Disclosure Specialist Responsibilities. Lock Procedures. Processor Responsibilities. Appraisal Ordering

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1 FHA 203K Streamline - Policies & Procedures FHA 203K Streamline will now be underwritten and funded in house. These applications should be originated in Mortgage Builder under the FHA203K-SR program code. The Self-Help program, FHA203K-SH, requires management approval by Corporate. All underwriting and funding of these loans will be handled by the Corporate office. Flow Process 1) Loan Officer takes a complete loan application MB screens completed per 3 Day Delivery Procedure 2) Disclosures must be sent within 3 days by Disclosure Specialist 3) File is Submitted to the Processor as soon as possible upon completion of the LO Checklist 4) Processor reviews file, provides the Loan Officer with Needs List of any items needed and orders appraisal and/or home inspection 5) Processor collects conditions and submits to the Corporate Underwriter for Approval 6) Upon loan decision, Underwriter forwards file to U/W Manager for 2 nd Signature 7) Corporate Underwriting Department submits file to SWMC for review, additional conditions may apply 8) Once the file is approved, the Loan Officer and Processor work to obtain and submit the Prior to Doc conditions 9) Loan must be locked with Secondary Prior to Docs 10) Once file is CTC, Loan Officer confirms fees and Processor submits doc order 11) Docs are drawn 12) Docs are reviewed 13) Processor and Loan Officer follow up on Prior to Funding Conditions 14) Please allow additional 72 hours for funding 15) 1 st draw will be disbursed at funding by SPFC 16) 2 nd draw will be disbursed upon completion of repairs by SWMC Loan Officer Responsibilities 1) Take a complete application in Mortgage Builder 2) Run Credit and AUS 3) Complete Mortgage Builder fields per the 3 Day Disclosure Delivery Procedure. PRO ) Submit file to Processor with initial documentation required as per LO checklist 5) Obtain additional documentation from borrower as needed by the Processor until the loan can be submitted 6) Work with Processor to obtain Prior to Docs conditions once the loan is underwritten by the Corporate Underwriter 7) Manually lock loan with Secondary (see procedures on page 2) 8) Work with Processor to obtain Prior to Funding conditions Page 1

2 Disclosure Specialist Responsibilities 1) The correct Fees ID is 203K 2) Disclose a Supplemental Origination Charge of $ on Line 815 (Box 1) 3) Processing and Underwriting Fees can not be charged 4) Appraisal Fee is $ on Line 804 (Box 3) 5) Final Inspection Fee is $ on Line 808 (Box 3) 6) Home Inspection Fee is $ on Line 810 (Box 3) 7) Title Update Fee is $ on Line 1112 (Box 4) 8) 203K Consultant Fee may be added as a Change Circumstance within 3 days of receipt of Home Inspection. The Fee to disclose is $ on Line 1304 (Box 6) Add 203K Consultant to the Service Provider List 9) Contingency Reserve and Rehab costs are not disclosed on the GFE 10) Disclosure Print Group is 1-FHA203K-2010-Disclosures Lock Procedures 1) Full loan application must be completed in Mortgage Builder to register the loan 2) Loan must be locked manually. Use Standard Lock Request Form 3) Cut off time is 1:00pm PST Processor Responsibilities 1) Process file as normal 2) FHA case number to be ordered with section of the act as 702 and 203K Consultant ID 203KS 3) Complete the 203K Maximum Mortgage Worksheet in Mortgage Builder. a. Menu structure for access to the 203K Worksheet within Mortgage Builder Origination > Processing > FHA > 203K Documents > 203K Maximum Mortgage Worksheet 4) Processors must obtain the Contractors signed and completed W-9 form and Insurance to be included in the submission package to Underwriting 5) Order Appraisal per instructions provided below 6) Order Home Inspection Report, if required, through HVCC Desk. (Home Inspections required for all REO and vacant properties and for properties requiring the services of a consultant) 7) Upon approval, work with Loan Officer to obtain Prior to Doc conditions 8) Once loan is CTC confirm fees with the Loan Officer and order docs 9) Confirm loan terms in Mortgage Builder are correct 10) Work with the Loan Officer to obtain Prior to Funding conditions and submit them to the Corporate Funding Department Appraisal Ordering To place an order for this specific program the processor must provide the following: Purchase Contract Contractor Bids (they will not process the order without these) Self-Help agreement if applicable The fee for a 203K report is $ Average turn around time is approximately 8-10 calendar days Log into Processor must select 203K in the Sub Loan type Field Proceed as normal on the appraisal ordering process Page 2

3 Underwriting Responsibilities All FHA Streamline 203K loans must be underwritten by Corporate Underwriting and require a 2 nd signature from Corporate Underwriting Management When calculating the total loan amount, drop off the cents from your bid and sales price or round down to the nearest dollar. Do not round up a. Example = Sales price $152,000, total rehab costs $8, = $160, x 96.5% = $155, (drop off cents) Base loan amount $155, The Underwriter is responsible for the completion of the Maximum Mortgage Worksheet in Mortgage Builder. This form is found under Origination > Underwriting > FHA Underwriting > FHA 203K > 203K Worksheet Completion of Maximum Mortgage Worksheet Page 3

4 While in the Purpose field, use the look-up to open the table. Select the purpose, Purchase or Refinance, and while holding the Control key down, also select Streamline. See example below Additional Underwriting Requirements Include the Following: 1) Ensure that there are no more than 5 units or 25% of a given condo project that are undergoing rehab at any one time. Verify with title if there are any FHA loans in the project. If there are, look up on the FHA connection to verify that these are not 203K 2) It is required that the purchase agreement include the provision that the buyer applied for 203K financing and that the contract is contingent upon buyer s acceptance of additional required improvements as determined by HUD or the lender. If missing, the Underwriter will need to list this condition in the loan approval 3) Upon receipt of all PTD conditions, U/W submits file to SWMC for review Doc s and Funding: All FHA Streamline 203K loans must be drawn and funded in the Inland Empire closing department. There is a 72 Hour turn time for funding. Doc Drawer Responsibilities: Page 4

5 1) Supplement Origination Fee of 1.5% of the Total Rehab Costs paid to Lender (Line 815) 2) Collect for 2 Final Inspection Fees of $ each paid to the Appraiser (Line 808) 3) Home Inspection Fee of $ paid to the Home Inspector (Line 810) 4) Consultant Fee may be charged if there was a Consultant and it was included on the GFE. An invoice must be provided with the doc order. he fee will go on Line 1304 and is paid to the Consultant. 5) Add condition that Initial Draw must be paid to the Contractor 6) The following docs must be included in the Doc Set sent out to be signed unless they are included in the file already signed: a. Homeowner/Contractor Agreement b. Self Help Agreement c. Rehabilitation Loan Rider to the DOT or Mortgage d. Rehabilitation Loan Agreement e. 203K Borrower s Acknowledgement f. Escrow Commitment Certification g. Escrow Commitment Procedure h. Interest on 203K Repair Escrow Account i. Notice to Borrower Regarding 203K Program j. 203K Applicant Acknowledgement k. Information for Contractors l. Consultant Expectations (if applicable) m. Consultant Identity of Interest (if applicable) n. Interview Form for Contractor & Consultant (if applicable) 7) Condition for 2 Title Updates (101.6 Endorsements) Funder Responsibilities: 1) Review HUD for Fees as listed above 2) Review HUD to ensure that the Title Endorsements are included 3) Include the Initial Draw in the final wire a. Initial Draw is the LESSER of bid for material costs or 50% of the total bid b. Included on the Draft Wire detail Screen in the F6 Add Button c. Label as 203k Initial Draw paid to Contractor This announcement will be posted in the P directory under Announcements Secondary. If you should have any questions regarding this announcement, please contact Secondary. Page 5