Transcript How To Do Business With FSB

Broker and Correspondent Training
Flanagan State Bank headquarters is located in
Flanagan, IL. The bank was founded in 1913
and has been family owned/operated since the
1930’s by the Schwerin family.
FSB is a bank that believes in providing the best
possible customer service. We do not believe in
going just half way and will commit to taking
care of our customers 100%
Our TPO Division continues to cultivate new
investors and agencies to provide the best
possible programs and rates that we can.
Programs
FHA
USDA
VA
Conventional
Services
Appraisal Department
Scenario Review
Income Analysis
Q&A
Quick Underwriting
www.fsbtpo.com
Forms & Docs
Loan Officer Marketing Materials
Contact Information
Helpful Links
Program Information
Correspondent
Closes loans in their company
name
Funds their own loans that are
closing in their name using a
warehouse line, funding line or
own funds
Does not disclose YSP/SRP
FSB will purchase the loan from
them after delivery of the
closing package
Broker
Loan closes in Flanagan’s name
FSB funds are used to fund the
loan
Disclosure of LPC required
Loan is funded at time of
closing if a purchase or
recission if a refi.
For most of our customers, a combination of both Corr and Broker is used due to FHA
Rate sheets are distributed via email every
morning and then as rates change throughout
the day
Available on our website at www.fsbtpo.com
Off sheet pricing available for Jumbo loans, high
balance FHA & VA loans
USDA Loan Scenario - $85,000.00 loan amount, 649 credit score, IL property, waiving underwriting
Work your way backwards to the profit your company identifies as needed from each transaction.
IF your company designates your profit should be 2.75 Lender Paid, start adding your adjustments up
first.
For this scenario that would equal:
Loan Size – N/A
Credit Score - -.750
State Location – N/A
Waiving Underwriting Fee - -1.00
Total Adjustments = -1.750
Now add your anticipated compensation to the total adjustments
2.75 + 1.750 = 4.50
Your rate must cover at a minimum -4.50 or it will result in a discount being paid by the borrower.
Looking at the rate sheet in your hand outs, this would put the rate offered at:
4.375% paying 104.748 (30 day lock)
subtract your adjustments/comp needed and you are left with .248 credit to
the borrower towards closing costs or rate extensions.
FSB does not set any limits on Borrower Paid
Compensation. However, the loan must pass the final
Points & Fees Test or fees will be reduced at closing.
Pricing will work similar to the screen before, but
compensation will not be reduced from the yield on
the rate.
The remaining yield left on the rate will be provided to
the borrower as a credit, but the credit CANNOT be
used towards the Borrower Paid Origination Fee
showing on the GFE. It can be used for all other closing
costs except the origination fee.
Please note: FSB’s lowest loan amount is:
$30,000 on USDA
$35,000 on FHA/VA
$40,000 on Conventional
The Correspondent customers do not have “Lender
Paid Compensation”.
They do not have to disclose the yield earned on the
rate on the GFE/TIL
They are limited only by max pricing on the
program/rate sheets for each program.
Please note USDA is limited to 104.50
FHA/VA is limited to 104.50
Conventional is limited to 104.50
The max pricing is after adjustments!
Corr files may charge “Upfront fee” and earn yield on
rate
All locks are completed online within the file
you are locking
Once locked within the file, an email
confirmation will be sent to confirm pricing
Off sheet pricing for Jumbo and High Balance
VA/FHA loans is available
Pricing is subject to change as the market
changes, always confirm pricing either using
online pricing/Scenario Pricer or have the most
recent rate sheet
LO or Processor
begins file in
Mortgagebot
Upload of FNMA 3.2 or
manual entry file
Registration of File is
completed
Loan can be locked at this
time, if desired
Submission Package is
uploaded for review
Loan is finaled to notify
Underwriting Department
loan is ready for review
File is received
in Underwriting
Jr Underwriters pick up file
in order of receipt and
sort/label documents for
UW to review. All reports
are ordered
Jr Underwriters complete
compliance review of file
and condition accordingly
Loan is sent to UW for
credit underwriting
Underwriters review and
condition for PTC and PTF
items needed
File is sent back to Jr UW’s
to deliver Conditional
Approval to LO/Processor
File is received
for resubmission
Conditions are sorted and
labeled by the Jr.
Underwriter.
Compliance Conditions are
reviewed by the Jr UW
and signed off if provided
Jr UW sends loan to UW
for condition review
UW clears conditions and
sends updated approval to
Jr UW
Jr UW delivers update
Conditional Approval to
LO/Processor
Resubmission of
conditions
(consecutive
attempt)
Same pattern as above
If loan is USDA: all
conditions are met, file is
sent to USDA office for CC
If all conditions are met,
UW will FINAL loan
clearing all conditions
Loan is sent back to Jr UW
to confirm all Compliance
conditions are cleared. If
all are cleared CTC can be
issued.
Email is sent to
LO/Processor confirming
CTC or requesting items
needed for CTC
Clear to Close
LO/Processor to send
Closing Request Form to
Closing Department via
email
Closer will confirm receipt
of document and closing
date
Closing Instructions are
sent out at least 24 hours
prior to closing or per
closing request
HUD to be approved on all
brokered loans prior to
closing package sent to
Title Company
Wire for broker funded
loans is sent 24 hours
prior to closing
If a loan is a Corr that is
closing, the closing
package is to be uploaded
in the Mortgagebot file
The original Allonge, Note
and Bailey Letter is to be
sent to the TPO Division
Headquarters
The LO/Processor will
email the Correspondent
email and notify them the
package is ready for
review
The Jr UW will review and
advise if all is in file for
Purchase
The file and originals must
be delivered prior to the
lock expiring
Post Closing
(Correspondent)
Tips and Tricks to getting your file through our
underwriting review quickly
One of the most common things we see in
underwriting is the 1003 having missing
information or inaccurate information.
It is very important that the application contain
ALL the boxes filled in, not just some of them
The next few slides will provide insight into the
most common errors that show up on a 1003
and these errors will add conditions to your
approval that tie up your time and could be
avoided
The highlighted section should be accurate and match the GFE/TIL. If a Joint
account, the top section should be signed by both applicants.
The refinance section should only be completed IF a refinance and all sections
should be completed.
It is important to list their current address and any addresses the borrower/co-borrower may have had
over the past 2 years.
If the address does not match the Driver’s License that is submitted, the underwriter will require an LOX.
If RENT is marked in the residence history, a VOR will be requested.
If Own is marked in the residence history, the REO section should contain coordinating information.
IF the applicant does not rent or own, neither should be marked and an LOX from the borrower should be
included noting the circumstances of the housing for the borrower.
All forms that show a section for initials or signatures must be fully executed to meet compliance
requirements.
The employment history section must be completed in detail. Any missing information will result
in conditions from the underwriter to complete the section.
Phone number should be accurate and not a number that will reach the borrower. This number
will be used to complete the Verbal Verification of Employment that will be completed within 48
hours of closing.
If a borrower has multiple W-2’s for the most recent 2 years, all W-2 employment must be listed
on the 1003. Dates must be correct and a verification may be requested at the discretion of the
underwriter.
Monthly Income and Housing Expense
Accurate income is always crucial in a mortgage loan. Income should be broken down according to its correct
classification and not lumped together if containing OT, Bonus or Commission.
SSI can be grossed up according to the tax bracket chart and will be listed under Other Income. Self
employment income will also be referenced in this section.
If rent/own are checked in the residence history, then Present Housing Expense must be completed. This
section allows the underwriter to verify how much payment shock the borrower will experience.
Proposed housing should include the full PITI payment that the loan will generate.
Assets:
If assets are listed in the application, then 2 months bank statements MUST be provided.
Bank statements will also be required regardless if on application or not when verifying fixed income, down payment funds (to verify
borrower used own funds for Earnest Money Deposit if cancelled check not provided) or cash to close is noted in details of
transaction.
If bank statements note NSF, overdrafts or other negative activity on accounts, UW guides do note that this is financial
mismanagement and will not approve the borrower for a loan. It is important that the Loan Officer/Processor review statements
prior to submission to underwriting. If the circumstance was a one time occurrence, an exception may be made based on the reason
for the NSF.
Liabilities:
Must all be included that are on the credit report and any that might not report on the report, but should be a part of the DTI.
Paystubs should be reviewed for child support garnishments prior to underwriting submission.
Under Assets Section, many LO’s will list household goods and Automobiles in this section. For the purposes of mortgage loans,
this information is not required. Liquid assets are more important to an application than non liquid assets.
Alimony, Child Support, Maintenance will required documentation to support. A divorce decree and verification of children’s ages
are basic documents needed.
Job related expenses:
Listed here will be union dues, unreimbursed expenses taken from tax returns and other misc amounts that are the borrower’s
responsibility based on their employment. These are recurring expenses.
Unreimbursed expenses are typically a surprise to the LO and 8 out of 10 times a deal killer. FSB strongly suggests requesting the
tax returns from the borrower to verify there are not any surprises before it is underwritten.
REO Section
Full disclosure of properties owned is required. This should include lots, land, commercial property, residential property, etc. USDA is
very specific about a borrower only retaining a single residential property in addition to purchase the new one. They must qualify
with BOTH PITI payments.
Properties that are pending sale or recently sold should be referenced in this section, too.
Free & Clear properties must be documented so the underwriter can see that the property truly is Free & Clear
PITI must be proven on all properties either through tax returns (Schedule E or mortgage statements, tax statements and proof of
HOI)
a)
b)
c)
d)
e)
f)
g)
h)
i)
j)
k)
l)
m)
n)
o)
p)
Details of transaction:
Purchase price should match the contract
If escrow is being held for repairs to
property, include this amount here.
N/A – only for construction lending
If a refi – debts to be paid off should
transfer to this section from marked to be
paid liabilities
Prepaid items as showing on GFE
Closing costs as showing on GFE
Government Loan Fee – as applicable
Discount points – if applicable
Total costs of transaction
DPA/Grant will show in this box
Closing costs paid by seller per contract
Other Credits such as property tax credit,
broker credit, etc will reflect here
Base loan amount
Government Loan fee(should match g)
Total Loan amount
Cash from/to borrower. If cash from
borrower, assets to cover this amount need
to show in Assets section of 1003. No cash
back allowed to borrower except for
reimbursement of fees paid in advance
All questions must be marked
correctly. The borrower does sign
acknowledging that all information
contained in the applications is true
and accurate.
The questions we see that are
normally marked inaccurately are:
B
C
G
Double check the answers with the
borrower to insure accuracy and
eliminate surprises later in the loan
process.
Borrowers signatures will be matched to driver’s license signatures to confirm identity and
verify matching.
Date of application should match date of GFE/TIL and other initial application disclosures.
Date of 1003 may be after credit report date on a purchase. Typically the receipt of the
purchase contract is a simple reference date for determining when the 3 day rules begins for
disclosures. On a refinance it should be dated within 3 days of the credit report per compliance
rules.
Ethnicity, Race and Sex should be checked based on information from the LO.
Originator to indicate how application was taken.
LO’s information and signature required. Should be dated within the 3 days required per RESPA for initial disclosure.
Credit Reports are valid for 90 days from the date
pulled
All non traditional tradelines must be added to the
reports as a supplement
All government loans will require letter of explanation
for the derogatory credit that shows on the report.
The LOX must show what happened, how the borrower
overcame the problem and how the problem will not
happen again.
All inquiries must be listed on the Undisclosed Debt
Form and note if new credit was opened or not.
FSB does pull a “soft pull” credit report that will show
any new credit, updated balances and new inquires at
the end of the underwriting process.
The minimum documentation required for submitting a file to underwriting is:
All required application disclosures
GFE & TIL
1003
2 years W-2’s – most recent
30 days most recent paystubs
Written VOE if using OT, Bonus, Commission or job time is under 2 years
Verbal VOE if straight wage earner income and job time over 2 years
Credit Report
Purchase contract, if purchase transaction
Payoff, if refinance transaction
2 months bank statements or assets statements if other type of asset
Letters of explanation for derogatory credit
Letter of explanation for rent free as applicable
Verification of mortgage/rent added to credit if not showing on the credit
Copy of Driver’s License – must be valid and not expired
4506T fully executed
If self employed – 2 most recent years of tax returns (personal & business returns with all
schedules)
HOI Quote or binder
VA – Certificate of eligibility
Notes to underwriter providing details for the
file
Property info if Condo or PUD – condo/pud
questionnaire, HOA bylaws, master policies, etc
Tax returns for all borrowers of all income types
Title commitment with tax info included
It is important to note that compliance requires
all docs to be included in the loan as required by
Federal and State Laws. The list of documents
on the next page incorporates all regulations
mortgage lenders and brokers currently have to
meet to remain compliant. If you ever disagree
with our requirements, we just ask that you
supply proof that the document in question is
not required in your state. To do this, we must
have it in writing from your State Regulator.
Submission Cover Sheet
State Disclosure – as applicable for your state
Initial 1003
GFE
Itemization of Fees/Fees Worksheet to match GFE
Intent to Proceed
TIL
HUD Counseling Disclosure Acknowledgment
Servicing Disclosure
Notice of Right to Receive Copy of Appraisal
Equal Credit Opportunity Act Disclosure
Service Provider Form, if State required or if items
listed in Section 6 on GFE
Notice to Home Loan Applicant Credit Score Info
Disclosure (usually final pages of credit report)
Risk Based Pricing/Your Credit Score and the Price
You Pay For Credit
Disclosures notices
Undisclosed Debt Acknowledgment Form
Copy of Driver’s License
4506T form – fully completed
Mortgage Fraud FBI Form
Mortgage Broker Disclosure – if applicable
Privacy Act Disclosure
Flood Disaster Protection Act of 1973
Borrower’s Certification & Authorization
Fair Credit Reporting Act
Patriot Act Disclosure
Anti-Steering Disclosure – if LPC and must have 3
options completed!
Proof of Delivery of HUD Settlement Book
Program Specific Disclosures
All disclosures are available at
www.fsbtpo.com or from your
Account Executive Team
4506T being sent in with form correctly completed – FSB will order transcripts
immediately upon receipt of file. If the form is not completed correctly it will be
rejected by the IRS and cause delays
Proper submission of file to underwriting – the inclusion of the needed docs for
Federal and State are the responsibility of the submitting LO to obtain and insure all
dates, figures and amounts match and are correct
Telling the Underwriter the “story” of the file. Please do not leave the underwriter to
guess at what needs to be know on the file. Supply a “Note To Underwriter” outlining
what you are trying to accomplish, how you are doing it, what items you are missing,
etc. The more information you supply the better your conditions will be. Numerous
conditions come from an underwriter trying to piece the file together with limited
information.
Providing as complete a file as possible for initial underwriting – if you need a quick
turn around for a closing deadline then we need as full of a file as possible. We can
close fast, as long as we have everything we need to do our part.
When re-submitting conditions, do not upload one or two and then resub. We want
as many conditions as possible to review at one time. Our goal is to touch a file 2 – 3
times and then be ready for closing. Touching a file more than this slows our process
up and will result in delays on our turn times.
The Corr files will have less compliance conditions on the front end of the
underwriting process. The compliance conditions will be noted, but will be required
with the closing package
Corr files will be responsible for providing: Flood Cert and tax transcripts
HOI and Title will be in the name of the Correspondent
Funding the loan
Reviewing the Purchase Advice
Preparing the Allonge and Bailey Letter for closing
The Corr will be responsible for delivering the closing package after the closing. The
“delivery” will occur in this manner:
The closing package and any outstanding PTF conditions and Compliance Conditions will be uploaded
to the file in Mortgagebot to Closing Package.
The original Note, Allonge and Bailey Letter will be overnighted or mailed to FSB
The closing package (all items) must be received by FSB before we can purchase the loan
The rate must be valid through the purchasing of the file.
Do
Insure that all your dates on your initial
disclosures are uniform
Make sure the LO signs the 1003 before
submission and dates the form correctly
Application Dates are:
Purchase – date property address was
obtained. Usually determined by
purchase contract.
Refinance – date should be on or within
3 days of credit report date
GFE – Prepared Date within 3 days of
1003 – blank dates are not allowed
LO to sign TIL, 92900A and any other
documents that have a signature space
for them. Blanks are not acceptable
Don’t
Send in docs with dates that are not
within 3 days from application
Have multiple dates throughout the
forms.
Send in a GFE that does not match the
fees worksheet and the Details of
Transaction on the 1003
Send in a GFE with blanks – all must be
completed properly
Send in a TIL with the recording fee a
different amount than what is disclosed
on the GFE
When reviewing your submitted GFE, we are
looking for this information in the Important
Dates Section:
Insert System Training here!! If you have
already had our LOS training, please proceed
to the next slide
The next few screens will outline how to
utilize our Pricing Engine and lock the files.
To locate the Scenario Pricing Engine, open Forms & Docs and midway down the
menu click on Scenario Pricer. All sections in RED must have information entered
to price correctly.
Originator Compensation must be
entered. Choose one of the following
options:
Lender Paid
Borrower Paid
Origination fee:
Must be completed to reflect the amount
being charged for either LPC or BPC as
chosen above
The lock information does not carry over
to the GFE at this time. If using our
system to prepare Initial Docs, please note
you will still have to complete the GFE in
full.
On Correspondent Loans, it is not
necessary to choose compensation type.
Make sure to complete the Credit Information
section for accurate pricing!
In the same section you will be able to tell us to
waive the underwriting/commitment fee. Under
credit grade choose UW WAIVER.
Once the form is completed appropriately, click on
PRODUCT SELECTION at the bottom of the screen.
Your pricing options will be shown
and you may choose which
rate/pricing is best for your loan.
All adjustments will show at the
bottom.
You may choose any of the
options from the buttons below
the pricing.
Please note that you will not be
able to choose a rate until you
choose the lock button at the
bottom.
Located two spots down from the Scenario Pricer, this screen
is used for when the LO is ready to complete the lock and does
not need to price out the loan.
Screens are similar to Scenario Pricer
All information must be entered to accurately price the loan.
Any information needed but not entered will result in pricing
not being shown.
To waive UW fee, use drop down under Credit Information –
Credit Grade
Confirmation will be sent
via email
If your rate expires, you will be charged an
extension fee PLUS worst case scenario for the
difference, as applicable
It is best to not let rates expire and simply
extend so as not to have any additional
adjustments
If your loan will not be closing for whatever
reason and it is locked, please cancel your locks
with the lock desk
A new lock cannot be completed until the
current one has expired for 61 days
FHA Case Numbers
To request a NEW case number complete
the form and email to
[email protected]
Within a few hours (or less) the FHA case
number will be returned to you
To request a TRANSFER from another lender
to FSB of a case number, you must contact
the Lender that holds the case number and
provide them with our FHA ID. They will
then transfer it to us.
To have FSB Transfer a case number to
another Lender, complete the Transfer
Section of the form and send to
[email protected]
The appraisal CANNOT be ordered until the
case number is received per FHA guides
VA Case Numbers
These must be requested through the VA
Portal by the submitting company
When you request the case number the
appraisal is automatically ordered
FSB does not maintain any AMC relationships
We accept any AMC appraisal, but will not order through the AMC on behalf
of our accounts
We will maintain a roster for each company and each companies branch
allowing them to use local appraisers.
There must be a minimum of 3 appraisers on the roster to begin ordering
through FSB
We do not collect any fees and all appraisal fees are to be paid at closing
To order an appraisal, complete the Appraisal Order form located on our
website at www.fsbtpo.com.
Leave the Name/Address of the Appraiser BLANK – FSB will complete
If a purchase order, include purchase contract with the order form and send
to [email protected]
If a refi, only the order is needed
The appraisal department will confirm receipt of order and acceptance of
order by the appraiser. Notes will be maintained in the file on status of
appraisal and due date
Mortgagee Clause for title:
Flanagan State Bank
ISAOA
333 Chicago Road, PO Box 302
Paw Paw, IL 61353
Loan #
EPA & COMP endorsements needed
24 month chain of title. Must include the verbiage “a 24 month chain of title has
been completed”
CPL
Wire Instructions – if FSB is funding the loan
Property taxes must be noted on title or a tax certificate provided
Lender’s coverage must match the loan amount
Clear title must be provided before closing will occur
Currently 24 hour underwriting turn times on all products
A conditional approval does not mean that additional conditions will not apply.
Although FSB does not wish to consistently add conditions to a loan, it may be
necessary as new information is presented in the file for review. It is strongly
suggested to present the best possible file at submission to avoid additional
conditions as the file progresses.
Goal: to touch files no more than 2 – 3 times before closing the file
AE Team will be able to answer majority of your underwriting questions, but you may
contact the underwriter via email or phone with questions, as well. Please try to keep
these to a minimum to allow them to maintain underwriting turn times
The duties for underwriting are split up between the Jr Underwriting and
Underwriter.
The Jr Underwriter reviews all compliance items and provides the compliance
conditions
The Underwriter completes the Prior to Closing (PTC) and Prior to Funding (PTF)
conditions.
Questions should be directed to each accordingly
Broker Loans
The underwriter will provide Final Approval, but the Jr Underwriter actually
gives the CTC on the file once all compliance conditions are met
The CTC will be sent to the LO or Processor (or both) with a notice to send
the completed Closing Request Form to the Closing Department to schedule
with them
The Closing Department, upon receipt of the Closing Request Form will
confirm the closing and date of closing with the sender
Closing Instructions are sent out first with instructions for the preparation of
the HUD
The HUD will be sent back to the assigned closer for review and upon HUD
approval, the closing docs will be sent to the title company
The wire for the closing is sent 24 hours in advance, or as soon as possible on
a closing that is a rush
Correspondent Loans
Follow above, but wire will be sent by Correspondent
If docs are prepared by Corr, they will be responsible for HUD approval
Upload closing package to file within 48 hours
Email: [email protected] and advise them the package
is uploaded and ready for review.
Overnight/Mail original Allonge, Bailey Letter and Note to:
Flanagan State Bank
333 Chicago Road, PO Box 302
Paw Paw, IL 61353
Att: Correspondent Department
Lock must be valid through receipt of the original documents. It is the
Correspondent companies responsibility to extend accordingly
Review Purchase Advice when sent by Flanagan and confirm accuracy
The loan is not considered delivered to FSB until the Note and Allonge are in
our possession
For both Brokered Loans and Correspondent Loans
If our investors request a document that you may have in your file or requires
contact with the borrower, we will come back to you for assistance in
meeting such a request
In all our closing packages, a First Payment Letter is prepared. This contains
information needed by the borrower to mail their first payment to us by the
due date shown. Often times, this notice is not pointed out by the closers.
Please bring this to your borrower’s attention so they can make their
payment on time and mailed to the correct place.
Your borrower will get notification of the transfer of their loan. If you would
like to confirm they were notified by the correct company, please contact
your Account Executive for this information.
Thank you for viewing our training. If you
have questions after this training you may
email [email protected] or
contact your Account Executive Team