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Appraisal Services Group Processing Procedures

When a loan application package is received from the Client it is addressed to a processor. The processor starts the initial review process by putting the file in a new manila folder.

The file is then put into the proper stacking order:

These items are placed on the right side of the manila folder

Ø Rate Lock form (check for Lender name and rate expiration)
Ø 1003 Mortgage Application
Ø Credit Report
Ø Income Docs (W2, Pay stubs, Bank Statements)
Ø Appraisal
Ø Home Owners Insurance
Ø Title (Divorce decree is previously married)
Ø Disclosures (GFE, TIL, Borrowers' release)
Get all mandatory disclosures listed
The left side of the folder is for tracking correspondence and misc. items.

Now the processor begins the actual review. Items to look for on Page 1 are:

Ø Is the file FHA, VA or Conventional
Ø Check if this a purchase or refinance*
Ø What is the term; 30 years, 15 years
Ø Is this a Conforming or Jumbo loan mortgage amount
Ø Check the source (s) for funds - Where are they and how much
Ø Names and number of borrowers
Ø Marital Status
Ø Years of School - Mandatory
Ø How many dependents
Ø How long at present address - should be 2 years or more
Ø How long at previous address - if less than 2 years at present
Ø The mortgage application should be signed and all pages initialed
Ø All disclosures should be signed and dated

*If this is a purchase are they living with family or renting. If renting we need to verify rent and check the term of the lease on the rental.

Items to look for on Page 2

Ø Income - Check for blanks on the form.
Ø Calculate from pay stubs or tax information and compare to 1003
Ø Compare the present mortgage to the proposed for payment shock
Ø If they are divorced check the divorce decree to see if they are showing child support and are they receiving or paying. Look for settlement charges on decree.

Ø If paying child support, add to debt ratio
Ø If receiving child support they need a one year minimum history showing deposits

Ø Bank Accounts - Filled in if blank. We need Name, address & account number
Ø Liabilities from credit report. Fill in where missing
Ø Re-calculate debt ratio if liabilities are found missing from 1003
Ø Check for Stocks, Bonds listed on 1003 and have documentation for assets
Ø Check household assets and autos ( for what?)

 

Items to look for on Page 3 Market value of current or proposed - This decides appraisal's estimated value Check if current residence is pending sale or sold - if sold we need HUD Details of transaction - Put fees in Good Faith Estimate first. Prepaid items will be entered right before submission to underwriter Check Credit Report If this is a joint application then both borrowers should be on one credit report If married but have different last names we need 2 separate credit reports Credit report should be a tri-merged credit report with 3 credit scores per borrower. We use the middle score for qualifying but all 3 scores go into the mortgage processing software. Verify all debts - # of liabilities on mortgage application should equal # of open trade lines on credit report Check for late payments - If the mortgage has been late get a verification of mortgage All other derogatory information that shows up will need a letter of explanation if it occurred within 6 months of application. The loan originator must request letters of explanation. We do not offer coaching to the borrowers. Check for open collections - must be paid before closing unless medical and if they are medical ask the underwriter for their opinion on the medical collection(s) If this is a purchase and there are inquiries within 60 days of the application the borrowers will need to sign off stating they did not obtain a new mortgage recently. This can be done at closing but needs to be brought up right away. Income Documents Stacking order: W2s / 1099s for last 2 years from primary borrower Paycheck stubs from last 30 days of employment from primary borrower W2s / 1099s from Co-Borrower Paycheck stubs from Co-Borrower Bank Statements for last 2 months Stocks, Bonds & Misc. assets Count the number of W2s you have in the file and match the number of jobs to page 1 on the 1003 Check to see if the employment is Full Time or Part Time. If Part Time you need to average the pay over the last 2 years. If applicants are employed at current position less than 2 years then divide year to date income by the number of months already past in the year. This should show if applicants are on track to make the stated income on the 1003 If applicants receive more than 20% of their gross income from commission we need their full tax returns from the last 2 years. If applicants are self-employed we always need 2 returns for last 2 years to get the average for their income. If applicants own an S corporation we will need the Profit & Loss statements also. If husband and wife own the company - a "Licensed" accountant can verify self-employed income if we have the accountant's license on file. Bank Statements Start with the checking account. Stack statements from most recent to oldest. Compare the most recent account balance from checking account to what is stated on page 2 of the 1003 for a match. If the amounts are different the replace the amount on page 2 with what is shown on checking account statement. If this is a purchase then look for deposits over $2500. We will need a letter of explanation for large deposits. Look for a gift letter on purchases. If gift letter exists check the paper trail. Donor must have ability to give the gift. Trail must evidence the donor's account to the borrowers' account. Always order a verification of deposit as a back up. Verify all account numbers from statement to 1003 If there is ever an NSF on the account we need a verification of deposit or a recent print out from the bank. If this is a purchase and an NSF shows up we need an additional 2 months history prior to the 2 months you currently have. If there is additional NSF history on the next, previous history the LO must be notified because it can cause major problems on the file. Check Stocks, Bonds next. Quarterly statements are OK. A print out from a website is OK if the borrower's name and social security are listed on the website and the logo/company information is listed on the website also. Homeowners insurance Get the agents name and phone number Get the agent to fax over a binder policy with the correct beneficiary clause On purchases we need a prepaid policy for 1 year

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Appraisal

§ If the client has not already ordered the appraisal the opener must order it. This includes final inspections, FHA VC inspections, new construction inspections (satisfactory complete) and Pest Inspections.
§ Check appraisal for Appraised value (put on 1003), across the board adjustments, listing and sales history (3 years) and the proximity of the comparables to the subject property. Comparables should be less than 1 mile and preferably closer than ½ mile. Dates of sales should be less than 1 year and preferably less than 6 months on comparables.
§ Check to see if Appraised Value is higher than the top comparable value. It should fall in the middle of the range of values.
§ Check the taxes on the appraisal. Divide the annual taxes from the appraisal and put the monthly figure in the Proposed Payment section of the 1003.
§ Check the appraisal for a Home Owners Association Fee. If one exists be sure to add it to the Proposed Payment on the 1003.
§ Check if property is a PUD, Condo or Single Family. If this is a condo we need a Home Owners Association certification letter and a Certificate of Liability to show they are not behind on the association payments.
§ Check appraisal addendum(s) for derogatory comments affecting marketability and or condition. Check also for a cost to cure conditions.


The Title

§ Check for clouds/exclusions on title. Previous unrecorded releases need to be addressed immediately. If a mortgage exists on title, that shows open, and it is not being paid off we either need a subordination agreement to allow the mortgage to stay open, a hold harmless letter from the previous title company or the release from the borrower. In any case it is the duty of the processor and opener to Flag these issues.
§ When a problem exists on title the processor will assist out title department in clearing the exception. Processors and openers will request the previous HUD or release from the borrower. The RESG title department will then take this information and get the Hold Harmless letter from the previous title company. This policy holds whether RESG is doing the title or the title is ordered from another title company.
§ Check for subordination on second mortgages. See if we are paying off the second, closing the account or subordinating. If we are subordinating the second mortgage the processor will provide the client all necessary information for the subordination application and send it to the client. Typically there is a fee for the application. RESG does not pay these fees for the client.

All procedures stated above are to be approached with the intention that our company does whatever is in our power to obtain the information first and contact the client secondly. Only in matters that are outside our control or involve the client's paycheck do we need to consult the client.

On Purchases where outside parties such as Realtors & Attorneys the client should always be consulted first if a deadline or problem exists. Try to let the client handle matters of rapport when their referral sources are involved.