excellent Range No Adjustment – Expected Range (-0.125) – Poor Range (-0.250) – Unacceptable Range Continued on next page
WPA-09-002 This communication is intended for use only by mortgage professionals and business partners of Mortgage Services III, LLC (MSI).
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Wholesale Partner Announcement
At MSI…Your Interest Is Our Priority! Issue Date 1/07/09 Effective Date Varies WPA 2009-002
Pull Through Policy, Tax Transcripts, Appraisal Forms and Closing Protection Letter, Continued
Pull-Through Policy, Continued Pull-Through Program Fee/Incentive Example Quarter Follow-Through Analysis Quarter ID and Payment Months Month Date Payment starts around Business Day 5 after Analysis 1 Jan; Feb; March April May 15 For Quarter 1 performance, pay/charge in: May; June; July 2 April; May; June July Aug 15 For Quarter 2 performance, pay/charge in: Aug; Sept; Oct 3 July; Aug; Sept Oct Nov 15 For Quarter 3 performance, pay/charge in: Nov; Dec; Jan 4 Oct; Nov; Dec Jan Feb 15 For Quarter 4 performance, pay/charge in: Feb; March; April 1 Jan; Feb; March April May 15 For Quarter 1 performance, pay/charge in: May; June; July Etc. The program continues on a rolling calendar based on this quarterly example until terminated by MSI. (MSI does reserve the right to cancel this program at any time without prior notice.) Notes: Sellers must commit (lock) a minimum of $1 Million in a tracking period to be monitored (and paid any incentive) for “pullthrough”. Newly approved Sellers will be included in the program upon the commitment of $1 Million and will follow the quarterly calendar. Fees/Incentives will be assigned at time of commitment and charged/paid on individual loans at time of purchase in the net funding amount. MSI reserves the right to suspend selling privileges for any Seller that meets the Poor/Unacceptable range for Pull-Through for consecutive 2-Quarters Tracking Periods.
Minimum Appraisal Forms
Effective Immediately, with loans locked on/after 1/07/09, the following minimum appraisal form guidelines apply: MSI will no longer accept a Form 2070 or Form 2075; the Form 2055 is the minimum appraisal Form accepted by MSI.
Continued on next page
WPA-09-002 This communication is intended for use only by mortgage professionals and business partners of Mortgage Services III, LLC (MSI).
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Wholesale Partner Announcement
At MSI…Your Interest Is Our Priority! Issue Date 1/07/09 Effective Date Varies WPA 2009-002
Pull Through Policy, Tax Transcripts, Appraisal Forms and Closing Protection Letter, Continued
Background In this current economic environment, unfortunately we are seeing a sharp increase in fraudulent income documentation and other income schemes, including but not limited to: Using sophisticated software to create professional-looking income documentation. Borrowers amending tax returns in an attempt to bypass 4506-T controls.
4506 Transcripts
Effective immediately. (MSI has already implemented this process.) Closed Loans (not underwritten by MSI) delivered for funding/purchase: MSI has instituted the policy of pulling tax transcripts and a Record of Account on all credit-qualifying loans received for loan funding/purchase. This practice will help identify the activities that can be signs of suspicious activity. Receipt of the transcripts from the IRS will increase the funding time with MSI a minimum of 3 business days from receipt of the closed loan file. MSI will accept (and encourages) all Sellers to expedite their funding by including a copy of the transcripts (and Record of Account) for the most recent 1-year period (for salaried employees) or 2-year period (for self-employed) from the IRS in each loan file (first document in the credit package). The Record of Account must be included and can be ordered by simply checking the box for Record of Account in section 6 of the Form 4506-T. If the transcripts are included in the closed loan package, to ensure that MSI sees the transcripts (and does not order), place the transcripts and the Record of Change as the first documents in the Credit Package. The transcripts should be requested and reviewed as part of the underwriting and/or pre-closing quality control audit. (Independent verification of the validity of the income used to qualify is a lender’s best protection against fraud.) Loans submitted to MSI for underwriting: Loans submitted to underwriting without the tax transcript documentation will be suspended while MSI orders the tax transcripts and Record of Account. MSI will accept tax transcripts and Record of Account (for the most recent 1-year period, salaried; 2-year period, self-employed) ordered by the Seller and included in the underwriting loan package. (Providing the tax transcripts in the loan file submitted for underwriting will eliminate underwriting delays.) Important Note: For post-purchase quality control, it is still required that a 4506-T be dated and signed by the borrowers at loan closing.
Continued on next page
WPA-09-002 This communication is intended for use only by mortgage professionals and business partners of Mortgage Services III, LLC (MSI).
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Wholesale Partner Announcement
At MSI…Your Interest Is Our Priority! Issue Date 1/07/09 Effective Date Varies WPA 2009-002
Pull Through Policy, Tax Transcripts, Appraisal Forms and Closing Protection Letter, Continued
Amended Tax Returns MSI has the following “policy” regarding amended tax returns (which are identified in the Record of Account). The IRS permits tax returns to be amended up to 3-years after the initial tax-filing year. If tax returns have been amended, the underwriter (and MSI) must be able to document the following, via the tax transcripts obtained using the 4506-T: The IRS has processed and accepted the amended tax returns; that information is contained in the transcripts. All outstanding liabilities and/or tax penalties have been paid; the transcripts show no outstanding money owed to the IRS. Additionally, the underwriter must carefully review any increased income to insure its validity, and the loan file should contain: Documentation to support receipt of the income as well continuation of the income (reasonably for at least 2-years in the future). The underwriter in these cases must make every effort to prudently document the added income and the reasonable expectation of continuation.
Closing Protection Letters
Effective immediately (MSI is currently requiring this) for loans closed by the Seller, MSI requires that each loan include a copy of the transaction-specific Closing Protection Letter (CPL) (or Insured Closing Letter) in each loan delivered for funding/purchase. The following quote from an industry risk document outlines the reason for requiring this letter. “A lender who wants the title insurer to be responsible for the agent's acts in connection with escrow closing activities and services must separately contract with the title insurer for such additional protection by obtaining an "Insured Closing Letter" or "Closing Protection Letter”.
Seller guide
The applicable updated Seller Guide chapters will be posted no later than January 7, 2009. Please contact your Wholesale Account Executive with any questions.
Questions
WPA-09-002 This communication is intended for use only by mortgage professionals and business partners of Mortgage Services III, LLC (MSI).
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