Program Announcement for December 12-15-2022

Program Announcement for December 12-15-2022

All policy changes and updates are referenced below to the appropriate section of the CLG. These policy changes are effective 12/15/2022 unless otherwise noted.

This announcement, and previous announcements, are also available on the Announcements page of our website.

These updates apply to everyone using the Chenoa Fund program—correspondents and TPO.

10.2 Mortgage Electronic Registration Systems (MERS)

First mortgage loans being sold to CBC Mortgage Agency, and all secondary mortgages where DPA Funds have been reimbursed, must be registered in MERS no later than seven days after the closing date in accordance with MERS Guidelines. In addition, all mortgage loans, first and second liens must have a TOS/TOB transfer initiated to CBC Mortgage Agency through MERS within 48 hours after CBC Mortgage Agency purchases the first mortgage loan and/or within 48 hours of the DPA funds being reimbursed on the secondary mortgage, resulting in the MIN reflecting CBC Mortgage Agency as the holder of the Servicing and Investing rights in MERS within 72 hours of the same purchase date, and/or DPA reimbursement date. 

CBC Mortgage Agency’s Org. ID is 1012881. 

We remind all correspondents of the following:

  • 1st and 2nd Liens should not be assigned the same MIN. Each lien will need its own individual MIN.
  • MIN should be listed on the Note and Security Instrument and should name MERS as beneficiary/mortgagee/grantee.
    • The only exception to this is Maine Property loans.
  • All loan information should be entered into MERS as shown on the Security Instrument. 
    • Select the correct lien type for the loan (secondary mortgages should reflect subordinate lien type in MERS).
    • The loan amount should also match based on the lien type.
  • An interim funder and sub-servicer should not be added for secondary mortgages.

Assignments should only be used in the event where the property is a Maine loan and cannot be assigned to MERS directly within the Security Instrument. A MIN should still be registered for the 1st and 2nd MINS, and an Assignment to MERS should be completed to properly assign the loan to MERS. Please note that you must use a Maine Approved Assignment to MERS for this and that all state-required verbiage is included. Please contact our MERS Department if you would like a template for reference.  

Assignments must be sent to CBC Mortgage Agency’s corporate office at the below address: 

CBC Mortgage Agency 

912 W. Baxter Drive, Suite 150

South Jordan, UT 84093

 

5.22 | Guidance on Fees

 5.22.1 Fees to CBC Mortgage Agency 

All Programs: $399 Admin Fee. 

No lender fees allowed on secondary financing. The only fees chargeable to the borrower in conjunction with the secondary financing are prepaid interest, recording fees for the Deed CBC Mortgage Agency (09/08/2022) (32) Correspondent Lending Guide Ver. 12.5 For business and professional use only. Not for consumer distribution. This document is not an advertisement as defined in 12 CFR 226.2(a)(2). All products are subject to credit and property approval. Other restrictions and limitations may apply. NMLS #1186381, CBC Mortgage Agency. Subject to change without notice. All rights reserved. Equal Housing Opportunity. of Trust, reasonable settlement fees, a courier fee to return the signed documents to the Lender, and a MERS registration/transfer fee. The admin fee is charged to the correspondent and is reflected on the Purchase Advice as a deduction from the total loan sale proceeds. This fee is a secondary market cost to the correspondent and is not part of the primary transaction, therefore it is not appropriate to charge this fee in section B or C of the LE/CD. Any addition to the lender’s fees to the borrower to offset this charge must never reflect as a charge payable to CBC Mortgage Agency and must always be listed in Section A, paid to the correspondent (for example, included in the Origination Charges or as a separate line item charge). Any fees added to Section A must be included in the TRID points & fees test. Fees on the LE and CD should never reflect as payable to CBC Mortgage Agency, CBC Mortgage Agency, or Chenoa Fund, regardless of the section. Regarding discount points, CBC Mortgage Agency follows FHA  Handbook 4000.1 and CFBP guidelines for TRID, at no time will CBCMA purchase a loan that exceeds 3% QM points and fees test.

5.22.2 Seller Credits  

CBC Mortgage Agency takes the position that seller credits may be used to pay for origination points or discount points.)

Keep in mind that converting seller credits to seller-paid fees must be done prior to or at closing. Seller credits used to offset points and fees must be disclosed on the initial and final CD; they cannot be corrected after closing and must be reflected on the purchase contract prior to closing.

5.22.3 Fees to Originator

All Programs: CBC Mortgage Agency will allow a maximum origination fee of 1.5%. Additionally, the lender may charge for any CBC Mortgage Agency loan level pricing adjustments (LLPAs); charges for loan level pricing adjustments may be seller-paid. Lenders will be required to refund borrowers for any origination fees (including non–bona fide discount points) exceeding 1.5% plus CBC Mortgage Agency LLPAs (if applicable). Reasonable lender underwriting, administrative, or program fees are not considered in this calculation; however, they are considered in the QM 3% points and fees test.

It is recommended that discount points are not charged; we recommend that lenders treat loan-level pricing adjustments as points and name them as points. 

5.28.3 HPML, High Cost, & QM Compliance

All FHA: HPML transactions are allowed. Requires all loans to be purchased to meet FHA 4000.1 guidelines.  Additionally, we require that loans that are to be purchased by CBCMA to meet TRID and Quality Mortgage Rules  (QM) and Guidelines. High Cost loans are not permitted. All first mortgages must adhere to QM/ATR compliance. Mortgage loans exceeding the 3% max points and fees test are not permitted unless cures are applied. Bona fide discount points must adhere to FHA & CFPB guidelines and any or all state regulations. Bona fide discount points do not count toward the 3% max points and fees test.

5.28.4 Rate Sheet Compliance

All FHA: The terminology of “discount points” has been clarified with regards to discussions surrounding the price paid by correspondents for rates charged on our rate sheets. Please see the Correspondent Lending Guide, section 5.22.1 (Fees to CBC Mortgage Agency) for a complete explanation and correct compliance interpretation.

For loans where discount points are present, correspondents may be required to include the correspondent’s published rate sheet in the purchase package in order to allow CBC Mortgage Agency to determine bona fide discount points from discount points that must be counted toward the 3% max points and fees calculation (non–bona fide discount points). This rate sheet must be from the day the loan was locked.

Bonafide and Non-bonafide fees

-Bona-fide discount points exist when your company publishes a rate sheet that has, after application of all LLPAs, a par rate or that pays a premium. If a borrower selects a lower rate than that ‘par or better’ rate, then the discount point charged to get that lower rate would be a bona-fide discount point. CBCMA allows discount points per FHA & CFBP guidelines.

-Non-bonafide discount points exist when no ‘par or better’ rate exists on your company’s published rate sheet. If the highest rate available results in a fee to the borrower, this fee is a non-bona-fide discount point. CBCMA allows non-bona-fide discount points, but they must be counted towards the maximum 3% points and fees rule.

Non-bonafide discount points paid by a seller using a seller concession must be considered in the 3% points and fees calculation.

Non-bonafide discount points can be paid by a seller as part of ‘seller paid items’ and not have them count against the 3% points and fees test.This rate sheet must be from the day the loan was locked.

5.9 | Undisclosed Debt Monitoring and Soft-Pull Credit Refreshes

As a delegated correspondent, it is up to the DE UW to determine if additional debt or other material defects affect the loan salability. 

5.12 | Payment Shock Requirements

Payment shock applies to all FICO® bands at 125%. Payment shock overlays are determined by the lower middle FICO® scores for qualifying borrowers. 

All FHA:

  • 125% or less.
    • Borrowers who lived separately prior to purchasing a home together may combine previous housing payments to determine payment shock.

The above changes affect the following sections:

5.22 | Guidance on Fees

  • 5.22.1 Fees to CBC Mortgage Agency
  • 5.22.3 Fees to Originator
  • 5.22.2 Seller Credits
  • 5.28.3 HPML, High Cost, & QM Compliance
  • 5.28.4 Rate Sheet Compliance

5.9 | Undisclosed Debt Monitoring and Soft-Pull Credit Refreshes
7.5 | QM Points and Fees Calculation section was removed as the information is stated in section 5.22
7.6 | Additional Guidance from CFPB on Appropriate Interest Rate for Excluding Discount Points Under Final ATR Rule section was removed as this information is stated in section 5.28.
7.7 Seller and Lender Credits and QM Points and Fees section removed as this information is stated in section 5.28.
7.8 | Important Notice Regarding CBC Mortgage Agency Investor Delivery Fee and Clarification of Rate Sheets was removed as this information is stated in section 5.22.
7.81 | Seller Credits and the Buckley-Sandley Memo was removed as the information is no longer required.
10.2 | Mortgage Electronic Registration Systems (MERS)