FREDDIE MAC’S LOAN PRODUCT ADVISOR AU ENGINE

AU feedback is free of charge. There is a $78.41 charge for Tri-Merge Credit per report requested. A tri-merge credit report from an approved credit vendor can be reissued instead at no additional charge.

FANNIE MAE’S DESKTOP UNDERWRITER AU ENGINE

AU feedback is free of charge. There is a $78.41 charge for Tri-Merge Credit per report requested. A tri-merge credit report from an approved credit vendor can be reissued instead at no additional charge.

Upon receipt of a new loan application from a consumer, Provident Funding issues a set of initial disclosures in compliance with certain federal and/or state regulations and to communicate the terms and requirements of the loan. During the loan application process, certain notices are issued to communicate the status of the loan or to request additional information from the borrower. These disclosures and notices (among all others) are generated automatically by the loan origination system as the loan application is processed:

• How to Complete Your Application (included in the set of initial disclosures)
• Notice of Incompleteness
• Conditional Approval
• Final Credit Approval
• Denial Letter/Notice of Action Taken

The "How to Complete Your Application" disclosure included with initial disclosures informs borrowers of the documentation they are required to submit in order to complete the application before it may be evaluated. The “borrower-required” documents are limited to the following:

• Income documentation: paystubs, W-2’s, tax returns, and/or benefit reward letters
• Asset documentation: bank statements
• Signed disclosures: only certain disclosures need to be signed and returned, including (but not limited to) the IRS Form 4506-T, Borrower’s Certification and Authorization, Intend to Proceed, Uniform Residential Loan Application Form 1003, and Right to Receive a Copy of Appraisals
• Evidence of homeowners insurance
• Interest Rate Lock Agreement
• Purchase contract (purchase transactions only)

Additional documents and information that are required but not provided directly by the borrower may include:

• Preliminary title report or title commitment
• Other title, escrow, and settlement information (e.g., title search, tax certificate, closing protection letter, wiring instructions)
• Property appraisal report

All borrowers are invited to register and login to the online portal, My Loan Zone. This site allows borrowers to access loan disclosures, electronically sign documents, and directly upload and review documentation required to process their loan applications. In order to access these features, borrowers must pass an ID verification test after registering for the site using two factor authentication and agree to receive disclosures electronically. If a borrower, does not opt in to receiving disclosures electronically, disclosures and notices are delivered via postal mail. Regardless of whether or not a borrower opts in to receiving disclosures electronically, all borrower-required documents must be uploaded to complete the loan application. Loan originators are able to assist borrowers in uploading the required documents using their own dedicated portals (PFloans for mortgage brokers).

Once all of the borrower-required documents have been uploaded, the “facially complete” loan application is placed in the underwriting queue. The additional documentation and information not provided directly by the borrower (e.g., title documentation and appraisal report) are not required to be uploaded (although can be) before an underwriting evaluation may begin but are required before final credit approval may be issued.

If the facially complete application package is determined to be incomplete (either borrower-required items are missing or additional information is required), a “Notice of Incompleteness” is issued to request the additional information from the borrower. It also informs them of additional items and services that are pending but not provided directly by the borrower (such as title documentation or a property appraisal report). These outstanding items, which are necessary to issue a credit decision, are taken directly from the underwriting condition log which is determined by the underwriter and entered into PFnet for the loan application number during the underwriting process.

A Notice of Incompleteness is triggered automatically whenever a new condition has been added or if the borrower has not submitted all documentation necessary to consider their application facially complete. The notice is placed in a queue to be generated at the end of the day to encompass all conditions in one notice and to avoid sending multiple notices in one day. Each time a new condition is added to a loan, an email is sent to the loan originator to inform her/him of the request so that they may provide the borrower with assistance in uploading conditions if necessary. Additionally, if the borrower has registered on My Loan Zone, she/he will receive an email instructing them that new required items have been added to the condition log.

When all borrower-required items have been uploaded and accepted by the underwriter, a Conditional Approval Letter is issued, informing the borrower what required items remain outstanding (such as title documentation or a property appraisal report). Once all outstanding items have been received and the underwriter has released the loan for closing, a Final Credit Approval Letter is issued. (If both a Conditional Approval Letter and Final Credit Approval Letter are triggered to be issued on the same day, the Conditional Approval Letter is cancelled and only the Final Credit Approval Letter is issued.)

Both the disclosure for How to Complete Your Application and the Notice of Incompleteness request that borrowers submit the required documentation within 25 days. However, at their discretion, loan originators may continue to actively process a loan as long as they perceive the opportunity for the loan to close exists. Provident Funding shall not take action to cancel a loan application until it has either received confirmation from the loan originator or has made an effort to confirm with the loan originator that a loan application should be cancelled (withdrawn, denied, closed for incompleteness, or approved but not accepted). If a loan application is denied, a Denial Letter is issued; or if it is withdrawn, closed for incompleteness, or approved but not accepted, a Notice of Action Taken is issued.

All loan document signings are required to be notarized. The Security Instrument (Mortgage or Deed of Trust), as well as other closing package documents, require a notary acknowledgement of the signing. In performing his/her notary function, the notary is required to verify the identity of the borrowers, by obtaining photo identification or by certifying that the notary personally knows the borrower. Under no circumstances will Provident Funding allow the notary or closing/settlement functions to be performed by any of the following parties:

• Broker, any employee of the broker’s company, or any affiliate of the Broker or Broker’s Company
• Realtor, or any affiliate of the Realtor or Realtor’s company
• Friend, attorney, family member or employee of the Borrower or Broker

In order to lessen our potential exposure that can result if the signing of loan documents is not conducted by the closing agent, it is Provident Funding’s policy that all loan documents must be signed in the presence of, and notarized by, a notary meeting one of the following standards:

1. In geographic areas when it is customary for the title insurer to conduct closing through its escrow division, an employee of the Title Insurer must act as the notary unless a document-signing service is used.
2. In geographic areas where it is customary for independent title companies to conduct closing, an employee of that title company may perform the notary function unless a document-signing service is used.
3. In geographic areas where escrow and title are completed separately, it is acceptable if the Escrow company employs the notary and they supply the following:
4. If the Escrow Company is regulated by the California Department of Corporations and a member of the Escrow Agents Fidelity Corporation, that organization’s bond satisfies PF’s requirement provided the following documentation is supplied:
   • A copy of the declaration page listing the Escrow Company and its principal address.
   • Confirmation that the Escrow Company to be in good standing under the Bond.
5. If a document-signing service is used, the notary must be contracted with the document-signing service and the service must supply evidence of Fidelity or Errors and Omissions Coverage of at least $500,000 per occurrence and evidence that such coverage is in good standing. Independent Traveling Notaries, not affiliated with a signing service, are not acceptable unless they can provide their own Errors and Omissions coverage of at least $500,000 per occurrence.

We have included a Closing Agent Certification document in our closing package that must be completed by the closing agent (attorney, escrow officer, title agent, or title insurer). In the event that no arrangement can be made to sign loan documents in accordance with the policy stated above, we will allow an accommodation signing by one of the following:

1. An employee of a title insurance company where the title company is affiliated with the title insurer for the loan transaction
2. A nationally recognized title company that has been recommended by the title insurer for the transaction. We will need an executed notary indemnity letter on our required format.
3. The American consulate, if the signing takes place outside the country. Advance approval from the Corporate Senior Underwriter must be obtained through the PF case system.