Emerging Mortgage Banker (EMB) Procedures€¦ · brokered (no “flipping” between EMB and...

WHOLESALE LENDING

Emerging Mortgage Banker (EMB) Procedures

These procedures are for use on loans with an application date on or after October 3, 2015.

Original Issue Date: 09/20/2010

Last Revision Date: 05/28/2020 Franklin American Mortgage Company, a Division of Citizens Bank, N.A. (FAMC) Last Reviewed Date: 01/07/2020 For Wholesale Customers Only of 25

EMB Procedures WHOLESALE LENDING

Table of Contents

A. PROGRAM INFORMATION (2/8/19).............................................................................................................. 4 B. SETUP & APPROVAL (10/3/15) .................................................................................................................. 4 C. REGISTERING AND LOCKING AN EMB LOAN (2/8/19) ........................................................................................ 5 D. SUBMISSION AND UNDERWRITING (8/31/18) .................................................................................................. 5

UNDERWRITING SUBMISSION (8/31/18) ..................................................................................................... 5 SETUP PROCESS (5/31/17) .................................................................................................................... 5 a. Loan Estimate (LE) (5/31/17) ............................................................................................................. 5 AUTOMATED UNDERWRITING SYSTEMS (2/8/19) .......................................................................................... 7 a. FAMC AUS Portal (9/20/13) ................................................................................................................ 7 b. Desktop Originator (DO) and Loan Product Advisor (LPA) (2/8/19) ................................................................ 8 c. Guaranteed Underwriting System (GUS) – USDA-RD (5/31/17) ...................................................................... 8 ORDERING AN APPRAISAL (6/11/19) ......................................................................................................... 8 a. Automated Appraisal ordering (8/31/18) ............................................................................................... 8 b. EMB-Managed Appraisals (6/11/19) ...................................................................................................... 9 UNIFORM COLLATERAL DATA PORTAL (UCDP) AND SUBMISSION SUMMARY REPORT (SSR) (6/11/19) ............................ 9 UNDERWRITING CONDITIONS (8/31/11)..................................................................................................... 9 TURN TIMES (9/20/10) ........................................................................................................................ 10 TRANSFER OF LOAN FILES (6/11/19) ....................................................................................................... 10

E. DISASTER REQUIREMENTS (8/31/18) .......................................................................................................... 10 F. ESCROW HOLDBACKS (10/3/15) ............................................................................................................... 10 G. SPONSORED ORIGINATOR – FHA APPROVED (SOFA) AND PRINCIPAL-AGENT RELATIONSHIPS (10/3/15) ........................... 11

SOFA RELATIONSHIPS .......................................................................................................................... 11 PRINCIPAL-AGENT RELATIONSHIPS .......................................................................................................... 11

H. ORDERING CLOSING DOCUMENTS THROUGH FAMC (5/28/20) ............................................................................ 11 I. ORDERING CLOSING DOCUMENTS THROUGH A THIRD-PARTY VENDOR (2/8/19) ...................................................... 12

NAME AND SOCIAL SECURITY NUMBER VARIANCES ....................................................................................... 13 HAZARD INSURANCE (10/3/15) .............................................................................................................. 13 TAXES ............................................................................................................................................ 13 NOTE, SECURITY INSTRUMENT, AND ASSIGNMENT (2/8/19) ............................................................................ 13 a. MERS Requirements (2/8/19) ............................................................................................................ 13 b. MERS Rider – State-Specific for Montana, Oregon, and Washington (11/17/14) ................................................ 14 VERBAL VERIFICATION OF EMPLOYMENT (VVOE) (2/8/19) .............................................................................. 14 THIRD-PARTY PROCESSING FEES (2/8/19) ................................................................................................. 15 UCD SUBMISSION (2/8/19).................................................................................................................... 16

J. TITLE COMPANIES & POLICIES (10/3/15) ..................................................................................................... 16 K. APPROVED THIRD-PARTY DOC VENDORS (11/17/14) ....................................................................................... 17 L. EXECUTING THE DOCUMENTS (2/8/19) ....................................................................................................... 17

POWER OF ATTORNEY (POA) (2/8/19) ..................................................................................................... 17 APPROPRIATE PARTY SIGNATURES .......................................................................................................... 17 INITIALS .......................................................................................................................................... 17 CORRECTIONS .................................................................................................................................. 17 CLOSING DISCLOSURE (CD) (2/8/19) ....................................................................................................... 17

M. RESCISSION AND DISBURSEMENT DAYS (9/24/10) ........................................................................................... 19 N. FUNDING PROCEDURES (10/3/15) ............................................................................................................. 20

PRIOR TO FUNDING (10/3/15) ............................................................................................................... 20 POST FUNDING (8/31/18) .................................................................................................................... 20

O. REMITTANCE OF FHA UFMIP, VA FUNDING FEE, AND USDA-RD GUARANTEE FEE (10/3/15) ......................................... 21 FHA UP FRONT MORTGAGE INSURANCE PREMIUM (UFMIP) (8/31/18) ................................................................ 21 VA FUNDING FEE (VAFF) (1/27/14) ......................................................................................................... 21 USDA-RD GUARANTEE FEE (10/3/15) ....................................................................................................... 22

P. CLOSED LOAN SUBMISSIONS (5/31/17) ....................................................................................................... 22 VIA UPLOAD (5/31/17) ........................................................................................................................ 22 VIA EMAIL (5/31/17)........................................................................................................................... 22




COLLATERAL DOCUMENTS TO BE SHIPPED TO FAMC (8/31/18) ........................................................................ 23 Q. PURCHASE CONDITIONS (5/31/17) ............................................................................................................ 23 R. AUDITING PROCEDURES (2/8/19) .............................................................................................................. 23 S. COMMON PURCHASE CONDITION ITEMS (2/8/19) ........................................................................................... 23 T. HIGHER-PRICED MORTGAGE (HPML) DETERMINATION INSTRUCTIONS (2/8/19) ....................................................... 24 U. UNDISCLOSED DEBT (11/17/14) ................................................................................................................ 24 V. LATE FEES (11/16/17) ........................................................................................................................... 24 W. FINAL DOCUMENT TRANSMITTAL (8/31/18).................................................................................................. 25




Important Note: The information in this procedures document is accurate as of the revision date and is subject to change without notice. FAMC policies will be communicated via standard communications and Lending Guide updates. In the case of conflict, the FAMC Lending Guide is the controlling document. Nothing herein should be construed as legal advice and may not be relied upon as such.

A. PROGRAM INFORMATION (2/8/19)

The Franklin American Mortgage Company (FAMC)* Emerging Mortgage Banker (EMB) program is designed for Brokers desiring to become Lenders, as well as Community Banks and Credit Unions that have the resources and desire to fund their own loans. This program allows the EMB to act as a Lender without incurring expenses related to operating and employing an entire fulfillment

center. The EMB Lender uses its own funds to close. FAMC performs a post-funding audit on the closing documents and purchases the loan once the docs are satisfactory, provided the loan meets all applicable guidelines and is in compliance with appropriate laws and regulations.

The benefits of the EMB program are:

• Control over the closing and funding processes

• FAMC handles the underwriting and government insuring

• Use of a preferred Doc Prep Vendor

• Timely loan funding without Investor prior approval

• EMB Lenders also have the option to use FAMC closers to draw documents for them

To become an approved EMB Lender, please contact your Account Executive (AE) to obtain the necessary application forms. Refer

to the FAMC website for fees. *Franklin American Mortgage Company is a division of Citizens Bank, N.A. and is referred to throughout this document interchangeably as “FAMC” or “Citizens.”

Ineligible Loan Programs

The following programs are ineligible for the EMB program:

• Borrowers taking title in the name of a Trust – FAMC must draw the documents*

• Non-conforming Jumbo closed using a third-party vendor’s documents – FAMC must draw the documents*

• USDA/RD closed using a third-party vendor’s documents – FAMC must draw the documents*

*FAMC’s Q.docs system must be utilized when FAMC is drawing the documents; refer to Section H for additional information.

Truth in Lending Act (TILA)-Real Estate Settlement Procedures Act (RESPA) Integrated Disclosures (TRID) Rule Impact

FAMC originates and purchases loans that are in compliance with the requirements of TILA and RESPA. Accordingly, FAMC will also originate and purchase loans that are in compliance with the TRID requirements as specified in FAMC’s published policy, which is available in the Wholesale Lending Guide > Corporate Policies & Guidelines > Corporate Compliance > Federal > TILA – RESPA Integrated Disclosures (TRID).

TRID, which became effective with applications on or after October 3, 2015, applies to all closed-end credit transactions secured by real property. For additional information on TRID, please refer to Memo No. 15-09-15.

B. SETUP & APPROVAL (10/3/15)

All EMB Lenders who would like to utilize a third-party vendor to generate closing documents must obtain prior approval by FAMC.

Only FAMC-approved third-party document vendors are permitted. Please refer to Section K for a list of approved vendors. FAMC allowable products are vendor-specific; please contact the document vendor for a list of approved products. If your preferred vendor is not listed, please contact your AE for further instructions.

Please click here for MERS requirements.

https://franklinamerican.com/documents/wholesale/Closing/After_1-1-2016.pdf

https://www.franklinamerican.com/wiki/_media/public_extranet/wholesale_bulletins/150915.pdf




C. REGISTERING AND LOCKING AN EMB LOAN (2/8/19)

After signing into wholesale.franklinamerican.com, select Register or Lock a Loan.

Important Note: When selecting a lock period, EMB Lenders should be mindful of turn times and potential issues that could affect funding of the loan. Prior to the lock expiration, the EMB Lenders must fund the loan on their line AND submit the

loan to FAMC. Customers that participate in both the EMB and Broker programs must submit all loans of the same product type as EMB or brokered (no “flipping” between EMB and Broker on Conventional loans, for example). Customer accounts are set with the

appropriate program for each product, which is then automatically reflected on FAMC’s website at the time of lock/register. EMB loans have a unique loan number and separate pricing. Please refer to the current rate sheet on wholesale.franklinamerican.com for additional information.

D. SUBMISSION AND UNDERWRITING (8/31/18)

UNDERWRITING SUBMISSION (8/31/18)

All loan submissions must be uploaded to the wholesale.franklinamerican.com. The loan must be either locked or registered

with FAMC before the submission will be accepted. Contact your AE to inquire which operations center will be responsible for accepting loan submissions from your area. Office locations and contact information are available on the FAMC website under the Contact tab.

Please note the following:

• The Q.image Submission Form should reflect the correct contact information so FAMC can ensure that communications are routed to the appropriate parties.

• The EMB Lender will receive a confirmation via fax or email indicating when the file was received by FAMC. Loan status may also be viewed on the website.

• The EMB Lender will receive an Underwriting Disposition Sheet via fax or email from FAMC.

• Citizens’ FHA and VA ID numbers are listed below for reference and apply to all operations centers.

FHA ID VA ID

3447101994 2900590000

SETUP PROCESS (5/31/17)

All loan submissions are reviewed for minimal required documentation that will enable an immediate underwriting review. The minimum required documentation is designated on the Q.image Submission Form with bold green, *an asterisk, and

underlined print. Loan files missing any of the required documentation will remain in the Setup department; the Underwriting department will not review the loan until all items are received. An email notification will be sent to the EMB Lender indicating which items are missing and where to send the items. Once all items are received, the file will receive a re-submit date and move to the Underwriting department for review.

a. Loan Estimate (LE) (5/31/17)

The LE is intended to help consumers understand the key features, costs, and risks of the mortgage loan they are applying

for. The LE will be reviewed upon submission to ensure it is completed in its entirety and is not lacking any required information. In order to accurately review the disclosure, the settlement services provider list must be included with the loan submission.

https://www.franklinamerican.com/lending-partners/wholesale



https://franklinamerican.com/contact




Loan Estimate Content

The EMB Lender must ensure the LE is delivered or placed in the mail no later than the third business day after receiving

an application, and the disclosure must comply with all prescribed information within the Rule. For the purpose of the LE, a business day is a day on which the creditor’s offices are open to the public for carrying out substantially all of its business functions. The EMB Lender must ensure the LE contains the correct and specific content for that transaction.

The LE is a 3-page disclosure that generally contains the following:

Page 1 Page 2 Page 3

• General information on the specific

loan transaction, including creditor

information

• Loan Terms table with descriptions of

applicable information about the

loan

• Projected Payments table

• Costs at Closing table

• A link for consumers to obtain more

information about loans secured by real property at a website

maintained by the CFPB

• A required statement: “Save this

Loan Estimate to compare with your

Closing Disclosure.”

• A good-faith itemization of the

Loan Costs and Other Costs

associated with the loan and paid by the applicant/borrower

• A Calculating Cash to Close table

to show the consumer how the

amount of cash needed at closing is calculated

• Adjustable Payment Loans - an

Adjustable Payment Table detailing how the monthly

payments will change

• Adjustable Rate Loans – an

Adjustable Interest Rate Table detailing how the interest rate will

change

• Creditor contact information

• A Comparisons table reflecting an

estimated 5-year payment

breakdown, the APR, and the Total Interest Paid (TIP)

• An Other Considerations table

including the ECOA Right to Receive a

Copy of the Appraisal statement,

Assumption requirements, Late Payment information, and the

Servicing Statement disclosure

• An optional Signature Statement for

the consumer to sign to acknowledge receipt.

All new Changed Circumstance Worksheets (CCWs) and LEs must be submitted to FAMC for review so that FAMC’s systems may be updated accordingly.

LE Delivery Requirements

The EMB Lender is responsible for ensuring that they deliver the LE or place it in the mail no later than the third business

day after receiving the application. The Mortgage Disclosure Improvement Act (MDIA) waiting periods apply; therefore, the LE must also be delivered or placed in the mail no later than the seventh (7th) business day before consummation of the loan. Please refer to the TILA MDIA Policy, which is available in the Wholesale Lending Guide > Compliance > Federal, for further information.

Acceptable LE Delivery Methods

Type Description Proof of Delivery

In Person If the application is taken face-to-face, it is acceptable to deliver the disclosure in

person. The disclosure is considered “delivered” once the disclosure has been given to

the borrower.

Signed and dated copy of the disclosure

Email

Email delivery is allowed, provided it is E-Sign compliant with FAMC policy.

Note: If email delivery was not in compliance with the E-Sign Act, all timing

requirements default to First-Class Mail.

E-Sign compliant

acknowledgement

received by the EMB

Overnight It is acceptable to deliver the LE via UPS, FedEx, or other national delivery services. The disclosure is considered “delivered” once the overnight package containing the

disclosure has been signed for.

Signed and dated copy of the delivery notice

First-Class Mail

Delivery of the disclosure via first-class mail delivery is acceptable. For timing purposes,

four (4) business days for mailing, including the day the document was mailed, is

required. The document is assumed to be/considered “delivered” on the 4 th day. For example, if the document was mailed on Monday, count Monday, Tuesday, Wednesday,

and Thursday of the same week. Delivery is assumed to be on Thursday.

No proof of delivery is required; however, a copy

of the disclosure must still be maintained in the file.

Note: A disclosure that is signed and dated by the borrower(s) can be considered delivered as of the date it was actually signed (if that date is earlier than an “assumed” delivery date).




AUTOMATED UNDERWRITING SYSTEMS (2/8/19)

a. FAMC AUS Portal (9/20/13)

The EMB Lender may submit a loan through Desktop Underwriter (DU) or Loan Product Advisor (LPA) through the

Automated Underwriting System (AUS) Portal via the FAMC website. This AUS Portal will allow loan submissions directly to Fannie Mae’s DU and Freddie Mac’s LPA. Note: USDA-RD loans should NOT be submitted through the FAMC AUS Portal, DU, Desktop Originator (DO), or LPA. FAMC

will submit USDA-RD loans through the Guaranteed Underwriting System (GUS). Please refer to Section C below. Once a loan is either registered or locked, access to the AUS Portal is located at wholesale.franklinamerican.com. Click on the Loan Status page, and then select View Pipeline. An Order AUS link will appear only if the loan has been registered

or locked.

If you do not have Portal access, click on the following link under the Automated Underwriting tab.

Here are some of the advantages of using the Portal.

• Do not need to finalize findings

• Can import data from DU and MISMO files

• View AUS Findings historically (i.e., the 1st submission as compared to the 4th submission)

• Access directly from the website pipeline, no additional login needed

The EMB Lender is responsible for all credit report fees. FAMC will be responsible for agency-associated access charges.

Each time that a new case file/key number is issued, both the EMB Lender and FAMC incur an AUS access fee. To avoid multiple AUS access fees, changes to loan data must utilize the same case file/key number that was originally assigned by DU/DO or LPA. At FAMC’s discretion, AU Portal access may be terminated for those users who abuse the AU Portal by submitting loans without the intention of delivering the loans to FAMC.

A copy of the most recent DO findings or the LPA feedback and a copy of the credit report are required in the loan file submission.





b. Desktop Originator (DO) and Loan Product Advisor (LPA) (2/8/19)

The EMB Lender may submit a loan through DO or LPA when logging into wholesale.franklinamerican.com > Automated Underwriting. Note: USDA-RD loans should NOT be submitted through the FAMC AUS Portal, DU, Desktop Originator (DO), or LPA. FAMC

will submit USDA-RD loans through the Guaranteed Underwriting System (GUS) or, if the EMB Lender is a Lender Agent, they may submit their own loans through GUS. Please refer to Section C below. Please note the following:

• FAMC must be identified as the investor.

• It is vital that the proper institution code is picked in the AUS when submitting a loan file directly to FAMC for underwriting.

• The case must be fully transferred or released to FAMC prior to final underwriting approval.

• A copy of the most recent DO findings or the LPA feedback and a copy of the credit report are required in loan file submission.

AUS Access Method Institution Code (Investor Choice)

FAMC’s AUS Portal N/A

Desktop Originator FAMC-Citizens/Whsl/DO Lender - Wholesale

Loan Product Advisor Citizens Bank NA (209323)

AUS systems are not a pre-qualification tool. The borrower’s credit report should be checked in advance of using any

AUS system so that the credit profile can be analyzed to determine product eligibility and the credit report reference number can be utilized, thus avoiding multiple credit report pulls and additional credit report fees. Desktop Originator (DO)

DO is Fannie Mae’s licensed AUS. You can directly access it via this link: desktoporiginator.fanniemae.com. This portal is also listed on the FAMC website. Information can be imported directly to DO via most Loan Origination Systems (LOS).

Loan Product Advisor (LPA)

LPA is Freddie Mac’s licensed AUS. It can be accessed at http://www.freddiemac.com/loanadvisorsuite/loanproductadvisor/. This portal is also listed on the FAMC website. Information can be imported directly to LPA via most LOS systems.

c. Guaranteed Underwriting System (GUS) – USDA-RD (5/31/17)

FAMC will submit USDA-RD loans through the Guaranteed Underwriting System (GUS) upon full loan submission. Customers

who wish to have findings prior to submission can register for GUS as Lender Agents so they have access to run their own findings and know earlier in the process if they have a GUS “Accept/Eligible” and the loan documentation requirements. For more information, please see Memo No. 17-01-12 on GUS registration and the USDA GUS Training presentation and USDA Training and Resource Library on the GUS loan submission process.

Submission to GUS requires a credit report to be merged. EMB Lender-provided credit reports from AcraNet, Avantus, Birchwood Credit, CBCInnovis Credit, CIC Credit, Credco CoreLogic, Credit Plus, Equifax Mortgage Solutions, Kroll Factual Data, or Universal Credit have the ability to be merged by the FAMC Underwriting Specialist into the GUS findings.

Technical affiliates of these credit providers cannot be re-issued. If credit provided is not from one of these agencies, the FAMC underwriting specialist will request a new credit report upon full loan submission.

ORDERING AN APPRAISAL (6/11/19)

a. Automated Appraisal ordering (8/31/18)

Appraisal orders can be placed online through the Q.appraisal portal; please select the Quick Reference Guide link for instructions to complete this process. Sections covered are as follows:


https://desktoporiginator.fanniemae.com/

http://www.freddiemac.com/loanadvisorsuite/loanproductadvisor/

https://memos.franklinamerican.com/bulletin/usda-gus-registration-update/

https://www.franklinamerican.com/wiki/_media/public_extranet/wholesale_training_materials/usda_gus_training_3.8.2016.pdf

https://www.rd.usda.gov/programs-services/lenders/usda-linc-training-resource-library

https://lendingpartners.franklinamerican.com/ext/wholesale?npage=appraisalmgmt

https://lendingpartners.franklinamerican.com/wiki/_media/public_extranet/wholesale_appraisal_management/appraisal_managment_quick_reference_guide.pdf




• Accessing the Appraisal Management System

• Appraisal Order Form

• Payment Process

• Managing an Appraisal Order

b. EMB-Managed Appraisals (6/11/19)

Completed EMB-managed appraisals are submitted to FAMC via upload at wholesale.franklinamerican.com. The completed appraisal must be accompanied by:

• A copy of the appraiser’s current license

• Proof of payment to the appraiser including the source of the payment or a Mortgage Disclosure Improvement Act

(MDIA) Compliance Certification completed by the EMB Lender

• Certificate of Compliance either from the appraisal management company (AMC), or EMB Lender if an AMC is not

involved

• Borrower Appraisal Disclosure, if the borrower is waiving their 3-day review of the appraisal

• Evidence of the date and method appraisal(s) were delivered to borrower(s), if the EMB delivered the appraisal

• Uniform Collateral Data Portal (UCDP) Summary Submission Reports (SSRs) from both Fannie Mae and Freddie Mac

o The appraisal must be shared within the UCDP with Citizens Bank. o Review the section below for additional information regarding SSRs.

UNIFORM COLLATERAL DATA PORTAL (UCDP) AND SUBMISSION SUMMARY REPORT (SSR) (6/11/19)

To facilitate the electronic collection of appraisal report data to the Government-Sponsored Enterprises (GSEs), Fannie Mae and Freddie Mac, at the direction of the Federal Housing Finance Agency (FHFA), developed the UCDP, which is a single

portal for the electronic submission of appraisal data files. Lenders are required to use the UCDP to submit electronic appraisal data files that conform to all GSE requirements, including the Uniform Appraisal Dataset (UAD) when applicable, before the delivery date of the mortgage to Fannie Mae and Freddie Mac. For details on using the UCDP, please see the Uniform Collateral Data Portal FAQ for EMB Lenders.

All appraisals successfully uploaded to the UCDP receive an SSR summarizing the appraisal submission details and the status of the submission, as well as a Document File Identifier (Doc File ID), which is the unique appraisal identifier generated by the UCDP. Loans delivered to either GSE must have an appraisal with a "Successful" status in the UCDP prior to loan delivery.

Note: FAMC will not purchase any loans with a missing Doc File ID or unacceptable SSRs. If you have been approved by FAMC to manage the appraisal process, it will be your or your Appraisal Management Vendor’s

responsibility to obtain the SSRs from Fannie Mae and Freddie Mac and provide them at the time of appraisal delivery.

EMB Lenders who manage their own appraiser panel are also required to share appraisals with Citizens. For details on appraisal sharing and the one-time UCDP appraisal sharing setup process, please see the UCDP FAQ mentioned above and

the UCDP Aggregator Assignment and Appraisal Sharing Job Aid.

UNDERWRITING CONDITIONS (8/31/11)

All outstanding underwriting conditions should be uploaded together in one submission to streamline the underwriting process. When utilizing the “multiple conditions” option, the Underwriting Disposition sheet should be placed on top and the conditions numbered as they appear on the disposition sheet.

Prior to Doc Conditions

• “Prior to Doc” conditions and suspense conditions may be viewed immediately on the Lookup Individual Loan report available under the Loan Status link on the FAMC website.

• All “Prior to Doc” conditions must be signed off by an underwriter for the loan file to be cleared-to-close (CTC).

• All underwriting conditions should be uploaded to the wholesale.franklinamerican.com. Prior to Funding Conditions

https://wholesale.franklinamerican.com/

https://www.franklinamerican.com/wiki/_media/public_extranet/public_extranet/ucdp_guide_for_embs_060614.pdf

https://www.franklinamerican.com/wiki/_media/public_extranet/public_extranet/ucdp_guide_for_embs_060614.pdf

https://lendingpartners.franklinamerican.com/wiki/_media/public_extranet/public_extranet/ucdp_aggregator_assignment_and_appraisal_sharing_job_aid.pdf

https://lendingpartners.franklinamerican.com/ext/wholesale?npage=loanStatus





In table-funded states, all “Prior to Funding” conditions must be at the closing table and available for the Closing Department to review in order to provide a funding number for the release funds.

TURN TIMES (9/20/10)

Underwriting turn times are broadcast on the wholesale.franklinamerican.com. EMB Lenders may log in to view up-to-date turn times.

TRANSFER OF LOAN FILES (6/11/19)

All loan applications should be taken by a duly registered or licensed loan officer (LO). If a loan is being transferred to FAMC, the loan submission must contain a transfer letter without recourse.

Note: Appraisal transfers are not permitted for EMB loan files.

E. DISASTER REQUIREMENTS (8/31/18)

FAMC distributes and publishes a Disaster List on our website that generally includes counties that have been declared by FEMA as eligible for Individual Disaster Assistance, which applies to all loan products. Depending upon the severity of the event, the

Disaster List may also include counties that have been determined by FAMC to be at risk of damage from approaching storms, floods, fires, or other threatening conditions. Properties that are located in the counties listed on the Disaster List must comply with FAMC’s Disaster Policy requirements.

Disaster declarations that only impact Conventional Non-Conforming Jumbo Fixed product loans are not on the Disaster List; however, these loans must still meet FAMC Disaster Policy requirements.

Disaster Policy requirements apply to all EMB loans that have not yet been purchased.

Important Note: It is the responsibility of the EMB Lender to be aware of local conditions and to monitor FEMA-Declared Disasters and the FAMC Disaster County List for applicable disaster requirements. FAMC will make every effort to include disaster-related conditions at the time of underwriting, but it is ultimately the responsibility of EMB Lender to furnish disaster requirements prior to closing/purchase, even in the absence of such underwriting conditions.

For detailed guidelines, please refer to the Wholesale Lending Guide > Product Information & Guidelines > Appraisal Guidelines > Disaster Policy. Click on the FAMC Disaster County List link to access the most current Disaster List. The list can also be accessed on the FAMC Memos page at wholesale.franklinamerican.com > Resources.

F. ESCROW HOLDBACKS (10/3/15)

FAMC will allow funds to be held in escrow for weather and non-weather-related repairs under certain circumstances. A summary of the process is outlined below. Detailed guidelines can be found in the Wholesale Lending Guide > Product Information & Guidelines > Property Eligibility > Escrow Holdbacks.

1. An escrow holdback can be requested by providing a written estimate from a certified contractor or builder for new construction. The written estimate must itemize all incomplete work and the cost to complete each item; it also needs to indicate who will be paying for the repair.

2. The underwriter will determine if the request meets FAMC Escrow Holdback Guidelines. If the request meets FAMC

guidelines, the following will occur:

a. The date in which the repairs must be completed will be established and added as a prior to funding condition. b. A prior to funding condition will also be added noting how much will need to be collected on the Closing

Disclosure (CD) for the escrow holdback and the fee for the final inspection. c. If FAMC is drawing the documents, FAMC will ensure that the Escrow Holdback Agreement is in the closing

package and collect for the final inspection. d. If the EMB is using a third-party document vendor, the EMB will be responsible for the Escrow Holdback

Agreement and collecting for the final inspection. The EMB will also be responsible for making sure that the escrow holdback amount on the Escrow Holdback Agreement matches the amount requested on the prior to funding condition; this amount should also match the amount collected on the CD.


https://www.franklinamerican.com/wiki/_media/public_extranet/current_county_list.pdf





G. SPONSORED ORIGINATOR – FHA APPROVED (SOFA) AND PRINCIPAL-AGENT RELATIONSHIPS (10/3/15)

SOFA RELATIONSHIPS

The SOFA category allows FHA-approved Lenders who have not obtained unconditional Direct Endorsement (DE) authority the ability to close FHA loans in their own name while acting as a Sponsored Originator (SO). The originating Lender goes through the approval process with FHA but does not need to have a DE underwriter on staff or submit test cases to FHA.

The originating Lender enters into an SO relationship with FAMC. Regular SO customers (not FHA-approved) must continue to close all FHA loans in FAMC’s name. SOFA File Flow (8/31/18)

• The SOFA originates the FHA loan.

• FAMC orders the case number and underwrites the file.

• The SOFA may manage the appraisal process under certain circumstances as allowed by FAMC.

• FAMC may prepare the closing docs or may allow document approval by the SOFA through an approved vendor.

• FHA allows the loan to close in the SOFA’s name.

PRINCIPAL-AGENT RELATIONSHIPS

FHA-approved Lenders with unconditional DE authority work with FAMC only as a “Principal”. Under a Principal-Agent relationship, the originating DE Lender (EMB Lender) is the principal and the underwriting DE Lender (FAMC) is the agent.

If the EMB Lender is the principal, they must assign the FHA case number to Citizens Bank, N.A.’s name and FHA Lender ID number. FAMC will not work with DE-approved Lenders as an SO, including ordering or accepting an SO case number. The DE Lender goes through the approval and test case process with FHA and must continually maintain a DE underwriter

on staff. All branches associated with a corporate office set up with FAMC in a Principal-Agent relationship should order their own case numbers. Principal/Agent File Flow

• The principal (EMB Lender) originates the FHA loan and orders the case number.

• The principal (EMB Lender) may manage the appraisal process under certain circumstances as allowed by FAMC.

• The agent (FAMC) underwrites the file.

• The agent (FAMC) may prepare the closing documents or may allow document approval by the originating principal through an approved vendor.

• FHA allows the loan to close in either the originating or the underwriting DE Lender’s name.

• The loan is purchased by FAMC after the collateral and closing packages are reviewed.

• FAMC performs the mortgage insurance function although either party is allowed access in FHA Connection (FHAC).

H. ORDERING CLOSING DOCUMENTS THROUGH FAMC (5/28/20)

• EMB loans must utilize FAMC’s Q.docs system to obtain closing documents. Please refer to the Q.docs Quick Reference Guide on the FAMC website for details on Q.docs.

• Q.docs can be processed up to 12 business days in advance of closing.

• Once Q.docs has been processed, if not already completed, all Required Closing Documents (RCDs) (insurance, taxes, title commitment, Insured Closing Protection Letter [ICPL] and survey) need to be uploaded to the closing coordinator

via the Q.docs portal. Refer to Memo No. 17-11-16 for information on uploading RCDs in Q.docs. o After FAMC receives notification of the Q.docs completion and all RCDs, the file will be merged with the approved

credit file and assigned to a closer. o If Q.docs are requested, then FAMC will prepare the documents. In these cases, since FAMC prepares the

documents, FAMC will coordinate with the settlement agent in order to prepare the CD and disclose the CD to all applicable borrowers.

• When Q.docs is processed for non-self-employed borrowers, or when the underwriter has received the loan file for self-employed borrowers, FAMC will begin the Verbal Verification of Employment (VVOE) process. Upon completion of the VVOE, an expiration date will be added to the Loan Status page for the VVOE.

https://www.franklinamerican.com/wiki/_media/public_extranet/wholesale_training_materials/qdocs_qrg.pdf

https://www.franklinamerican.com/wiki/_media/public_extranet/wholesale_training_materials/qdocs_qrg.pdf

https://memos.franklinamerican.com/bulletin/closing-process-enhancements-update/




o The VVOE must be good through the Note date. If the VVOE is set to expire prior to the Note date, the EMB Lender must contact their underwriting specialist and request that the date be updated.

o EMB Lenders can view the VVOE and other document expiration dates by going to the Loan Status page and clicking the date in the Approval Expires field.

o After the loan has been issued final approval, EMB Lenders can obtain a copy of the VVOE for their files. Print the VVOE by going to the Loan Status page and clicking Print FAMC Completed VVOE(s).

• Early release of the CD is available upon request for EMBs who use FAMC to draw documents. CDs can be released and delivered to the borrower(s) before a loan is cleared-to-close (CTC) and all conditions have been met, provided the following criteria have been met:

o Q.docs have been processed.

o The loan is locked through the funding date. o See WBM-2019-02-009 for details.

• The title commitment and ICPL must be in the EMB’s name and must contain a commitment number and loan number.

• Turn times and document delivery procedures will remain unchanged from standard wholesale loans.

• All EMB loans must close in the EMB’s name (a Corporate POA must be on file with FAMC).

• The title policy and ICPL will need to be in the EMB’s name.

• No fees will be paid to or collected by FAMC at closing (administration fees, and cure and FHA/VA penalty fees, if

applicable (see Section V, below), will be net funded from the EMB proceeds at the time of purchase). Refer to the Late Fees section.

I. ORDERING CLOSING DOCUMENTS THROUGH A THIRD-PARTY VENDOR (2/8/19)

Depending on the arrangement in place with the document vendor, the EMB Lender will either input the information into the vendor’s system or complete an order form to order documents. The EMB Lender will need to indicate FAMC/Citizens as the

investor within the document software; although, the exact method and verbiage to do so will vary depending on the vendor. If a third-party doc vendor is utilized, the EMB Lender or third-party doc vendor will be responsible for preparing and disclosing the CD to the borrower within the appropriate timing guidelines as outlined in FAMC’s published TRID procedures, which are

available in the Wholesale Lending Guide > Compliance & Risk > Compliance > Federal > TILA – RESPA Integrated Disclosures (TRID) Procedures.

https://memos.franklinamerican.com/bulletin/early-release-of-closing-disclosure-process-update-2/




Make sure the documents match the information in the file:

• The address (Blvd., Ave., Street, etc.), city, zip code, and county on the appraisal must match the flood certification, the taxing authority information, the survey (if applicable), and all closing documents. If there is a discrepancy, make sure that everything matches before releasing docs.

• The final 1003 must reflect the correct name(s), loan amount, interest rate, and property address, as well as all other

correct information. For FHA and VA loans, the final 1003 and 92900a (HUD/VA Addendum to 1003) that is executed at closing must be the one approved by the underwriter. View these forms by clicking the “View Images” link on the Loan Status page.

• Suggested address verification resources: o usps.com

o melissadata.com

NAME AND SOCIAL SECURITY NUMBER VARIANCES

The names and Social Security Numbers (SSNs) must be correct on all documents throughout the file.

HAZARD INSURANCE (10/3/15)

Hazard insurance is required on all loans.

• When escrowing, the hazard insurance must be in compliance.

o FAMC requires one (1) full year to be paid at closing in addition to the escrows on ALL purchases. o A paid receipt is required if shown as paid outside of closing (POC) on the CD.

• The mortgagee needs to be the EMB and not Citizens. A change request will be needed in order for Citizens to set up escrows.

• After the loan is purchased, it is the responsibility of the EMB Lender to notify the hazard insurance company to change the mortgagee to FAMC. The mortgagee clause is located at wholesale.franklinamerican.com > Closing tab.

TAXES

FAMC requires a tax certificate on all loans. The tax certificate can either be a separate document or included in Schedule

B of the title commitment. The amount escrowed must match what is documented. If escrowing based on improved taxes, provide a written statement explaining the amount calculated.

NOTE, SECURITY INSTRUMENT, AND ASSIGNMENT (2/8/19)

The Note must be endorsed over to “Citizens Bank, N.A., A National Banking Association” either on the Note directly or by use of a Note Allonge. If an Allonge is used, please send it to the EMB auditor for prior approval before executing. Refer to Funding Procedures for a Sample Note Allonge.

FAMC enforces the Government National Mortgage Association (GNMA) requirement that case numbers be evidenced on all security instruments, collateral documents, and applicable riders for all FHA and VA loans.

a. MERS Requirements (2/8/19)

Any loan utilizing a “MERS as Original Mortgagee” (MOM) must be originated by a MERS member. The EMB Lender is responsible for notifying FAMC if they are a MERS member. Provide the MERS Org ID#, initial approval date,

expiration/renewal date, and membership type (i.e. lite) to FAMC’s Broker Administration Department ([email protected]). For more information about MERS membership, please visit mersinc.org.

http://www.usps.com/

http://www.melissadata.com/


mailto:[email protected]

http://www.mersinc.org/




For all loans:

• The Transfer of Servicing Rights (TOS) and Transfer of Beneficial Rights (TOB) must be executed to Citizens Bank, N.A. in MERS.

• The MERS Org ID for Citizens Bank, N.A. is #1000103.

• MERS mortgage assignments must reference MERS in one of the following ways: o Mortgage Electronic Registration Systems, Inc.

o Mortgage Electronic Registrations Systems, Inc., as nominee for Citizens Bank, N.A., its successors and assigns

b. MERS Rider – State-Specific for Montana, Oregon, and Washington (11/17/14)

Freddie Mac and Fannie Mae announced the creation of a new joint MERS Rider (Form 3158), to be attached to an updated Security Instrument with revised MERS verbiage, for mortgages in the states of Montana, Oregon, and Washington. The new MERS Rider and updated Security Instrument must be used effective immediately.

Loans in these states are now required to be registered with MERS on the original security instrument and rider; subsequent assignments into the MERS system are not permitted. Consequently, if you wish to close loans in your name in these states, you are required to be a MERS member. FAMC will not purchase loans if the updated security instrument

and MERS rider are not utilized in these states.

Closing Documents

If FAMC draws the documents, the new MERS Rider and updated security instrument should be generated appropriately. Most document providers are already utilizing the updated documents; however, EMB Lenders are still responsible for ensuring that the correct documents are executed at closing.

Non-MERS Members

If you are an EMB Lender that table-funds and you are not a MERS member and do not wish to become one, loans with property states in Montana, Oregon, or Washington must be brokered and close in the name of Citizens Bank, N.A.

If you are interested in becoming a MERS member, please visit mersinc.org for more information. There are various levels of MERS membership, and a MERS representative can assist you in identifying the best option to suit your business needs.

If you do become a MERS member, please contact the Broker Administration Department with a copy of your MERS

approval (including Org. ID number and approval date) at [email protected] so your account may be updated accordingly. Without this information on file, you will be unable to close loans in your name in these three states.

The new MERS Rider (Form 3158) and state-specific Security Instruments can be accessed at freddiemac.com > Single Family > The Guide and Forms.

VERBAL VERIFICATION OF EMPLOYMENT (VVOE) (2/8/19)

When 1) conditions are being reviewed for non-self-employed borrowers, or 2) the underwriter has received the loan file for self-employed borrowers, FAMC will begin the Verbal Verification of Employment (VVOE) process. Upon completion of the VVOE, an expiration date will be added to the Loan Status page for the VVOE. .

• The VVOE must be good through the Note date. If the VVOE is set to expire prior to the Note date, the EMB Lender must contact their underwriting specialist and request that the date be updated.

• EMB Lenders can view the VVOE and other document expiration dates by going to the Loan Status page and clicking the date in the Approval Expires field.

http://www.mersinc.org/


http://www.freddiemac.com/singlefamily/guide/?tab=2&tog




o After the loan has been issued final approval, EMB Lenders can also obtain a copy of the VVOE for their files. Print the VVOE by going to the Loan Status page and clicking Print FAMC Completed VVOE(s).

THIRD-PARTY PROCESSING FEES (2/8/19)

EMB Lenders can choose to outsource certain aspects of loan processing to a third party. Services that may be provided by a third-party processor include, but are not limited to, the following:

• Collecting signed loan documents from the borrower,

• Obtaining borrower paystubs and tax returns,

• Ordering appraisals, and

• Performing verifications of borrower information (employment, assets, etc.). FAMC will allow reasonable third-party processing fees to be charged provided the use of the third-party processor complies with all applicable state and federal requirements:

• If the third-party processing company is affiliated with the mortgage loan officer/originator (LO) and/or the mortgage loan origination company, the third-party processing fee must be included in QM Points and Fees calculations.

• The Third-Party Processing Company Certification & Acknowledgement form must be provided on all loans that charge a third-party processing fee. Please see details in the Third-Party Processing Company Certification and

Acknowledgement section that follows.

• An invoice reflecting the fee must be included prior to closing, and the fee charged must be equal to both the invoice and the certification. Fees cannot exceed the FAMC administrative fee for the loan.

o The invoice must be computer-generated and not handwritten. o The processing invoice must include the processing company name, address, borrower name, loan number,

amount of the third-party processing fee, and description of services. o The invoice should be provided prior to closing.

FAMC reserves the right to review each third-party processing fee charged on a loan to determine:

• If the services performed merit the fee being charged, and the fee is reasonable; and/or,

• The independence of the third-party processor and processing company from the mortgage LO or mortgage LO’s company.

Generally speaking, if a third-party processing fee exceeds the FAMC administrative fee amount and/or the EMB Lender’s underwriting or administrative fees, the transaction will be reviewed more closely.

https://www.allregs.com/tpl/Viewform.aspx?formid=00043326&formtype=agency




Third-party processing fees that do not meet the requirements or are considered to be excessive cannot be charged. EMB Lenders in this scenario would need to build their processing fee into the compensation plans and make the appropriate adjustments. FAMC policy exceptions cannot be made.

Third-Party Processing Company Certification of Acknowledgement

Loans that have a third-party processing fee require the Third-Party Processing Company Certification & Acknowledgement form to be completed by the EMB Lender. The form can be found in the Wholesale Lending Guide under Forms > Product-Program and Miscellaneous Forms > Miscellaneous. A copy of this form is located at wholesale.franklinamerican.com > Forms

> Miscellaneous.

This form identifies the amount of the third-party processing fee and which services are being performed on the loan.

• The form is required for all loan types and must be provided at submission.

• The certification must be completed in its entirety, including an accurate description of services provided by the processor (commensurate with the fee charged), and must be signed by the LO.

• The processing fee included on the certification must match the amount disclosed on the LE and the invoice provided by the processor.

• The LO must confirm if the third-party processing company is an affiliate of the LO.

UCD SUBMISSION (2/8/19)

EMBs who draw closing documents through a third-party vendor are required to submit a compliant Uniform Collateral Dataset (UCD) XML file to Citizens, utilizing one of the two following methods:

• Through FAMC’s UCD upload page, located on wholesale.franklinamerican.com > Loan Status > UCD Uploads; or,

• Through the GSEs’ UCD collection portals. 1. Successfully submit the UCD file to either Fannie Mae or Freddie Mac, resolving any fatal error messages.

o Ensure the UCD file is submitted to the GSE for which AUS findings were obtained.

2. Grant Citizens access to download the UCD file via either Fannie’s or Freddie’s UCD collection portal. If this step is not completed, FAMC cannot purchase the loan.

o Fannie Mae requires the EMB Lender to establish a relationship with Citizens before assigning each loan’s UCD data to Citizens.

o Both Fannie Mae and Freddie Mac require that each loan’s UCD data be assigned to Citizens. 3. Provide FAMC with the report/certificate showing they have successfully submitted the UCD file to one of

the GSEs. This should be included in the closed loan package through Q.image and must be received prior to purchase.

o If the EMB Lender or their third-party vendor submits UCD files to both GSEs, they should provide FAMC with both reports/certificates.

o If only submitting one report/certificate, submit it from the GSE for which AUS findings were obtained. In some instances, submitting the report/certificate for the other GSE may result in a false

negative. o For GSE-specific products, provide FAMC with the report/certificate from the GSE that offers the

applicable product.

For complete UCD submission information, refer to Memo No. 18-07-09 and the job aids at wholesale.franklinamerican.com > Resources > Emerging Mortgage Banker Materials > Uniform Closing Dataset (UCD) Training Materials.

J. TITLE COMPANIES & POLICIES (10/3/15)

FAMC publishes an excluded list including Title Companies. The Exclusionary List is at wholesale.franklinamerican.com >

Resources. It is required that an ICPL from the Title Company is provided with each closing. FAMC will validate the ICPL prior to closing for FAMC-drawn closing packages and prior to purchase for third-party closing packages. The title policy and ICPLs must be in the

EMB Lender’s name.





https://memos.franklinamerican.com/bulletin/reminder-uniform-closing-dataset-ucd-submission/






K. APPROVED THIRD-PARTY DOC VENDORS (11/17/14)

Beadles, Newman & Lawler Encompass 360 Online Documents, Inc.

Black, Mann & Graham FirstFunding PeirsonPatterson L.L.P.

Creative Thinking Gregg & Valby L.L.P. Polunsky & Beitel, L.L.P.

Document Express Guardian Mortgage Documents RapidDocs

DocMagic * International Document Systems (IDS) Robertson & Anschutz, P.C.

Doc Prep Services Inc. Jackson Law Firm Schwartz & Associates

Docu Prep McGlinchey Stafford and Youngblood & Bendalin L.L.P. www.Proclose.com

Docutech M.D. Gibson & Associates, P.C.

EllieMae (DocMagic Version) MRG Document Technologies

* FAMC has an approved EMB Loan Document set for all states.

L. EXECUTING THE DOCUMENTS (2/8/19)

Every document must be signed above the signature line and match how the documents have been drawn. If the name is “John A. Smith”, then every document must be signed “John A. Smith.”

POWER OF ATTORNEY (POA) (2/8/19)

• The POA must be specific or military and must be approved by FAMC prior to the closing.

• If FAMC is drawing docs, be sure to show “Yes” in the Power of Attorney (POA) drop-down box on the Borrower & Seller screen in Q.docs, and enter the name of the POA as it shows on the POA document.

• When using a POA for the borrower/co-borrower, the actual signature and accompanying verbiage must match exactly with the name and verbiage underneath and be completely above the signature line. For example:

John Smith by Mary Smith as Attorney-in-Fact John Smith by Mary Smith as Attorney-in-Fact

For additional POA guidelines, refer to the Power of Attorney section in the Lending Guide.

APPROPRIATE PARTY SIGNATURES

All the appropriate parties must fully execute all documents (borrowers, sellers, EMB Lenders, settlement agents, listing

agents, etc.).

INITIALS

If the Note has a designated place for the borrower to initial the bottom of each page, FAMC requires the borrower(s) to initial each page of the Note. FAMC will not require the pages of the Note to be initialed if there is not a designated spot for the borrower(s) to initial; however, if the borrower(s) initial the Note at the bottom of the page when there is no designated place to initial, then all pages must be initialed to maintain consistency throughout the document.

CORRECTIONS

If for any reason there is a discrepancy with the documents (date, SSN, city, etc.), the borrower(s) must correct and initial

in every place that the mistake occurs within the package.

CLOSING DISCLOSURE (CD) (2/8/19)

This disclosure provides information to the consumer to help them understand all costs involved in the mortgage loan transaction. The consummation date for EMB loans, in all states, is defined as the date that the borrower(s) sign the mortgage Note.

• Delivery Requirements and definitions: o The EMB Lender must ensure that the CD is delivered to the consumer no later than three (3) business days

before consummation. The loan documents cannot be signed until the third (3rd) business day after the CD is

http://www.proclose.com/




considered delivered. If documents are ordered through Q.docs, FAMC will disclose the CD to all applicable parties. If a third-party document vendor is utilized, the EMB Lender or third-party document/fulfillment provider will be responsible for disclosing the CD.

o Definition of Business Day: For the CD, a business day means all calendar days except Sundays and legal

public holidays. **Please note that this is a different definition than business days for purposes of the LE.

• Who must receive the CD? o Purchase Money Loan: FAMC requires the CD to be disclosed to the primary borrower only. o Rescindable Transaction: The CD must be given separately to each consumer who has the right to rescind

under TILA.

CD Timing Reference Guides

First Class Mail Delivery

If the CD is Mailed On: THEN Assume Receipt On: THEN Business Days Are: AND Loan Can Close On:

Monday Thursday Thursday, Friday, Saturday The second Monday

Tuesday Friday Friday, Saturday, Monday The second Tuesday

Wednesday Saturday Saturday, Monday, Tuesday The second Wednesday

Thursday Monday Monday, Tuesday, Wednesday The second Thursday

Friday Tuesday Tuesday, Wednesday, Thursday The second Friday

Saturday Wednesday Wednesday, Thursday, Friday The second Saturday

All Other Delivery Methods (E-Sign, in person, overnight)

If the CD is

Acknowledged On: THEN Business Days Are: AND Loan Can Close On:

Documentation Must Reflect

Acknowledgment of CD on:

Monday Monday, Tuesday, Wednesday Thursday Monday

Tuesday Tuesday, Wednesday, Thursday Friday Tuesday

Wednesday Wednesday, Thursday, Friday Saturday Wednesday

Thursday Thursday, Friday, Saturday Monday Thursday

Friday Friday, Saturday, Monday Tuesday Friday

Saturday Saturday, Monday, Tuesday, Wednesday Saturday

Sunday Monday, Tuesday, Wednesday Thursday Monday

Delivery Requirements For Loans With Multiple Borrowers

Purchase Money

The CD can be given to the primary applicant or any consumer with primary liability for the loan.

Rescindable Transaction

The CD must be given separately to each consumer who has the right to rescind under TILA.

• Proof of CD delivery o For documents that are ordered through Q.docs, FAMC will disclose the CD to all applicable parties and

maintain proof of delivery.

o For loans through third-party doc vendors, proof of delivery must be submitted with the closed loan file for purchase. Please see the chart below regarding what will be required as proof of delivery based on type of delivery.

Acceptable Delivery Methods for the CD


In Person

The CD may be provided to the borrower in person. The disclosure is

considered “delivered” once the disclosure has been given to the borrower.

Signed and dated copy of the

disclosure.




Acceptable Delivery Methods for the CD


Email

Email delivery is allowed, provided it is E-Sign compliant with FAMC policies.

Note: If email delivery was not in compliance with the E-Sign Act, all timing requirements default to First-Class Mail.

E-Sign compliant acknowledgement received by the creditor.

Overnight It is acceptable to deliver the CD via UPS, FedEx, or other national delivery services. The disclosure is considered “delivered” once the overnight package containing the disclosure has been signed for.

Signed and dated copy of the delivery notice.

First-Class Mail

Delivery of the disclosure via first-class mail delivery is acceptable. For timing purposes, four (4) business days for mailing, including the day the

document was mailed, are required. The document is assumed to be/considered “delivered” on the 4th day. For example, if the document was mailed on Monday, count Monday, Tuesday, Wednesday, and Thursday of the same week. Delivery is assumed to be on Thursday.

No proof of delivery is required;

however, a copy of the disclosure must still be maintained in the file.

• CD Revisions and Corrections o Creditors must redisclose terms or costs on the CD if certain changes occur to the transaction after the

disclosure was first provided that caused the disclosure to become inaccurate. Please note that after a CD

has been received by the borrower, a revised LE cannot be disclosed. o There are three (3) categories that require a corrected CD:

▪ Changes that occur before consummation that require a new three (3) business day waiting period. ▪ Changes that occur before consummation and do not require a new three (3) business day waiting

period. ▪ Changes that occur after consummation.

If the change is… Then the delivery requirement is…

APR varies by 1/8th for Fixed or 1/4th for

ARMs No later than the third business day BEFORE consummation

Any numeric correction (fee, changes to

seller paid amounts, etc.) that occurs during the 30 calendar day period after consummation

Providing a corrected CD no later than 30 calendar days after receiving

notification of fee change. Any refunds for excess fees charged must be provided to the consumer no later than 60 days after consummation along with the corrected CD reflecting the refund.

Any non-numeric/clerical correction that occurs during the 60-day calendar period after consummation

Provide a corrected CD no later than 60 days after consummation

M. RESCISSION AND DISBURSEMENT DAYS (9/24/10)

Saturdays count as a rescission day. Holidays and Sundays are not counted in the rescission period. No transaction may fund on Sunday, or a legal federal holiday. The following are not subject to the three (3) day right of rescission period:

• Investment properties

• Second homes

• No Cash-out Construction-to-perm refinances (if property is vacant at the time of closing/consummation) o Cash-out Construction to perm refinances (if allowed by the Product Description) DO require the rescission

period.




N. FUNDING PROCEDURES (10/3/15)

PRIOR TO FUNDING (10/3/15)

• Before authorizing the funding, the EMB or Fulfillment Center (if applicable) will carefully review the following: o All signatures on the Note, security instrument, and Also Known As (AKA) Statement must reflect exactly as

drawn.

o All prior to funding conditions must be satisfied (items on Underwriting Disposition). o The Note and security instrument must reflect final loan amount, interest rate, Case # (for Government

loans), and MERS MIN #. o FAMC recommends that EMB Lenders obtain final underwriting approval prior to closing the loan. Closing the

loan prior to the receipt of final underwriting approval may result in the loan becoming ineligible for purchase by FAMC.

Note: FAMC will not purchase an FHA loan with a Note Date prior to the DE final approval date.

• After the EMB or Fulfillment Center is satisfied, they will authorize the settlement agent to disburse funds.

• Important note: EMB Lenders must fund the loan on their line and submit the loan to FAMC prior to the expiration of the lock.

POST FUNDING (8/31/18)

• The settlement agent is required to ship all executed closing documents directly to the EMB or Fulfillment Center after funding unless otherwise instructed by the EMB. Some EMBs require the Collateral Package to be shipped directly to the Warehouse Bank.

• Once received by the EMB, all documents will be thoroughly reviewed for accuracy, consistency, and compliance prior to delivery to FAMC. This will help avoid delays in the purchase process.

• Prior to shipping the closed loan package to FAMC for auditing and purchase, the EMB must endorse the Note or provide a Note Allonge. Both must be executed by an authorized signer. The interim endorsement on the Note should read as follows:

Pay to the order of Citizens Bank, N.A., A National Banking Association

By: ________________________________ (signature) Name: _____________________________ (printed name) Title: ______________________________

• Loans are eligible for purchase provided all of the following are true:

o All prior-to-purchase conditions have been received and cleared. o It is at least the second business day after the Original Note and Allonge (if applicable) have been received

and approved by FAMC.

o It is at least the third business day from when the loan disbursed with the EMB’s funds.

No same-day fundings.




Sample: Allonge with required information:

ALLONGE TO NOTE

RE: (Property address exactly as it appears on the Note/Security Instrument) LOAN: (#)

LOAN AMOUNT: ($) ALLONGE TO NOTE DATED: (note date)

IN FAVOR OF: (EMB’s company information exactly as it appears on the Note / Security Instrument) [Example: ABC Mortgage DBA Any Mortgage Company, Inc.] AND EXECUTED BY: (Borrower(s) name(s) exactly as shown on the Note/Security Instrument)

PAY TO THE ORDER OF Citizens Bank, N.A., A National Banking Association

WITHOUT RECOURSE THIS: (note date) (EMB’s company information exactly as it appears on the Note / Security Instrument) [Example: ABC Mortgage DBA Any Mortgage Company, Inc.]

BY: ______________________ NAME: ______________________ TITLE: ______________________

O. REMITTANCE OF FHA UFMIP, VA FUNDING FEE, AND USDA-RD GUARANTEE FEE (10/3/15)

FAMC allows a select group of EMB customers to remit their own FHA Up Front Mortgage Insurance Premium (UFMIP) and/or VA

Funding Fee (VAFF) payments directly to HUD and VA. This option requires prior approval from FAMC and is only available to EMB Lenders who have previous experience handling the remittance of the UFMIP and/or VAFF. EMB Lenders who would like to be considered for this option will need to contact their AE.

Regardless of whether an EMB is approved to remit the UFMIP and/or VAFF, FAMC is still responsible for insuring all government loans. The loan will not be purchased by FAMC if the EMB Lender has already insured the loan.

FHA UP FRONT MORTGAGE INSURANCE PREMIUM (UFMIP) (8/31/18)

If FAMC is remitting the UFMIP, it will be done at the time of purchase. If the approved EMB remits the payment, FAMC must receive acceptable proof of payment documentation before the loan will be purchased. Please refer to the late fee guidelines for FHA UFMIP in Section V of this procedures document.

Under-Disclosed Mortgage Insurance Premium (MIP)

Loans with under-disclosed MI cannot be purchased by FAMC. If the EMB Lender closes a loan with under-disclosed MI, the

loan must be corrected prior to FAMC purchasing the loan.

VA FUNDING FEE (VAFF) (1/27/14)

If FAMC is remitting the VAFF, it will be done at the time of purchase. If the approved EMB remits the payment, FAMC must

receive acceptable proof of payment documentation before the loan will be purchased. Please refer to the late fee guidelines for the VA Funding Fee in Section V of this procedures document.




USDA-RD GUARANTEE FEE (10/3/15)

FAMC obtains the Conditional Commitment (Form RD 3555-18) and thus is responsible for the remittance of the Guarantee Fee to Rural Development (RD). The Guarantee Fee is paid by the borrower on the CD. In order to comply with the USDA requirements, FAMC net funds the USDA Guarantee Fee on all EMB loans.

• On the CD, USDA Guarantee Fee may be made payable to “USDA”, or “(EMB Lender) fbo USDA”. Both of these will be acceptable.

• The EMB must net fund the USDA Guarantee Fee from the wire they send to the title company for closing. FAMC will net fund the USDA Guarantee Fee, and it will be itemized on the EMB Lender’s purchase advice. FAMC will finalize remittance of the Guarantee Fee electronically to RD at the time FAMC purchases the loan.

P. CLOSED LOAN SUBMISSIONS (5/31/17)

VIA UPLOAD (5/31/17)

EMB Lenders should upload the closed loan package to wholesale.franklinamerican.com. The EMB Closed Loan Submission

Form (For Purchase) (available at wholesale.franklinamerican.com > Forms > EMB) must be included in the uploaded package to ensure that the EMB auditor knows whom to contact. Please note that EMB Lenders that use fulfillment companies will still need to submit closed loan packages via email using

the process outlined in the section below. Once the loan receives final approval and is in the “U/W – Approved” or “Docs-Out” stage, a closed loan package may be uploaded by following the steps below. Only PDF or TIFF files can be uploaded.

1. Log into wholesale.franklinamerican.com and select a loan from your pipeline to be rerouted to the Loan Status page.

2. Under the Closed Loan Submission section toward the bottom of the page, select the applicable file using the browse

function and then click Upload. If Closed Loan Submission does not appear in the green banner, please contact an EMB auditor.

3. Once the package is uploaded, the Closed Package Received date will populate. The name of the FAMC EMB auditor

will populate in the Auditor field once the loan is assigned to an auditor.

Note: If the package is uploaded on a holiday or weekend, or after 5 p.m. local time of the EMB Lender, the following business day will populate.

VIA EMAIL (5/31/17)

The email method of delivery can only be used by a fulfillment company submitting a closed loan package on behalf of the EMB Lender. EMB Lenders submitting a closed loan package themselves must use the upload method outlined above.

How to submit completed closed loan packages via email:

1. The document must be saved as a Portable Document (PDF) or a Tagged Image Format (TIF) file extension.

2. The EMB Closed Loan Submission Form (For Purchase) needs to be attached as the cover sheet. a. Make sure the fully completed loan file is being sent with the cover sheet to FAMC.










3. All closed loan packages should be emailed directly to [email protected].

4. The email must include both the loan number and borrower’s name in the subject line. Closed loan packages submitted via email must be received by FAMC no later than 5 p.m. local time of the EMB Lender in order to be considered received on that day. Anything received after 5 p.m. will be considered as received on the following business day.

If a Purchase Condition Notice is issued, any conditions to be met should be sent directly to the EMB auditor. The EMB Lender or Fulfillment Center (if applicable) should retain the original closed loan file until the loan purchase is completed in the event case corrections are required. After the loan has been purchased, the original file does not need to be sent to FAMC.

COLLATERAL DOCUMENTS TO BE SHIPPED TO FAMC (8/31/18)

Regardless of the delivery method used, the following original documents need to be shipped to FAMC for processing to the

delivery address shown below:

Document Delivery Address

• Original Note

• Original Allonge (if applicable)

• Bailee Letter

Franklin American Mortgage Company, a division of Citizens Bank, N.A. EMB-1000

5221 N. O’Connor Blvd., Ste. 1000

Irving, TX 75039

Q. PURCHASE CONDITIONS (5/31/17)

When applicable, EMB Lenders can upload purchase conditions on the Loan Status page. Please refer to Memo No. 14-05-14 for

instructions.

R. AUDITING PROCEDURES (2/8/19)

• FAMC will audit the package and issue a purchase condition notice detailing what is required to purchase the loan, or purchase the loan within forty-eight (48) hours after receiving the closed loan package.

• FAMC requires the batch number for the transfer of the MIN number for all EMB Lenders who are MERS members utilizing their own MIN number prior to purchase.

• When the file is complete and ready for purchase, the funds will be wired the following morning to the EMB’s Warehouse Bank and the EMB will receive a purchase advice. FAMC must have the correct wiring instructions.

• FAMC fees will be net funded from the wire in addition to any late fees and prepaids that might occur. Refer to Late Fees.

S. COMMON PURCHASE CONDITION ITEMS (2/8/19)

• Figures on the executed CD do not match the final closing instructions.

• Security instrument is not a certified copy.

• Signatures on the executed CD are incorrect, missing, or

undersigned.

• Legal description on the security instrument does not

match the title commitment.

• Escrow amount collected on the executed CD does not match the Initial Escrow Account Disclosure Statement.

• Legal description is missing or not attached to security instrument.

• Borrower’s name or address is incorrect on the hazard insurance policy.

• Applicable riders to the security instrument are missing.

• Mortgagee clause on the hazard insurance is incorrect. • Notary acknowledgement on the security instrument is

incorrect.

• Mortgagee clause on the flood insurance is incorrect. • Non-purchasing spouse did not sign the security

instrument or Right of Rescission (ROR) Notice.

• Note is not endorsed. • Borrower(s) executed rescission papers on a different

date than the security instrument.


https://www.franklinamerican.com/wiki/_media/public_extranet/wholesale_bulletins/140514.pdf

https://franklinamerican.com/documents/wholesale/Closing/After_1-1-2016.pdf




• Note is endorsed incorrectly. • Borrower(s) did not sign the rescission papers.

• Signatures on the Note are incorrect, missing, or undersigned.

• Loan disbursed prior to the end of the rescission period.

• POA verbiage on the Note is missing or is not properly executed via POA instructions.

• Dates on the rescission papers are incorrect.

• Property address on the Note does not match the appraisal and tax certificate.

• Underwriting conditions from the final approval were not met.

• Alterations on the Note were not initialed. • Final 1003 is not signed by the borrower(s).

• Signatures on the security instrument are incorrect, missing, or undersigned.

• Final 1003 is not signed by the loan officer.

• POA verbiage on the security instrument is missing or is not properly executed via POA instructions.

• HMDA information on the final 1003 is incomplete or missing.

• Property address on the security instrument does not

match the appraisal and tax certificate. • Collateral package has not been received by FAMC.

• Alterations on the security instrument were not initialed.

• Missing a copy of each borrower’s photo ID.

T. HIGHER-PRICED MORTGAGE (HPML) DETERMINATION INSTRUCTIONS (2/8/19)

EMB Lenders must use the Federal Financial Institution Examination Council (FFIEC) rate spread calculator for HPML determination. The rate spread calculator generates the spread between the Annual Percentage Rate (APR) and a survey-based estimate of APRs using Average Prime Offer Rates (APOR). An APOR is an APR that is derived from average interest rates, points,

or other loan pricing terms currently offered to consumers. The calculated “Rate Spread” is used to determine whether a loan qualifies as a Higher Priced Mortgage Loan (HPML).

• EMB Lenders must submit a printout of the HPML determination with their closed loan package.

• Review the EMB HPML Determination Job Aid for detailed instruction on utilizing the calculator.

• Detailed HPML procedures can be found on the Wholesale Lending Guide > Compliance & Risk > Compliance > Federal > TILA – Higher-Priced Mortgage Loan Procedures.

U. UNDISCLOSED DEBT (11/17/14)

Undisclosed debt is generally considered either new debt or customer obligations not otherwise reported on the initial or final loan application. Borrowers have an obligation to inform their Lender of any new debt or change in financial responsibility that occurs prior to closing the loan. Any consumer debt that is not on the loan application, credit report, or otherwise not disclosed

throughout the loan process is considered undisclosed debt. This includes all new debt acquired after credit is pulled at time of initial application through loan closing. Any new debt obtained by the borrower(s) will require the loan to be re-underwritten to account for the additional credit; any

new inquiries must be addressed by the borrower(s) with a signed letter of explanation. While the new disclosure informs the borrower(s) of their responsibilities, EMB Lenders are strongly encouraged to educate their customers on these guidelines and their obligations.

FAMC strongly encourages EMB Lenders to utilize the Undisclosed Debt Acknowledgement disclosure (or a similar disclosure) for all loans. The disclosure is available at wholesale.franklinamerican.com > Forms > EMB for your convenience. EMB Lenders are responsible for ensuring that no new debt has been incurred on or before the date of the note.

V. LATE FEES (11/16/17)

All EMBs

• All closed loans MUST be delivered to FAMC, in purchasable condition, prior to lock expiration, by 5:00 p.m. in the local time zone of the EMB Lender. If the lock has expired prior to delivery, the loan must be relocked at worse case pricing. If the lock expires after delivery, FAMC will grant a two (2) business day “Grace Period” to cure any deficiencies. If the

https://cfpb.github.io/hmda-platform-tools/rate-spread/

https://www.allregs.com/tpl/viewform.aspx?source=TOC&formtype=toc&formid=cfe2d2a6-30d6-472e-b99f-d8394a4035bb

https://franklinamerican.com/?npage=home




loan is still not purchasable after the grace period, the loan will be subject to a two (2) basis point per day “Cure Fee” up to a maximum of fifteen (15) calendar days. At the end of the 15-day cure period, if still not purchasable, the loan will be subject to a mandatory re-lock at worse case pricing plus the accrued cure fees. The loan can always be relocked at worse case pricing once the original lock has expired plus accrued cure fees, if any.

• Loan amount x .02% x # of days = Cure Fee FHA EMBs

• The loan MUST be purchased eight (8) calendar days after the interest date on the CD, regardless of weekends or holidays. If it is not, there will be a 4% fee added to the UFMIP.

• Original UFMIP $$ x 4% = The late charge VA EMBs

• The loan must be purchased twelve (12) calendar days after the closing date, regardless of weekends or holidays. If the loan is not purchased, there will be a 4% fee added to the funding fee.

• Original VA Funding Fee $$ x 4% = The late charge

Note: These late fees will be net funded when FAMC purchases the loan.

W. FINAL DOCUMENT TRANSMITTAL (8/31/18)

EMB Lenders are responsible for delivering all final documents (docs) to FAMC within sixty (60) days of the loan purchase date.

This is outlined in the EMB Loan Purchase Agreement > Article II – Purchase and Sale of Mortgage loans > Section 2.5 “Closing and Delivery of Documents”. Note: Final docs are separate from those docs included in the closing package.

Final docs required to be submitted to FAMC:

• Original recorded mortgage

• Final title policy - Please refer to the Title Companies & Policies section for additional information.

EMB Lenders should utilize the EMB Final Document Transmittal Form to deliver all final docs to FAMC. The form is located at wholesale.franklinamerican.com > Forms > EMB.

Upon receipt, please deliver all final documents to:

Franklin American Mortgage Company, a division of Citizens Bank, N.A.

Attn: Final Documents 6100 Tower Circle

Suite 600 Franklin, TN 37067

FAMC’s post-closing department will submit a monthly “Outstanding Final Document Report” to all EMB Lenders to indicate if there are any outstanding documents on a loan. If the report indicates that a document is missing, the EMB Lender should submit

the document along with the EMB Final Document Transmittal Form, as indicated.

Equal Housing Lender. Franklin American Mortgage Company, a division of Citizens Bank, N.A., a national banking association, whose address is One Citizens Plaza, Providence, RI

02903. Company NMLS #433960. For mortgage banking professionals only; not authorized for distribution to consumers or third-parties. All info herein is current as of the last revision date and subject to change without notice.




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