SMART CORRESPONDENT PROGRAM
A SMART-Correspondent is a customer who has been approved to close loans in their name, utilizing their own funds with
SMART Options for underwriting and closing document preparation outlined below. The Correspondent is not required to
disclose yield spread premium.
The difference between a SMART-Correspondent and true Correspondent is a true Correspondent, at their own expense;
submits the loan to a staff or company paid underwriter, obtains the approval, prepares the closing documents, obtains final
documentation including recorded security instruments and final title policies, and provides any corrections to final
documentation, while Coastal absorbs most if not all of the “correspondent” expenses for SMART Correspondents.
SMART-Correspondents are preferred customers with the financial backing to fund their own products.
Coastal does not collect any fees upfront. All other monies are distributed to the SMART-Correspondent including escrows,
interim interest, MIP Premium, VA Funding Fee and all fees they have requested we collect from them.
The closing package is reviewed within 72 hours of receipt. After the closing package is reviewed in Charlotte, the SMART-
Correspondent is Sent a “FUNDING STATUS REPORT” which lists any outstanding items required prior to us “funding” them.
Once the SMART-Correspondent has sent all required items, post-closing sends them a “PURCHASE ADVICE” which breaks
down the monies we will wire to the SMART-Correspondent to “fund” the loan.
Unpaid Principal Balance
Less Administration Fee (Fee Schedule posted @ www.coastalfunding.biz - Help – Closing)
Less MERS Registration Fee
Less Flood Certification (unless correspondent orders flood)
Plus SMART-Correspondent Compensation
Less SMART-Correspondent Discount
Plus Interim Interest
Less Interest Credit
Less FHA UFMIP
NOTE: VA Funding Fee must be paid by Lender in a Correspondent Transaction (Loan Guaranty
Certificate must also be obtained by Lender & provided to Coastal upon receipt (this is due to
limitations within VA’s electronic registration)
Plus MIP Credit
Less Escrow Balance
Less Buydown Subsidy (if not included in pricing)
Less Financed Discount Points
For a Total NET FUNDING AMT
SAVINGS - SMART VERSUS TRUE CORRESPONDENT
• Compare the savings to a True Correspondent transaction:
o Shorter Lock Terms. You must disburse by expiration date in lieu of delivering by expiration date.
o Tax Service Fee
o Quality Control
o Cost of Running AUS
o Underwriting Fees
o Underwriting Liability
o MERS Registration
o Delivery Costs
o Cost of Recording Assignment
o Expense for obtaining Trailing Documents and resulting late penalties if not obtained in a timely manner
o Government Loans: Remittance of Fees, Insuring, and Liability if not insured in a timely manner
o Additional Representations and Warrants
11-19-09 F:/Smart Correspondent/SMART Overview – External 1
SMART CORRESPONDENT PROGRAM – Details
1. Submit your file to Coastal for Underwriting
2. After you receive your approval, Complete & Fax the SMART-Correspondent Fee Sheet & Closing
Package Request posted on www.coastalfunding.biz - Help – SMART Correspondents
3. Coastal prepares the closing package
4. Closing package is returned to Coastal by the Closing Agent
5. If applicable, Closing Agent is instructed to send the Note to your Warehouse Bank
6. Coastal reviews the closing package within 72 hours of receipt of package
7. Coastal sends you either:
a. Deficiency notification – Lists all items required for funding
b. Purchase Advice
NOTE: If you close VA (Dept. of Veterans Affairs) loans as a SMART correspondent:
1. Provide evidence Funding Fee Paid
2. Submit loan to VA for Loan Guaranty
3. Provide Coastal with Loan Guaranty Certificate
T.I.D.E. Status Notifications:
1. Disbursed – When Coastal confirms loan has closed
2. Credit Ready – When Coastal Assigns to Post-Closing
3. Post-Closing Received – When Coastal Receives Original Closing Package
4. Collateral Received – When Coastal Receives Original note
5. Investor Suspended – Deficiencies Identified – Funding Delayed. Coastal will send you a Funding Status
Report Notification for your action.
6. Post-Closing Complete – When all Deficiencies have been cleared
7. Collateral Approved – Funds have been requested
8. Funded – Funds have been wired
Contact Information for Reimbursement of Funds:
If you have NOT received notification regarding deficiencies or funding authorization within 72 hours of
receipt of the closed loan package by Coastal Charlotte, please e-mail PostClosing@coastalmortgage.net for
status. Include the Application #, Borrower Last Name, Property Address and Closing/Disbursement dates.
If No Deficiencies, loan will normally fund within 4 business days of our receipt of original note.
We can also assist you in becoming an FHA Approved Loan Correspondent –
See details at www.coastalfunding.biz - HELP – FHA Sponsorship
11/24/09 F:/SMART Correspondent/SMART Overview-Details-External 1
SMART CORRESPONDENT APPLICATION PACKAGE CHECKLIST
COMPLETE & RETURN AS COVER SHEET W/SUBMISSION DOCUMENTATION PACKET
CFG Account Executive: ________________________________________________
Coastal Funding Group conducts a variety of quality checks on the principal officers. Such checks may include, but
are not limited to: References, Credit Report, BackGround Searches, Financial Strength, etc. Coastal Funding Group
seeks relationships that meet high ethical and quality standards. Contact Your Account Executive if you have any
questions or concerns regarding qualifications.
√ Item Required
Cover Letter With Company Description (N/A if approved as Broker) √
Completed Correspondent Lending Application √
Completed Correspondent Agreement √
If you wish to participate - Include $100 Sponsorship Fee payable to Department of
Veterans Affairs OR Evidence of VA Prior Approval Authority.
Resume(s) of Principal Officer(s) – Minimum of 2 years “A” paper loan origination
Reference Information from Two Investors
(n/a if your company is currently approved with Coastal as a Broker)
Copy of Filed Articles of Incorporation (Corp) or Articles of Organization (LLC) including
Any Amendments to Articles √
Previous Year Financials – N/A State or Federally Chartered Financial Institution or HUD
Approved Mortgagee or HUD Approved Correspondent
Signed YTD Balance Sheet and P&L – N/A State or Federally Chartered Financial
Institution or HUD Approved Mortgagee or HUD Approved Correspondent
Declarations Pages of Insurance Policies √
Errors & Omissions or General Liability - $300,000 Minimum Coverage Amount √
Fidelity Bond Coverage - $300,000 Minimum Coverage Amount √
Quality Control Process & Procedures for Mortgage Lending - N/A State or Federally
Chartered Financial Institution
Completed E-Mail and Fax Consent Form √
Wiring Instructions √
Completed & Authorized Corporate Resolution (N/A – LLC) √
Signed Consequences of Loan Fraud √
Copy of Current License(s), State Certification or Exemption for All States for which you
Evidence of CURRENT Surety Bond Coverage √
Signed Acknowledgment (Coastal’s Instructions to Warehouse Bank) N/A if closing with
Signed Acknowledgment of Expectations √
Acct Executive: ________________
Correspondent Lending Application
Company Name: _________________________________________________________________
Street Address: ________________________________________________________________
Mailing Address (if different): ____________________________________________________
City: _________________________________ State: ________ ZIP: _________________
Phone: ________________________ Fax: _________________________________
Please indicate your Company's Classification:
___ Mortgage Banker ___ Savings & Loan ___ Thrift
___ Finance Company ___ Commercial Bank ___ Credit Union
___ Other: Describe: _____________________________________________________________
Tax Id: _______________________________ Organized Under Laws of: _______________
Date f In p ti n:
D t of Incorporation: ___________________ Fi l Year End : _______________________
Fiscal Y Ends:
Parent Company: ________________________________________________________________
Principal Contacts: Name: Title: Phone:
Primary Contact: ________________________________________________________________
Approved With: Yes No Seller Identification # Approval Date
WAREHOUSE LINE: Please provide the following information regarding your warehouse line(s):
Institution: Amount of Line: Contact Name: Contact Phone Number:
ORIGINATION EXPERIENCE SUMMARY
Please provide the information regarding your company's mortgage loan volume.
Please provide the following information regarding the applicant's origination history:
Fiscal Year Agency Eligible # Agency Eligible $$ ALT A # ALT A $$ SubPrime# SubPrime $$
Prev Yr 1
Prev Yr 2
2. Investors - Please provide performance summary reports from each.
Provide the information on the investors that purchased the four largest dollar amounts of your mortgage
loans sold in the last 12 months.
Investor # of Loans Principal Balance Contact Phone Number:
Provide the following information for your company's insurance coverage:
Type Amt of Coverage Carrier Expiration
Errors & Omissions Coverage
Fidelity Insurance Coverage
General Liability Coverage
1. Which Mortgage Origination Software do you Use? _____________________________________
2. Do you utilize (check all that apply) ___ DU on the Web ___ DO on the Web
___ DirectSubmit ___ LP on the Internet ___ eMagic ___AU Central
___ Other: _____________________________________________________________
3. What is your web address? ______________________________________________________
* If Yes - Please explain Yes No
Was your company ever suspended from selling or servicing mortgages by any investor?
Was your company ever suspended by FHA, VA, FNMA, or FHLMC or MI Company?
Has your company had unfavorable findings (including, but not limited to a finding that the company
violated any applicable law with regard to mortgage operations or servicing activities included in any
audit, examination, or report by FHA, VA, FNMA, FHLMC, or any State or Federal reglatory or
Has any officer, director, or principal been affiliated with any company/business that was
suspended by FHA, VA, FNMA, FHLMC and/or subject to any voluntary or involuntary bankruptcy
Has your company or any officer, director, or principal of your company ever been sued or been a
party in a lawsuit in which it is alleged that your company violated applicable law(s) governing
mortgage loan origination or servicing?
The undersigned declares that the statements set forth herein and in any documents provided to Coastal Mortgage Services, Inc.
d/b/a Coastal Funding Group, in connection with this application are true and factual to the undersigned's best knowledge, after due
inquiry. The undersigned hereby authorizes Coastal Mortgage Services, Inc. d/b/a Coastal Funding Group to obtain verification of
the information disclosed from any lawful source and authorizes Coastal Mortgage Services, Inc. d/b/a Coastal Funding Group to
obtain any other information it may deem necessary about the named company and its principals from any sources, including but not
limited to any investor, agency, credit bureau or PMI company.
COMPANY NAME: __________________________________________________________________________
SIGNATURE OF CORPORATE OFFICER: _____________________________ DATE: ___________________
E-MAIL ADDRESS: _________________________________________________________________________
_____ Correspondent Agreement - Executed
_____ Copy of Agency Approvals (FHA, VA, etc.)
_____ Resume's of Principal Officers
_____ Most Recent Two Years Audited Financial Statements
_____ Declarations Page(s) of Insurance Policies
_____ Errors & Omissions
_____ General Liability
_____ Other: ________________________________
_____ Copy of Quality Control Program Guidelines
_____ Wiring Instructions
_____ Corporate Resolution Stating the Persons with Authority to Sell Loans & Sign Documents
_____ Enduring POA for Signing of Assignments
_____ Copy of Current License, State Certification or Exemption for all States as applicable.
_____ Acknowledgment of Expectations
For Purchase and Sale of Residential Mortgage Loans
This Correspondent Agreement (“Agreement”) is made and entered into as of the _____ day of ______________,
______, by and between Coastal Mortgage Services, Inc., d/b/a Coastal Funding Group and Coastal Mortgage
Services, Inc. d/b/a Coastal Home Equity (“CMS”), and ____________________________________________
(“Correspondent”), a ______________________ __________________________________.
(State) (i.e., corporation, LLC, Thrift, Bank, etc.)
Coastal Mortgage Services, Inc. will be referenced collectively throughout this document as “CMS”.
This Agreement is entered into with reference to and includes the following:
A. CMS is engaged, among other things, in the business of originating, processing, closing, funding and selling
mortgage loans. CMS operates its wholesale lending business as a d/b/a, namely Coastal Funding Group and as a
d/b/a namely Coastal Home Equity. The d/b/a companies operate a correspondent lending operation pursuant
to which CMS buys residential mortgage loans, secured by real property, from various Correspondent sellers.
B. Correspondent is engaged in the business of originating, processing, closing and selling residential mortgage
C. Correspondent, as applicable is a mortgagee approved, and will remain approved, by the
_____ Federal Housing Administration of the Dept. of Housing and Urban Development (FHA).
_____ Department of Veterans’ Affairs (VA)
_____ Federal National Mortgage Association (Fannie Mae)
_____ Federal Home Loan Mortgage Corporation (FHLMC)
and/or any governmental or quasi-governmental agency or insurer which is engaged in the mortgage lending
industry. In the event that any other approval is required to be obtained in order to originate, process, close,
fund, or service any Loan (hereinafter defined), Correspondent agrees to take whatever action is required to
obtain such approval.
D. CMS desires from time to time to purchase from Correspondent, and Correspondent desires to sell, one-to-
four family, first and second lien residential mortgage loans (individually a “Loan”) made to individual borrowers
(individually, a “Borrower”), closed in Correspondent’s name, on a servicing released basis, upon such terms and
conditions as set forth in this Agreement and as required by: rate sheets, written updates provided or posted
on the website: www.coastalfunding.biz (“Website”), underwriters, closing instructions, and post-purchase
1/13/2006 Page 1 of 10 Initials _________
E. The purchase price for the Loan shall be an amount equal to:
Principal Balance + Any Service Release Premium – Any Correspondent Discount +/- interest adjustment –
Administration Fee (includes: UW Fee, Doc Prep, Tax Service, Flood Certification, Commitment Fee and MERS
Registration Fee) – Escrow Account Balance – Buydown Subsidy – Tax Service Fee – Life of Loan Flood
Certification Fee +/- any other adjustments as necessary. NOTE: Correspondent will net fund the closing
agent for Tax Service Fee and Flood Service Fee and Coastal.
CMS will act as an Agent of the Correspondent by preparing the Closing Documentation and reviewing all Closing
Documentation from the Closing Agent. CMS will issue a funding number to the Closing Agent upon
review/approval of all documentation required for review/approval prior to disbursement. CMS will not
purchase a loan from Correspondent until all required documentation is received.
F. MARI and MIDEX release
Correspondent understands that CMS performs quality control reviews of the Mortgage Loans that
Correspondent submits to CMS. Correspondent hereby consents to the release of information about any loan
application that is believed to contain misrepresentations and/or irregularities. Correspondent agrees and
gives its consent that it and its employees may be named as the originating entity or loan officers on such
loans, whether or not Correspondent or its employees are implicated in the misrepresentations and/or
irregularities. Correspondent hereby releases and agrees to hold harmless CMS, Mortgage Asset Research
Institute, Inc. (“MARI”), all Mortgage Industry Data Exchange (“MIDEX”) subscribers and any trade
associations that endorse the MIDEX system from all liability for damages, losses, costs, and expenses that
may arise from the reporting or use of any information submitted by CMS or any other MIDEX subscriber to
MARI, recorded in the MIDEX system, and used in any way by CMS or any other MIDEX subscriber.
In consideration of the above recitals and the mutual covenants and promises contained herein, and intending to be
legally bound, the parties do hereby agree as follows:
This Agreement shall be effective as of ___________________, and shall continue until terminated by either
party. (CMS Use)
a) This Agreement may be terminated by either party without penalty or cause upon 15 days written notice to
other party. Termination shall not affect the obligations of Correspondent with respect to Section 3(f), 6,
7, 8, 9, 10, and 14.
b) In addition, CMS or any of its affiliates shall have the right to terminate this Agreement immediately by
notice in writing to Correspondent in the event of any of the following:
i) Correspondent defaults in any of its obligations under this Agreement or any other Agreements
between Correspondent and CMS, and such default is not cured within ten (10) business days after
notice to Correspondent of such default.
ii) Correspondent fails to deliver acceptable loans to CMS, under the terms and conditions of this
iii) Correspondent shall initiate or suffer any proceedings of insolvency or reorganization under the
bankruptcy code, or other federal or state receivership laws, or make any common law assignment for
the benefit of creditors, or be unable to pay its debts as the same become due;
iv) Correspondent assigns or attempts to assign its rights and obligations hereunder;
1/13/2006 Page 2 of 10 Initials _________
v) Correspondent by operation of law becomes unable to faithfully perform its duties pursuant to this
vi) CMS or any of its affiliates, suffer any involuntary sale or execution upon any interest in any Loan
purchased hereunder and such is the result of any act or omission (intentional or unintentional) on the
part of the Correspondent.
c) Termination shall not affect the obligations of Correspondent with respect to any event occurring before
termination. However, termination of this Agreement, except under Paragraph 2(a), shall be deemed to be
for or with cause, and CMS, at its option, shall have the right to cancel any open Loan registration
confirmation(s) or other commitment Agreements.
d) CMS may immediately suspend all registrations and lock-ins and may refuse to fund any or all Mortgage
Loans, pending the cure, to CMS’s satisfaction, of any breach of this document.
e) Correspondent agrees that in the event of a breach by Correspondent of this Agreement or any other
Agreement between CMS, or any of its affiliates, and Correspondent, or upon the default of Correspondent
under any instrument payable to CMS, or any of its affiliates, or upon failure of Correspondent to pay any
amounts due CMS, or any of its affiliates, CMS, or any of its affiliates, shall have the immediate right to
set-off from and against any amounts otherwise due or payable Correspondent.
3) SERVICES OF CORRESPONDENT
a) Correspondent will assist prospective Borrowers in completing credit applications and such other documents
in the form designated by CMS and as CMS may require for Loans that meet the then current underwriting
standards and loan policies of CMS. Correspondent will promptly submit all information generated pursuant
to such application to CMS for its review and approval.
b) Correspondent is NOT authorized as a delegated underwriter and must send all loans to Coastal Funding
Group or an authorized contract underwriting service for underwriting approval. Correspondent shall obtain
real estate appraisals only from those appraisers, which are licensed or certified according to state law
requirements and do not appear on Non-Approved Appraiser list posted on the Website. All appraisals
must meet secondary market requirements and in addition, satisfy all requirements mandated by state and
federal law. Correspondent will not be responsible for errors in determining loan eligibility according to
CMS guidelines for approval decisions made by underwriting provided that information and documentation
provided by Correspondent to such underwriter does not otherwise violate any terms, conditions,
representation or warranties under the Correspondent Agreement.
For any loan program requiring Automated Underwriting Findings via Loan Prospector® or Desktop
Originator®, the Correspondent will provide such findings with their loan package for underwriting and
make such corrections as required by the underwriter via resubmission to the appropriate Automated
System. CMS posts on the Website, whether CMS or the Correspondent will be responsible for the cost of
the Automated Underwriting Decision as well as the Automated options available to the Correspondent.
c) Correspondent, at its own expense, shall furnish to CMS, all credit data, financial statements, real estate
information, and such additional items as CMS, from time to time, may require. In addition, Correspondent,
at its own expense, shall perform such other functions as CMS may require to close, fund, and complete the
d) Prior to purchase of the Loan by CMS and after purchase, if required, Correspondent agrees to execute
such assignments, endorsements, or other documentation necessary to transfer ownership of the Loan to
1/13/2006 Page 3 of 10 Initials _________
CMS and/or such other assignee as may be designated by CMS, concurrent with the closing of such Loan or
as CMS may otherwise direct. CMS requires an executed Enduring Power of Attorney for Assignments.
This document allows an officer of CMS to assign loans from Correspondent to CMS. The CMS officer will
sign Correspondent’s officer’s name (per the Enduring Power of Attorney) to Note Endorsements or any
other document required to complete the loan assignment.
e) Correspondent shall close and disburse the Loan no later than the Rate Lock Expiration provided by CMS
for the particular Loan or be subject to repricing by CMS. Correspondent shall deliver to CMS all final
Loan documents required by CMS prior to the expiration date of the Funding Status Report or be subject
to repricing by CMS.
f) If Correspondent fails to make proper and timely required delivery in connection with any registration or
reservation (“registration”), the parties agree and acknowledge that CMS, or any of its affiliates, will
suffer damages, including, but not necessarily limited to, the decline in market value of the Loan,
underwriting costs, document preparation costs, investment losses, obligations to investors to whom a
registered Loan has been committed, and legal costs incurred as a result of non-delivery and enforcement
of CMS’ rights. Correspondent shall be liable for all such damages and other damages incurred by CMS, or
any of its affiliates, in addition to any other rights, remedies or damages of CMS at law, in equity or under
g) All loans which Correspondent desires to sell to CMS, or any of its affiliates, under this Agreement must
be registered with CMS. Following acceptance by CMS, or any of its affiliates, of a registered Loan,
Correspondent shall be obligated to deliver the Loan to CMS in accordance with the terms and conditions of
4) OBLIGATIONS OF CMS
Subsequent to Loan purchase, CMS may reverify appraisals, credit reports, and other information as it may
determine necessary at CMS’ expense in order to assure itself of the correctness of information in each Loan file.
Correspondent may retain, to the extent permitted by state, federal and local law and the requirements of the
applicable investors, a processing fee, an origination fee and all lawful discounts collected in excess of the CMS
quoted price. CMS may withhold, set off, and apply any fees otherwise due and payable to Correspondent to any
obligations of Correspondent to CMS, or any of its affiliates. In no event shall any compensation be paid to
Correspondent unless a loan is funded by CMS or any of its affiliates. CMS has the right to withhold any fees or
payments until the Loan file is complete and Correspondent has performed its obligations hereunder.
6) APPLICABILITY OF REPRESENTATIONS AND WARRANTIES
Each Loan shall be subject to all representations and warranties specified in this Agreement, including any other
documents or conduct of the parties with respect thereto, including without limitation, CMS, its affiliates,
successors and assigns. This Agreement shall exclusively govern the rights of the parties hereto despite the fact
that the Loan will be subsequent to this Agreement. Each representation and warranty herein shall survive the
purchase of a Loan and shall insure to the benefit of CMS, its affiliates, successors and assigns.
1/13/2006 Page 4 of 10 Initials _________
7) CORRESPONDENTS REPRESENTATIONS, WARRANTIES AND COVENANTS REGARDING LOANS
Correspondent covenants, represents and warrants to CMS that:
a) It is a duly organized entity, validity existing and in good standing under the laws of the jurisdiction of its
formation stated in the first paragraph of this Agreement and it has power and authority to engage in the
business of originating loans where the property securing each such mortgage loan is located and that it has
taken all required corporate action to enter into the Correspondent Agreement and to perform the
transactions contemplated thereunder and hereunder, and having done so, it has full power and authority to
enter into the Correspondent Agreement, and any other documents which may be contemplated by the
Correspondent Agreement, to perform all of its obligations under the correspondent Agreement and to
consummate and carry out all other actions contemplated by the Correspondent Agreement. Correspondent
and each of its directors, officers, agents, and employees have acquired and will, during the term of the
Correspondent Agreement, maintain all necessary licenses and qualifications to transact its business.
Correspondent shall submit to CMS copies of all such licenses on an annual basis or as requested by CMS.
b) Correspondent agrees to make current audited financial statements available to CMS upon request, and in
any case, within ninety (90) days after the completion of each fiscal year of Correspondent. CMS will rely
on these statements as part of its determination of whether to continue to purchase loans under the
Correspondent Agreement. Correspondent also agrees to make interim monthly or quarterly certified
financial statements available to CMS upon request.
c) Correspondent agrees it will not use for its own benefit or will not disclose to any person or entity
confidential information relating to CMS which it has acquired or which it may acquire during the term of
the Correspondent Agreement.
d) Correspondent has in full force and effect and will continue to maintain a fidelity bond and an errors and
omissions policy or policies or mortgage banker’s blanket bond covering all its activities hereunder, in an
amount and with terms acceptable to CMS and shall provide to CMS, on an annual basis or as required by
CMS or any state in which Correspondent or CMS are engaged in business activity, satisfactory evidence
e) Neither the execution, performance of the Correspondent Agreement by Correspondent nor any action
contemplated by Correspondent in connection herewith, violates or results in any violation of any provision
of the Correspondent’s charter, certificate or articles of incorporation or bylaws, or any judgment, decree,
order, writ, injunction, determination, award, law, statute, regulation, rule, or any other Agreement or
obligation of any kind to which the Correspondent is a party or by which it or its property is bound.
f) Correspondent has at all times complied in material respects with applicable local, state and federal laws
including but not limited to all applicable predatory and abusive lending laws.
8) ADDITIONAL RESPRESENTATIONS, WARRANTIES AND COVENANTS WITH RESPECT TO
With respect to each loan registered under the Correspondent Agreement, the Correspondent makes the following
warranties and representations, which shall be true at the time of registration and/or also at the time of delivery
or purchase of the loan and which shall survive the purchase thereof by CMS, its successors and assigns.
1/13/2006 Page 5 of 10 Initials _________
a) Correspondent shall have good title to and shall be the sole owner and holder of each loan, free and clear of
any pledge, lien, or any other encumbrance of any nature and has authority to sell, transfer, and assign the
same on the terms set forth herein, in the Correspondent Agreement.
b) Correspondent Acknowledges CMS shall have relied upon the representations and warranties expressed in
the Correspondent Agreement. All of the Correspondent’s representations and warranties, as well as each
borrower’s representations are true as of the date of execution of the Correspondent Agreement and shall
be true as of the date of purchase by CMS of each loan.
c) All signatures, names, social security numbers, addresses, amounts, credit and employment information,
asset information, including gift funds, property appraisal, and other statements of fact contained in and
associated with the loan transaction are complete, accurate, true, correct, and genuine in all material
d) All notes are properly executed, in a negotiable form and are valid and enforceable in accordance with their
e) Each mortgage securing each loan shall and does conform to Program Guidelines and is in the form required
by CMS and has been duly executed by the mortgagor, and each such mortgage has been duly acknowledged
and recorded in the correct jurisdiction and is valid and enforceable in accordance with its terms, securing
an enforceable 1st lien.
f) The improvements are free and clear of liens other than that securing the loan and were completed in full
compliance with the ordinances and regulations of any governmental jurisdiction or agency having
jurisdiction thereof and that such improvements presently comply with such ordinances and regulations.
g) Each loan shall be secured by a 1st or 2nd lien (as applicable) upon the real property described in the
mortgage securing such loan.
h) The full principal amount of the loan has been advanced to the mortgagor. All costs, fees and expenses
incurred in making and closing the loan, and in recording the mortgage have been paid; no part of the
mortgaged property has been released from the lien of the mortgage; the terms of the loan, including the
mortgage have in no way been changed or modified, and the loan is current and not in default.
i) The unpaid balance of each loan is as stated, the note and any such guarantees have been duly executed and
the obligation of all such parties for such amount is valid and enforceable.
j) All applicable local, state, and federal laws, rules, and regulations have been complied with, including but not
limited to all applicable predatory and abusive lending laws, and all conditions within the control of
Correspondent as to the validity of the insurance or guaranty as required by the National Housing Act of
1934, as amended, and the rules and regulation thereunder, or by the mortgage insurance companies, have
been properly satisfied, and said insurance or guaranty is valid and enforceable.
k) For each loan, CMS will provide a Life of Loan Flood Certification. For a property located in a Special Flood
Hazard area as designated by the Federal Emergency Management Agency, proof that a flood insurance
policy with minimum coverage as required by CMS will be required. Evidence of flood insurance on Second
lien mortgage loans and Home Equity loans will require coverage sufficient to cover both liens.
1/13/2006 Page 6 of 10 Initials _________
l) A current American Land Title Association (ALTA), or any other state applicable land and title association,
mortgagee’s title insurance policy regarding each loan, and insuring the lien of the mortgage securing the
loan in its original principal amount is, and shall be, effective at the time of the origination of the mortgage
loan and shall remain valid and in full force and effect; such ALTA policy shall be issued by a title insurer
acceptable to Fannie Mae and Freddie Mac, and such title insurer shall be qualified to do business in the
jurisdiction in which the real property securing the loan is located.
m) The assignment for the loan and mortgage from Correspondent to CMS is valid and legally enforceable.
n) The property evaluation document properly identifies the property by address and legal description and
provides the certification that the property is or is not in a flood hazard area.
o) As of the loan delivery date, all real property taxes and assessments due and payable for the real property
subject to the mortgage securing the loan shall be current and paid in full, and there shall be no delinquent
tax or assessment lien against such real property.
p) All documents submitted are genuine, and all other representations as to each loan are true and correct and
meet or shall meet the requirements and specifications of all parts of the Correspondent Agreement and
Correspondent is not aware of any defects in the loan, material damage to the property or other facts, the
disclosure of which would be necessary to make any representation or warranty herein not materially
q) Correspondent warrants that for each mortgage loan it shall have the sole power and authority to convey
and release the servicing rights for such mortgage loan, and that no other party has claimed, will claim, or
be entitled to any servicing rights with respect to the mortgage loan. Further, Correspondent represents
and warrants that it has ability to service the loans and payment if CMS does not purchase the loan prior to
the time that a first payment is due.
r) There are no bankruptcy, foreclosure, or litigation suits pending or threatened against any of the
borrowers, Correspondent, its principals or agents that was involved with the Loans purchased by CMS in
s) There are and will be no claims or defenses as to the loan by reason of any act or omission of
Correspondent or its directors, officers, agents, employees.
t) Correspondent has no adverse information concerning the borrower, which it has not communicated in
writing to CMS.
u) The loan has not been brokered to Correspondent by other lenders.
v) There is no undisclosed secondary financing involved in the transaction; and the borrower’s required equity
has been paid from the borrower’s own funds, unless otherwise pre-approved in writing by CMS.
w) The borrower received the face amount of the note, and the loan transaction is free from usury or claim of
1/13/2006 Page 7 of 10 Initials _________
x) There are no hazardous substances in or on the property, except for small quantities that are generally
recognized to be appropriate to normal residential use; nor is the present use of the property in violation
of any Environmental Law.
y) Each loan is current in all payments required in accordance with the terms of the note and security
instrument as of the date transferred to CMS.
z) The loan documents and the transaction comply in all respects with CMS’s requirements and with all
applicable federal, state, and local laws and regulations including, but not limited to all applicable predatory
and abusive lending laws, fair housing, anti-redlining, equal credit opportunity, truth-in-lending, real estate
settlement procedures, fair credit reporting, privacy and every other prohibition against unlawful
discrimination in residential lending or governing consumer credit, and also including without limitation, the
following, as amended: the Fair Housing Act, the Home Mortgage Disclosure Act, the Community
Reinvestment Act, the Financial Institutions Reform Recovery and Enforcement Act of 1989, the Real
Estate Settlement and Procedure Act of 1974 (including Regulation X), the Flood Disaster Protection Act
of 1973, the national Flood Insurance Reform Act of 1994, the Equal Credit Opportunity Act (including
Regulation B), the Fair Credit Reporting Act, the Right to Financial Privacy Act, the consumer Credit
Protection Act, the Gramm Leach Bliley Act of 1999 and the Truth in Lending Act (including Regulation Z).
Correspondent, by signing and accepting the Correspondent Agreement, warrants that all loans delivered
under the Correspondent Agreement were so originated and do comply with all applicable State and Federal
law and regulations, and that none of the mortgage loans are High Cost as defined by the applicable
predatory and abusive lending laws.
aa) Documentary evidence sufficient to substantiate such compliance shall be contained in each respective loan
file. Upon CMS request, correspondent shall provide to CMS evidence in form and substance satisfactory
to CMS, of any action taken by Correspondent to comply with such laws, including, without limitation,
notices and disclosures furnished to or signed by an applicant or borrower.
9) INDEMNIFICATION AND REPURCHASE
Correspondent acknowledges that CMS, and its affiliates, shall have relied upon the representations and warranties
expressed in this Agreement. All of Correspondent’s representations and warranties are and shall be true and shall
survive as provided in paragraph 7 herein. No representation or warranty made by Correspondent in connection
with the purchase of each Loan by CMS, or any of its affiliates, contains any untrue statement of any material fact
or fails to state any material fact necessary to make such representation or warranty not misleading.
In addition to any other remedies of CMS set forth herein, Correspondent shall repurchase applicable Loans and
shall indemnify and hold CMS, and its affiliates, harmless from losses (including the loss of servicing rights),
damages, deficiencies, claims or expenses (including reasonable attorney’s fees) incurred by CMS, or any of its
In addition to all other remedies available to it, CMS, and its affiliates, shall be entitled to offset any amounts it
owes Correspondent by any amounts Correspondent is required to pay to CMS, or any of its affiliates, under this
section. The indemnity provided in this Section shall remain in full force and effect regardless of any investigation
made by CMS, or any of its affiliates, or its representatives or any cancellation of this Agreement, and shall
survive this Agreement as to each Loan for so long as any amount due from the Borrower remains outstanding and
unpaid. Upon receipt of notice of claim covered by any indemnity or other indemnity in this Agreement, whether
such claim appears to be valid or not, Correspondent shall immediately assume the representation of CMS, or any
of its affiliates, and the defense of such claim at its own cost and expense to the satisfaction of CMS, with
1/13/2006 Page 8 of 10 Initials _________
counsel approved by CMS, and Correspondent shall be directly responsible for the payment of any settlement,
award or judgment relating to such claim.
10) JURY WAIVER/ATTORNEY FEES AND EXPENSES
If any legal action or proceeding is brought for the enforcement of this Agreement, or because of an alleged
dispute, breach or default in connection with any of the provisions of this Agreement, the successful or prevailing
party shall be entitled to immediately recover from the other party, its costs, plus reasonable attorney’s fees
incurred in such actions(s) or proceeding(s) in addition to any other relief to which it may be entitled. Except as
expressly provided hereunder to the contrary, each party shall bear its own costs and expenses incurred in
connection with the preparation of this Agreement and the performance of the obligations contemplated hereby.
After consultation with counsel, and with knowledge of the consequences, Correspondent and CMS hereby waive all
rights to demand a jury trial and agree that all suits shall be heard by a judge only.
11) WAIVERS/REMEDIES CUMULATIVE
CMS’s delay or failure to enforce any provision of this Agreement shall not constitute a waiver of that provision or
any other provision or Agreement with Correspondent.
All remedies afforded by this Agreement shall be cumulative and in addition to all other remedies provided herein
or afforded by law or in equity.
CMS shall have the right to amend this Agreement with written and/or electronic notice to the Correspondent. At
CMS’s request, Correspondent shall acknowledge changes to the Agreement in writing, but Correspondent’s failure
to provide written acknowledgment of any amendment shall not impair the enforceability of such amendment.
Correspondent shall not assign this Agreement or any of its rights hereunder. Neither shall Correspondent
delegate any duty hereunder without the prior written consent of CMS. Correspondent acknowledges that CMS
may assign any or all of its rights under this Agreement and/or the Related Documents to any of its affiliates.
In the event that any loan purchased by CMS from Correspondent, is subsequently paid in full within 120 days of
Loan Closing Date, Correspondent agrees to refund all Servicing Release Premium (minimum $500) paid
Correspondent within 10 days of notification of said payoff.
1/13/2006 Page 9 of 10 Initials _________
IN WITNESS WHEREOF, the parties have executed this Agreement in duplicate as of the day and year first
____________________________________ Coastal Mortgage Services, Inc. d/b/a Coastal
Company Name Funding Group
Signature Date Signature Date
Typed Name Typed Name
CORRESPONDENT CONTACT INFORMATION FOR FUNDING ITEMS:
_______________________________________________________ Phone #
_______________________________________________________ Fax #
_______________________________________________________ E-Mail Address
1/13/2006 Page 10 of 10 Initials _________
Fax and E-Mail Consent Form
(ALL FIELDS REQUIRED)
I understand that by providing ALL of my fax numbers and e-mail addresses,
I consent to receive faxes and/or e-mails sent by or on behalf of Coastal
Funding Group(its subsidiaries and affiliates).
Street Address 1:___________________________________________
Street Address 2:___________________________________________
City:______________________ State:________ Zip:__________
CERTIFIED COPY OF CORPORATE RESOLUTION
organized and existing under the laws of the State of _________________________________________
do hereby, certify that at the meeting of the Board of Directors of said Corporation, was held on
the______________ day of _______________, 20_______ at which a quorum was present and voting,
the following Resolution was unanimously adopted and that said Resolution is now in full force and
BE IT RESOLVED THAT __________________________________________________________
is authorized to execute the Wholesale Mortgage Purchase Agreement with Coastal Funding Group,
BE IT FURTHER RESOLVED that any one of those officers of this Corporation as noted below are
authorized to make, execute and deliver on behalf of this Corporation and as its act and deed any and all
loan documents pursuant to Loans to bind the Corporation in matters involving the sale of mortgage loans
to Coastal Funding Group:
IN WITNESS WHEREOF, the said ________________________________________________,
has hereunto affixed the seal of the said Corporation this ________day of ___________,20____
Corporate Resolution 01/11/00
3300 Battleground Ave., Suite 401, Greensboro, North Carolina 27410
CONSEQUENCES OF LOAN FRAUD
The consequences of residential loan fraud are far reaching and expensive. Coastal Funding Group warrants the
quality of our loan production to our investors. Fraudulent loans may not be sold in the secondary market for
home mortgages. If a loan is discovered to be fraudulent after its sale, Coastal Funding Group could be
obligated to repurchase the loan from our investor. Fraudulent loans harm our reputation and strain our
relationships with our investors and mortgage insurance carriers.
The consequences to those who participate in loan fraud are even more severe. Following is a list of a few of
the-repercussions that may be experienced.
To the originator/broker/lender:
1. Criminal prosecution which may result in possible fines and imprisonment.
2. Revocation of license.
3. Inability to access lenders caused by the exchange of legally permissible information between lenders;
mortgage insurance companies; FHLMC, FNMA, and other investors; police agencies; and state and
federal regulatory agencies including the Department of Real Estate (DRE), and the Department of Housing
and Urban Development (HUD).
4. Civil action by Coastal Funding Group.
5. Loss of approved broker or correspondent lender status with Coastal Funding Group.
6. Broker acknowledges any incident of fraud or suspected fraud; whether knowingly or unknowingly
submitted to Coastal by broker; may be reported by Coastal to one or more companies/ agencies in business
to report such information.
To the borrower:
1. Acceleration of debt as mandated in the security instrument (Deed of Trust or Mortgage).
2. Criminal prosecution which may result in possible fines and imprisonment.
3. Civil action by Coastal Funding Group.
4. Civil action by other parties to the transaction such as seller or real estate agent/broker.
5. Termination of employment.
6. Forfeiture of any professional license.
7. Adverse, long term effect on credit history.
I have read the foregoing. I understand and accept Coastal Funding Group’s policy on Loan Fraud.
SIGNATURE OF PRINCIPAL OFFICER
Loan Fraud 01/27/03
SMART CORRESPONDENT WAREHOUSE INSTRUCTIONS
Do you use a warehouse bank? _______ (Y or N)
Does your warehouse bank require the note come to them? (Y, N or n/a)
If Yes, then please complete the acknowledgment below.
Does your Warehouse Bank require a MERS Assignment? ___ (Y, N, or n/a)
The first payment will come to Coastal Mortgage Services. If this is not
acceptable, we will be unable to complete the SMART setup.
COASTAL’S INSTRUCTIONS TO WAREHOUSE BANK
• Please instruct your Warehouse Bank to Send the ORIGINAL NOTE for
receipt by Coastal no later than five (5) business days after Closing
• Send to: Coastal Mortgage Services, Inc.
11230 Carmel Commons Blvd.
Charlotte, NC 28226-3920
I hereby acknowledge receipt of this information:
Signature Printed Name, Title Date
Keep next page for your records and return this first page, signed original to
COASTAL’S INSTRUCTIONS TO WAREHOUSE BANK
• Please instruct your Warehouse Bank to Send the ORIGINAL NOTE for
receipt by Coastal no later than five (5) business days after Closing
• Send to: Coastal Mortgage Services, Inc.
11230 Carmel Commons Blvd.
Charlotte, NC 28226-3920
ACKNOWLEDGMENT OF EXPECTATIONS
Coastal Funding Group wishes all prospective new broker partners acknowledge the
following prior to final consideration for Approval in an effort to ensure you are in
agreement with specific requirements to maintain a broker/partner relationship.
• Approved brokers are required to maintain a 70% locked loan to pull through ratio.
• Automated Underwriting usage will be analyzed by Coastal Funding Monthly and
abuse of Coastal’s willingness to pay for these transactions will result in T.I.D.E.
access to LP and DU being removed.
• Customer has read the terms of the Wholesale Purchase Agreement as it relates to
Termination of the Relationship either by the Broker or by Coastal.
3300 Battleground Avenue, Suite 401, Greensboro, NC 27410
Phone: 336-545-5565 Toll Free 877-386-3234 Fax: 336-540-8918
Schedule of Fees – SMART CORRESPONDENTS
Effective for Applications Taken on or After 4/13/2009
SMART CORRESPONDENT (Coastal Prepares Docs)
$521 Administration Fee (Includes Tax Service Fee, AUS Transaction, Underwriting, Doc Prep, Quality Control
$13 Flood Certification effective 6/1/2008
$6.95 MERS effective 2/23/2009
ADDITIONAL FEES WHICH MAY BE CHARGED INCLUDE:
$75 Re-Draw Fee
$6.50 Georgia Per Loan Fee (If property is in Georgia)
SMART CORRESPONDENT UTILIZING BROKER DOCS® (Coastal Underwrites)
$486 Administration Fee (Includes Tax Service Fee, AUS Transaction, Underwriting, Quality Control & Post
$6.95 MERS effective 2/23/2009