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This article presents an abbreviated summary, or "Road Map" to the steps involved in our Warehouse Funding process. The WNCI Team referred to below is our Affiliated Financial Group (AFG). World Net Capital I (WNCI) is the marketing / coordination firm for our Affiliated Financial Group that includes:

 

1) a National Mortgage Firm (MF) that performs loan underwriting (and processing if needed), loan approval, closing, loan QC and QA, and funding for our Brokers and Correspondents, as well as loan origination;

 

2) a Risk Management Firm / Trading Firm (RMF) that locks interest rates, issues rate sheets and individual loan pricing, manages interest rate risks, and manages trading of the loans for the Banks; and

 

3) a group of Banks that provide the warehouse funds for our brokers and correspondents (Customers) to use for issuing mortgage loans to home buyers.

 

Combined, AFG performs a wide range of wholesale and retail mortgage services, issues mortgage warehouse funding facilities, and transfers loans at closing to investors or securitization pools. We have HUD/FHA approvals including Direct Endorsement (DE).

 

 

If you are a Broker:loanforms

• Broker originates and processes the loans; files are input to our LOS software

• AFG is the Lender

• AFG Underwrites the Loan

• AFG performs quality control (QC) and quality assurance (QA)

• AFG Prepares Closing Documents

• AFG Funds the Loan

• AFG sells the loan to the Investor

 

 

If you are a Mini-Correspondent:

• Correspondent originates and processes the loans; files input to our LOS software

• Correspondent is the Lender

• AFG Underwrites the Loan

• AFG performs quality control (QC) and quality assurance (QA)

• AFG Prepares the Closing Documents and delivers documents electronically

• Correspondent Funds the Loan from the Warehouse

• Correspondent assigns the title and deed to AFG lender

• AFG lender takes ownership of the loan from the Correspondent and transfers it to the Investor

 

Brokers won't notice much difference in their operation when they become a "mini-correspondent" with us; the main difference is that you will sign the closing documents in your name as the lender, and you will recieve a gain on sale on the "back-end" when we transfer the loans to our investors. Instead of getting a "yield spread premium," you will get a larger "gain on sale" that is not itemized on the closing docs.

 

 

Key Parameters Associated with Mini-Correspondent:

• Correspondent closes the loan in their company's name

• Correspondent pricing emulates wholesale pricing

• Correspondent product guidelines mirror wholesale guidelines

• Simple lock and delivery process

• AFG will monitor various compliance rules to include APR, TILA, high cost, RESPA and GFE approval

• AFG prepares closing documents and approves HUD-1

• No additional risk of repurchase based on loan performance

 

 

Key Benefits Associated with Mini-Correspondent:

• Anti-steering disclosure not required

• Correspondent prepares initial TIL and AFG prepares final TIL with closing documents

• Dual compensation rule does not apply - Correspondent can collect origination from borrower

•Correspondent is paid loan sales margin at time of loan sale to Investor - sales margin is not required to be disclosed on the GFE

• Loan is transferred to AFG upon receipt of complete executed closing package, including title assignment

• Correspondents may require a specific license in their state to be a lender

 

 

General File Flow:

• Loan Lock is requested by originator; originator submits a Pricing Request Sheet to Tradedesk

• Loan is locked in Correspondent lending channel

• Initial TIL is prepared and disclosed by Correspondent

• Correspondent can order appraisal when good faith estimate is prepared

• Loan is submitted to and underwritten by AFG the same as a Broker loan

• Underwriting is completed and stipulations issued within 24 to 48 hours; USDA take a little longer

• Upon clear to close (CTC), loan is submitted to AFG Closing Department

• AFG Closing Department contacts Correspondent directly for scheduling

• AFG Closing Department prepares the closing documents and Allonge is created

• Closing doc package is sent to warehouse bank for QA before funding

• AFG works with Settlement Agent to finalize HUD-1

• HUD-1 is sent to Correspondent for final approval

• AFG sends final HUD-1 approval and Final TIL to closing

• AFG wires funds directly to the Settlement Agent

• Closed package is sent overnight to AFG (it is important that the doc package is complete)

• AFG performs third party QC on closed doc package

• AFG executes note endorsement with Proof of Assignment signed by the Correspondent

• WNCI Team takes title of the mortgage then sells it to investor or securitization pool

• AFG sends Borrower letter to explain transfer of servicing

• Customers have access to our LOS software and can track their pipeline at every stage

 

 

Our Correspondents must be a registered MERS Mortgage Loan Originator (MOM).  The following briefly describes the MERS system and its requirements:

 

MERS:

• MERS (Mortgage Electronic Registration System) is a separate corporation acting solely as nominee for Lender and Lender's successors and assigns.

• MERS was developed to act as a central electronic loan registry.

• All MERS mortgages (or deeds of trust) registered in MERS System must be recorded in the public land records (MERS is not a system of legal record).

• MERS eliminates the need to record assignments upon sale to other mortgage investors.

• MERS makes the closing process easier and reduces possible document and recording errors.

• MERS eliminates the cost to prepare and record assignments.

• MERS eliminates chain of title issues.

• Interests are not transferred on the MERS System, only tracked.

• MERS is legally approved in all 50 states.

 

 

Basic MERS Requirements:

• MERS/ AFG requires all Correspondent Lenders to have a unique MERS loan originator ID issued by MERSCORP, Inc. to close loans in their company's name

• AFG will assist mini-correspondent with MERS registration

• AFG will auto-generate an 18-digit mortgage identification number (MIN) for each locked loan

• AFG performs all transactions in the MERS system to include MIN registration and servicing/beneficiary transfer

• AFG ensures MIN and MOM (MERS as Original Mortgagee) language for each loan is on security instrument as required

 

 

 

Summary of Warehouse Terms:

 

 

 

Warehouse Funding Facility Terms

Warehouse Limits

Starting at $1,000,000, up to $10,000,000

Financial Requirements

$50,000 Minimum Tangible Net Worth

Two Years Business Audited Financials (internal financial audit is acceptable if completed within past 90 days and signed by company executive)

Two Years Business Tax Returns (if applicable)

E&O and Fidelity Bond

Minimum Coverage of $300,000 each

Monthly Loan Volume

No limits; no fee for not using warehouse

Eligible Loans

Conventional, USDA, FHA, VA

Funding Percentage

100% of Note Amount; no haircut

Pass-Through Rate

Note Rate

Warehouse Fee

None

Warehouse Fee (Per Loan)

Underwriting and warehouse funding will be performed for an “all-in” fee of $1,200; this includes underwriting, credit report, flood certs, wiring fee, tax service, preparation of closing documents, and warehouse fee

Last Updated on Tuesday, 13 October 2015 10:52
 

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