1.0 Purpose and Scope The Correspondent Lending Division of Impac Mortgage Corp. (Impac) provides guidance for the purchase of Impac-qualified closed loans from correspondent sellers. This policy outlines the requirements and other factors pertaining to a correspondent seller s eligibility to conduct business with Impac. 2.0 Policy Directives Correspondent sellers must: Originate loans directly through their retail/wholesale operations. Close the loan in their name using their warehouse line. Financial institutions subject to oversight by the FDIC, NCUA, OTS, Federal Reserve or Comptroller of the Currency are exempt from this requirement. Ship the loan to Impac s Correspondent Lending Division for data/compliance review and purchase. 2.1 Approved States for Property Origination All states allowed Exception: Missouri not allowed for the AltQM Series programs. Qualified correspondent sellers will be allowed to originate home equity loans and junior liens in Texas (Texas 50(a)(6) loans). Seller s qualifications must be reviewed and approved by Impac s Client Administration prior to accepting Texas 50(a)(6) loans for purchase. Note: State-specific regulatory requirements supersede all Underwriting guidelines established by Impac. 2.2 Internet Access The Impac website - https://www.impaccorrespondent.com - provides correspondent sellers with access to Impac s policies and procedures, product matrices and announcements. Note: Correspondent sellers must request credentials from a Relationship Manager to gain access to the secure correspondent websites used for uploading Fannie Mae 3.2 files with Impac. Correspondent Seller Page 1 of 7
2.3 Correspondent Seller Eligibility Sellers who wish to participate in the Impac Companies Correspondent Program must meet the following eligibility criteria: Be properly licensed and authorized to originate and sell loans meeting Impac s product line and underwriting requirements. Have been in business for at least two years. Note: In cases of newer firms, principals should have a minimum of seven years experience in mortgage lending. Have a good reputation in the industry with proven references, and a high level of professionalism and strong ethical standards. Have a minimum tangible and verifiable net worth of $400,000 derived from current financial statements. For delegation of underwriting authority, a minimum tangible net worth of $1,000,000 derived from financial statements audited by a Certified Public Accountant is required. Maintain a current Errors and Omissions Insurance Policy and Fidelity Bond with a minimum coverage of $300,000 per occurrence. Have a good standing rating with all governmental licensing and revenue collection agencies, including a public record clear of any significant civil or criminal judgments. Note: A correspondent seller whose firm has been suspended, is currently under investigation by any governmental agencies or has an open judgment in excess of $25,000 will not be approved and will not be renewed to conduct business with Impac. All principal officers, owners and/or partners must have an acceptable personal credit profile. In the case of corporations, the entity must have a satisfactory corporate report. Past credit difficulties will be reviewed on a case-by-case basis. A letter from the correspondent explaining the derogatory item(s) is required. Financial institutions subject to oversight by the FDIC, NCUA, OTS, Federal Reserve or Comptroller of the Currency may have this requirement waived. All key personnel, as well as all names under which the lender is currently doing business, will be compared to state and local licensing verification, the Freddie Mac Exclusionary list, the HUD Limited Denial of Participation list and any other Correspondent Seller Page 2 of 7
verification deemed necessary to verify the validity of the information submitted for approval. In addition, an acceptable business credit report may be required for approval, ordered by Impac if necessary. 2.4 Correspondent Seller Eligibility Documentation Correspondent sellers must provide the following documentation to Impac for review: Completed Correspondent Lending Seller Application, signed and dated Mortgage Loan Purchase and Sale Agreement ( Agreement ), signed and dated Addendum One to Mortgage Loan Purchase and Sale Agreement ( Addendum ), signed and dated Completed Credit Consent, signed and dated Corporate Resolution Completed Loan Fraud Zero Tolerance form, signed and dated Completed Power of Attorney, signed and notarized Most recent two years audited and most recent interim unaudited financial statements (within the past five months) Completed Anti-Money Laundering and Suspicious Activity Reporting Attestation form, signed and dated Current resumes for all principal officers and senior managers addressing mortgage experience Note: Additional resumes may be required dependent upon requests for additional authority levels, e.g., for Delegated Underwriting approval Quality Control policies, along with most recent Quality Control audit report including management responses Company compliance review policy and procedures Company s Appraisal Independence Requirements (AIR) policy Agency approval letters, with approval date and ID number Correspondent Seller Page 3 of 7
Three business references currently engaged in business with the correspondent seller, including most recent investor scorecards, if available, from the investors. Proof of current fidelity bond or bankers bond, and errors and omissions insurance (and/or surety bond), with coverage meeting agency guidelines with a minimum of $300,000 per occurrence. Copy of correspondent seller s Third Party Origination (TPO) Policy and Procedures, if applicable W-9 MERS number Impac will verify the validity of information submitted for approval through state and national licensing search engines, Freddie Mac s Exclusionary list, HUD Limited Denials of Participation list, and any other verification process deemed necessary. On occasion, Impac may also order a current business credit report. 2.5 Product Approval Delegated correspondent sellers must be specifically approved to underwrite conventional and/or government loans to Impac. Conventional: No specific eligibility requirements necessary Government: Must be HUD-approved with either a DE Underwriter and/or a VA LAPP-approved Underwriter on staff. To be approved and to maintain their delegated underwriting authority, correspondent sellers must reflect a tangible net worth of at least $1,000,000 as derived from financial statements audited by a Certified Public Accountant. Failure to maintain the minimum net worth may result in the suspension of the seller s underwriting authority. 2.6 Full Underwriting Program Impac offers a full underwriting program for the following programs: All Fannie Mae and Freddie Mac loan products USDA Jumbo loans Alt QM loans Correspondent Seller Page 4 of 7
FHA and VA Loan approvals are subject to compliance and closing document review by due diligence reviewer and internal Quality Control review. Refer to the Correspondent Seller Delivery, Purchase Review and Funding Policy and the Correspondent Seller Delivery, Purchase Review and Funding Procedure for more information. 2.7 Proof of Fidelity Bond, Errors & Omissions Insurance, Direct Surety Bond, and Directors and Officers Liability Correspondent seller must have a blanket fidelity bond or bankers bond and an errors and omissions insurance policy in effect at all times that satisfy current Fannie Mae / Freddie Mac guidelines. These policies must insure the correspondent seller against losses resulting from dishonest or fraudulent acts committed by the correspondent seller s personnel, any employees of outside firms that provide data processing services for the correspondent seller, and temporary contract employees or student interns. The fidelity bond also should protect against dishonest or fraudulent acts by the correspondent seller s principal owner, if the correspondent seller s insurance underwriter provides that type of coverage. The correspondent seller also must obtain a direct surety bond to cover any officers (including its principal owner) if they cannot be covered by the fidelity bond. Coverage for fidelity bond, and errors and omissions, must be based on the correspondent seller s total servicing portfolio (residential and commercial loans), which the seller services for itself and all other investors, including Impac, during the preceding 12 months. If the correspondent seller does not service any loans it originates, minimum coverage of $300,000 is required. Calculations are as follows: Total Portfolio Minimum Coverage Required $100 million or less $300,000 More than $100 million but no more than $500 million More than $500 million but no more than $1 billion Over $1 billion $300,000 + 0.15% of total portfolio exceeding $100 million $900,000 + 0.125% of total portfolio exceeding $500 million $1,525,000 + 0.1% of total portfolio exceeding $1 billion Correspondent Seller Page 5 of 7
Provisions/Rider: Each fidelity bond or errors and omissions insurance policy must include the following provisions in the policy, or by separate rider: The insurer will name Impac, as an investor, as loss payee on payment drafts issued by the insurer for losses to Impac resulting from acts or omissions covered by the insurance The insurer will give Impac, as an investor, the right to file a claim directly with the insurer, should the correspondent seller fail to do so, for losses to Impac resulting from acts covered by the insurance Deductible: The policy s deductible clause may be for any amount up to the greater of $100,000 or 5% of the face amount of the bond. Cancellation: The insurance policy must specify the insurer will notify Impac of any cancellation or reduction of coverage within 10 days of such an occurrence. 2.8 Notification of Significant Change Correspondent seller must notify Impac in writing of any contemplated major changes in its organization, including with its notice copies of any filings with, or approvals from, its regulators. Significant changes Impac requires notification of include: Any mergers, consolidations or reorganizations Any direct or indirect material change in ownership including any change in ownership of the correspondent seller s parent, any owner of the parent, or any beneficial owner of the correspondent seller that does not own a direct interest in the correspondent seller Any change in corporate name Any change from a federal charter to a state charter (or vice versa) if the correspondent seller is a savings and loan association or a bank A material adverse change in financial condition The sale of a substantial portion of the correspondent seller s assets or a line of business 2.9 Legal Standing Correspondent seller must be well-organized, validly existing and in good standing under the laws of the jurisdiction of its organization, and be qualified to transact business in each jurisdiction where it originates and/or services mortgage loans. Correspondent seller must: Correspondent Seller Page 6 of 7
Have the power and authority to enter into Impac s Agreement Have the ability to comply with the terms and conditions of the Agreement and Impac s policies and procedures Not violate any provisions of the correspondent seller s articles of incorporation, charter or by-laws, or any other documentation relating to the conduct of the lender s business or ownership of its property Have a good standing rating with all governmental licensing and revenue collection agencies, including a public record clear of any civil or criminal judgments. 2.10 Fair Lending Commitment Impac is fully committed to the principle that all credit decisions should be made without regard to race, color, religion, national origin, sex, marital and familial status, military status, disability, age (provided the applicant has the capacity to contract and providing the applicant is of an age meeting the Underwriting requirements for the product), or any other basis prohibited by law. Impac fulfills this commitment while maintaining prudent credit discipline and sound business practice. Impac recognizes affirmative steps must be taken to ensure that this principle is applied consistently and continuously throughout all aspects of its credit operation, including product design, sales and marketing, underwriting, training, performance evaluation, and servicing practices. Reference: Impac s Fair Lending Plan 2.11 Eligibility Maintenance Correspondent sellers approved for participation in Impac s Correspondent Program must continue to meet the eligibility requirements outlined in this policy in order to maintain eligibility and participation approval. On an annual basis, correspondent seller must deliver audited financial statements for the preceding fiscal year to Impac. 2.12 Compliance Reporting Requirements For correspondent sellers subject to the jurisdiction of any governmental agency or quasigovernmental agency (e.g., Fannie Mae, Freddie Mac, HUD, VA, or FDIC), the correspondent seller must deliver copies of any disciplinary action taken by such agency, including suspension or termination of the correspondent seller s selling or servicing rights, within three business days of any such action. Correspondent Seller Page 7 of 7