Purchasing Hints and Tips

Purchasing Hints and
Tips
What You Need To Know To Get a
Closing Package Purchased on the
First Try
Preparing the Closing Package
• Our bank name should
always appear as Merchants
Bank, National Association.
• Every closing package should
include the Closed Loan File
Stacking Order Checklist, all
UW At Close conditions, and
all required closing
documents.
• The original note and allonge
should be mailed to 62 W 3rd
St Winona, MN 55987.
• The remainder of the closing
package is uploaded
electronically to the Calyx
Path file.
• Purchasing can be contacted
with questions via email at
purchasing@merchantsbank.
com, 800-732-0115 option
#2, or internal extension
11421.
Miscellaneous Items to Remember
• Please complete the Appraisal screen in Calyx Path including the
individual appraiser information.
• The file in Calyx Path must contain a rate lock agreement signed
and dated by the borrower and lender showing the interest rate
has been locked. This must be dated on or after the date of the
initial application.
• The file in Calyx Path must contain an initial application that is
signed and dated by the lender.
• All loan terms must match between DU or LP, the rate lock, and
the closing documents.
Underwriting At Close Conditions
• All necessary documentation to satisfy the UW
At Close conditions must be included in the
closing package.
• Please contact the UW Department PRIOR to
loan closing if there are any questions or
concerns regarding the conditions. This is
especially important if the cash to / from
borrower is not going to meet the condition.
Subject Property Address
• Review the submitted DU address and the standardized
DU address for discrepancies!
– If there are no discrepancies, the loan documents should
match both addresses.
– If the submitted and standardized addresses do not match,
the first page of the appraisal must match the standardized
address and there must be an addendum to the appraisal
showing the submitted address and language stating the two
addresses are one in the same.
• The LPS flood certificate must show a determination address that
matches the standardized address.
• The hazard insurance must match the submitted address.
• The note, mortgage, and all remaining closing documents must match
the submitted address.
SSA-89 / SSA-3288
• The SSA-89 is required for all
borrowers and must be included in
every closing package.
• A fully completed sample of this
form is available in Chapter 8 of
the manual.
• NO alterations may be made to the
form even with the borrower’s
initials (cross offs, write overs,
etc.).
• The SSA-89 may not be signed by
a POA.
• The SSA-3288 is required for every
borrower that qualifies using Social
Security income (SSI).
• A fully completed sample of this
form is available in Chapter 8 of
the manual.
• NO alterations may be made to the
form even with the borrower’s
initials (cross offs, write overs,
etc.).
• The SSA-3288 may not be signed
by a POA.
Right of Rescission
• The Right of Rescission may never be reexecuted.
• We do not require the borrower to sign after the
3 day period has ended.
• Any changes/alterations made to the document
MUST be initialed by the borrower.
Power of Attorney
• When a Power of Attorney is
used by one or both
borrowers to sign the closing
documents we will require
the following:
– A fully completed and
executed POA form. A signed
certified copy may be provided
in the closing package however
a recorded copy is required to
be included with your trailing
documents.
– The signature lines must be
typed and signed per one of
the options outlined in the
investor guidelines. Best
Practice : John Doe by Jane
Doe as POA
• When a Power of Attorney is
used by one or both sellers
for a purchase transaction we
will require the following:
– A fully completed and
executed POA form.
– If the POA is used only for the
HUD a copy is sufficient.
– If the POA is used to sign the
warranty deed a recorded copy
will be required for our
Trailing Documents
Department.
– A POA is NOT required if the
property is being sold by a
company or institution.
Application
• The Purchasing Department will review the final application for
the items shown below, however for compliance reasons the
application must be completed in it’s entirety.
- Date of Birth, Home Phone Number, Marital Status
- First Time Homebuyer information must be consistent between
sections III and VIII.
- Signed by the borrower and dated with the closing date.
- Signed by the Loan Originator and dated with the closing date.
- Loan Originator Identifier and Loan Originator Company Identifier fields must both be
completed.
- Government Monitoring must have the race, sex, and ethnicity completed if application was taken
face-to-face.
Note
• The payment address should be that of your bank’s location.
• The late fee section must reflect 5% charge after 15 days.
• Borrower’s name must be typed exactly the same between the
note, all 3 locations on the mortgage, and the assignment of
mortgage.
• Fannie Mae loans have a P&I tolerance of .01 less than the DU
findings or up to $1.00 over the DU findings.
• Freddie Mac loans have a $0 tolerance for the P&I.*
*For UW Approval P&I see Loan Transmittal (1008)
FKA / AKA Language
• The borrower’s name is one of the most common
reasons a file is pended. Please follow the guidelines
below in order to avoid having the file suspended.
– When FKA / AKA language is used it must be used on the
signature lines of the note and mortgage, the preamble of the
mortgage, notary section of the mortgage, and the assignment
of mortgage.
– If the borrower’s name is different than how it appears on
title (completely different name; not just a variation) you
must either use the FKA / AKA language or execute a Quit
Claim Deed. You may execute a name affidavit if there is
only a minor variation such as using a middle initial vs a full
middle name.
Title Commitments
• The title commitment must have an effective date within 90 days
of closing.
• The Proposed Insured must read either your bank name plus
ISAOA language OR Merchants Bank National Association plus
ISAOA language. Our bank name may not be abbreviated in
any way.
• A purchase transaction must include a copy of the warranty deed
in the closing package with the title commitment.
• Please include a copy of any documents referenced in the
commitment such as driveway or well agreements, conditional
use permits, easements, and encroachments. Please be proactive and contact the UW or Purchasing Help Desks if you are
questioning whether or not a document will be required for
Purchasing or Trailing Docs.
Mortgage
• Please include all pages of the mortgage and provide a
signed certified copy. This means the mortgage must
be stamped as certified and also signed by the person
who is certifying the document.
• The notary section must include the City, State, date of
acknowledgement, and signature of the notary.
• The preamble must include the marital status (joint
tenants is not sufficient).
• Names must be typed consistently between the
preamble, signature lines, and notary section.
• Names must be typed exactly as they appear on the
note.
Mortgage Riders
• One or more of the riders listed
may be required based on the DU
findings, and these may not always
be listed as UW At Close
condition.
• Please contact UW prior to close if
you are questioning the need for a
rider.
• The mortgage must have the
applicable box checked if any rider
is attached.
• The borrower’s name must be
typed below the signature line on
all riders, and it must be typed as it
appears on the mortgage.
• Second Home
• Investment Property (1-4 Family &
Assignment of Rents)
• Primary Residence 2-4 Family (1-4
Family & Assignment of Rents)
• Condominium (Association name
must be included)
• Planned Unit Development – PUD
(Project name must be included)
• Adjustable Rate Mortgage - ARM
Modifications
• These must be completed on Fannie Mae form 3179 for a fixed
rate and form 3161 for an ARM product.
• The original recorded mortgage must be included in the closing
package, as well as any other modifications done prior to the
final modification.
• The modification must include the document number and date
of the original mortgage.
• The borrower’s name must appear as it did on the original
mortgage.
• The modification must be signed by lender and include their
typed name, title, and the date.
Hazard Insurance
• Every closing package must contain a binder, policy, or declarations page for
the subject property that includes the following criteria:
– Mortgagee can appear as your bank name OR Merchants Bank with ISAOA
language included.
– The address of the subject property must exactly match how it appears on the
note (including the placement of any directionals). Watch UNIT #s.
– The effective date must be on or before the closing date. It is not acceptable to
send the binder for the upcoming policy term. We also cannot use the “change
effective date” if there is one – we only consider the effective date of the policy.
– All purchase transactions must show the first year’s premium either Paid At
Closing on the HUD or a paid receipt must be provided. This is required
regardless of the borrower’s choice to escrow.
– The premium must be included on the hazard insurance regardless of the
borrower’s choice to escrow.
– Coverage requirements follow investor guidelines.
HUD Settlement Statement and
Initial Escrow Disclosure
•
•
•
•
•
•
•
•
All pages of the HUD must be provided.
The settlement and disbursement dates must
be completed and correct.
The monthly escrow payments (lines 10011004) must match the monthly escrow
payment on the Initial Escrow.
The opening escrow amount collected on
the HUD must match the opening escrow
balance on the Initial Escrow.
When a principal curtailment is done it must
appear on the HUD and a check for the
curtailment amount must be sent along with
your original note and allonge.
Files with a LTV greater than 80% must
escrow regardless of the product type.
Property taxes or hazard insurance
premiums that are due within 6 weeks of
closing must be paid at closing if the
borrower is choosing to escrow.
If the borrower is waiving escrows for either
hazard insurance, property taxes, or both
the closing package must include a signed
original Escrow Waiver form.
•
•
•
The amount used for property taxes and
hazard insurance must be supported by
documentation in the closing package. For
hazard insurance, the amount used should
always match the binder/policy provided.
For property taxes, the amount used must
match the title commitment, appraisal, or
documentation from the county.
A construction to permanent loan may not
use an estimate for the property taxes (the
1% used by UW may not be used for
Purchasing). We do allow you to use the
mill rate obtained from the county times the
appraised or assessed value in order to
calculate the property tax amount.
The Cushion Selected by Servicer on the
Initial Escrow must equal one month, and
the escrow account balance on the right side
must also go down to the one month
cushion.
Authorization for Automatic
Payments
• Please encourage ACH as an option for your borrowers. A fully
completed form must include the following:
– Loan number, routing number, account number, bank name and address.
– The Payment Amount must equal the P&I plus any applicable escrow
amounts, and the Automatic Payment Amount should be completed with
the amount the borrower would like to pay every month.
– The Automatic Payment Start Date must be completed, and may be
anywhere from the 1st through the 15th of the month. Please note after 8
days the borrower will receive a late fee reminder, so it is important the
borrower is aware of that if choosing the 9th through the 15th of the
month.
First Payment Letter
– Payment information is correct and is broken down
accordingly (taxes and insurance must be listed
separately).
– Our bank name must appear as Merchants Bank
National Association and include our address of PO
Box 248 Winona, MN 55987.
– The first payment date must match the note.
I Received a Notice of Suspense…
Now What?
• Please call or email the Purchasing Help Desk with any
questions.
• Please read the suspense conditions carefully and
upload the applicable documents to the Calyx Path file.
Submit the conditions within the system to notify
Purchasing.
• Review the extension fee start date and deficiency cure
deadline date displayed on the Loan Summary screen.
• Please forward any original documents that have been
requested. Please do not forward originals if they have
not been requested.
Ready to Fund!
• Once all suspense conditions have been cleared (or
there were no conditions to begin with) you will receive
a notice that your Purchase Advice (PA) is available.
• The PA will reflect all fees and credits and indicate the
final amount and date that you will be funded.
• Please review your PA as soon as possible so that any
necessary corrections may be processed prior to us
completing the white sheets.