MPF Original Servicing Retained

Overview

How it Works

Complete this training and begin taking advantage of the MPF Original® program!

Process the Borrower's Loan Application

Your responsibilities

  • Confirm each loan meets the requirements of the applicable MPF Product guide
  • Originate, process, underwrite and close the mortgage loan
  • Meet program timeframes{Tooltip}
  • Sell the loan to MPF
    • MPF purchases the asset
      • Deliver the custody file to the MPF Document Custodian 
    • You retain the servicing
  • Meet MPF Quality Control requirements

Step 1: Borrower Application

Overview

Congratulations! Your borrower has trusted you to originate their home loan.

With you as their mortgage professional, the Borrower will complete the loan application and provide all requested documentation. Let’s get started!

Your responsibilities

  1. Determine if your borrower’s loan meets the MPF® program requirements found in the MPF Guide.
  2. Assist the borrower in completing the loan application.
  3. Send out initial disclosures (i.e., TIL, Loan Estimate, etc.).
    Follow all federal and state regulatory guidelines/requirements.

Step 2: Loan Data Delivery

Overview

Loan data delivery (also known as loan presentment) is your method of providing MPF® with the loan details. Accuracy is essential.

The loan data must be submitted to determine the loan’s Credit Enhancement (CE). The CE determines the amount of risk your institution will share on the loan. Your CE obligation is the sum of Loan Level Credit Enhancement for each Mortgage Loan plus, if applicable, the Pool Level Credit Enhancement amount for a Master Commitment.  Credit Enhancement results are given in both a percentage and dollar amount and represent the amount of shared risk. A low score would indicate a higher quality loan; a loan could receive a result of zero. 

It is highly recommended to Credit Enhance the loan prior to locking. The loan must be risk scored prior to being purchased by MPF. The process of credit enhancing the loan does not determine its MPF eligibility; it simply determines the amount of risk associated with each loan. With this information, you make the decision to sell to MPF.

Please note: The credit enhancement process can be completed at any time prior to loan purchase by MPF and may be performed multiple times. There are no fees associated with Credit Enhancement submission. 

Your Responsibilities

  1. Deliver the loan details within the eMPF website between 6:00 AM and 9:00 PM CST seven days a week.
    There are two options for submitting loan details:
    • Option 1 – Automated (Batch) Submission (single or multiple loans)
      • What's required:
        • Fannie Mae 3.0 XML ULDD
        • MPF Additional Data Fil
    • Option 2 – Manual Submission (single loan only)
  2. If loan information changes after your most recent submission, correct the loan data and re-submit.
    (For manual delivery, update your loan presentment and re-submit. For automated delivery, correct the information in your LOS and re-submit the batch.)
    • At the time of funding, the loan data submitted must match the loan file.

      Loan Presentment is not an automated underwriting system; it simply determines the CE.

      Accuracy is important. If your loan is chosen for MPF Quality Control review, the auditor will compare the data you provided to the loan file. Any discrepancies will be reported in the final quality control findings.

  3. Based on credit enhancement results, you make the decision to deliver the loan to MPF.

Step 3: Processing

Overview

Now's the time to complete the processing steps that ensure your borrower and the property meet the MPF® requirements.

You will process the MPF loan as you would loans for other secondary market investors. 

Your Responsibilities

  1. Run your automated underwriting system (if applicable).
  2. Gather borrower information. 
  3. Validate the information provided by the borrower.
  4. Order an Appraisal.
  5. Order the Title search.
  6. Order a Life of Loan Flood Certification.
    A flood zone determination certificate with life-of-loan coverage must be obtained.
  7. For LTVs over 80%: Obtain private mortgage insurance from our list of approved vendors.{Tooltip}
  8. If using an Automated Underwriting System (AUS): When loan data is updated and the AUS is submitted for the final time, loan information should match the documentation used to make the final decision.

Step 4: Pricing & Locking a Loan

Overview

Determine your borrower's interest rate.

You can refer to the MPF® rate sheets to view rates, terms and lock periods. Benefits of MPF Traditional pricing include:

  • No additional points for low loan amount
  • No additional points for second homes
  • No additional points for cash out refinances
  • No loan level price adjustments
  • No MPF delivery fees

Your Responsibilities

  1. Access pricing at the eMPF website.
    • Rate sheets are posted between 8:30 AM and 3:30 PM (CST).
    • Price the loan using the remittance option based on your master commitment.
    • Pricing is subject to change throughout the day based on bond market movement.
    • When comparing pricing to other MPF product options, other investors will purchase the whole loan (asset & servicing); therefore, their price will include a Serving Released Premium (SRP). For Servicing Retained, MPF will purchase the asset; therefore, our price will not include an SRP. Instead, you will retain ongoing fee income of 25 bps annualized on a monthly basis for your services.
      How to read the MPF Price Sheet
  2. Loans can be locked via the eMPF website between 8:30 AM and 3:30 PM (CST).
    • With MPF mandatory delivery, you won’t lock a specific borrower or property address; you will only lock a dollar amount, term, interest rate and lock period.
    • What you’ll need:
      • Master Commitment Number
      • Delivery Amount ($)
      • Product (Choose 15, 20 or 30 year pricing as the product type)
      • Commitment Term/Expiration Date
      • Note Rate (%)
    • Once your lock is submitted and confirmed within eMPF, you will be emailed a copy of the lock confirmation. It is recommended you print the confirmation for the loan file. You may also have a confirmation emailed to a secondary contact.
    • Learn more about MPF Original Locks and Tolerances.
    • Lock Extensions
      • Request a lock extension thru the eMPF website on the “Transaction” tab using the delivery commitment screen.
        • Extensions can be for one day at a time or for multiple days; an extension cannot exceed a total of 30 calendar days.
        • Extension fees will be calculated and quoted to you; you will have 60 seconds to accept or decline the quote. (For quotes not accepted within 60 seconds, simply resubmit.)
        • Extension fee will be charged to your general Settlement Transaction Account (STA) on the date the extension is accepted.
        • You will want to have funds in your general STA to cover the extension fee.
    • Loan Amount Reductions
      • Go to the eMPF website and click the “Transaction” tab using the delivery commitment screen and select “Reduction.”
      • Reduction fees will be calculated and quoted to you; you will have 60 seconds to accept or decline the quote. For quotes not accepted within 60 seconds, simply resubmit.
      • Reduction fees for a pair-off will be charged to your general STA, on the date the reduction fee is accepted.
      • Once a lock is reduced, the 5% (or 1% if applicable) tolerance rule no longer applies and the new tolerance becomes $50.
        See MPF Traditional Loan Amount Reduction examples
    • Pair-off Fees{Tooltip}
      • Pair-off fees will be charged for loans delivered at less than 95% of the original loan lock.
      • Pair-off fees will be calculated and quoted to you; you will have 60 seconds to accept or decline the quote. For quotes not accepted within 60 seconds, simply resubmit.
      • Pair-off fees will be charged to your general STA, on the date the pair-off fee is accepted.
      • These fees are charged at expiration with the benefit of tolerance.
      • If the lock is reduced prior to expiration, the fee is charged on the actual amount of the change. See MPF Original Pair-Off Fee examples
    • Over-Delivery / Price Adjustment Fee{Tooltip}
      • An over-delivery fee (also known as a price adjustment fee) will be charged on loans delivered in excess of 105% of the original loan lock.
      • A lock (delivery commitment) can be over-delivered by $100,000 but cannot exceed the maximum loan limits.
      • The amount charged to your general STA account will be based on the last price sheet of the day on the day the loan is purchased by MPF.
        See MPF Original Over-Delivery / Price Adjustment Fee examples

Step 5: Underwrite the Loan

Overview

The loan is ready for underwriting!

Once a package with all processed verifications and documentation is completed, the file is sent to the underwriter. The underwriter is responsible for determining whether the package is deemed an acceptable loan by analyzing the 5C’s of underwriting:

1. Capacity: How much can the Borrower afford?
Consider: DTI, Cash Flow, Occupation, Employment History, Income Stability, Timing of Repayment, Continuance, etc.

2. Capital: What will the borrower invest and have for reserves?
Consider: Checking/Savings, Investments, Liquidity, Cash for Close, Reserves, Overdraft/Non-sufficient Funds, etc.

3. Collateral: In the event of a default, what is the property worth?
Consider: LTV, Marketability, Appraisal Discrepancies, Liens, Easements, Judgments, etc.

4. Conditions: What are unique factors surrounding the loan?
Consider: Market Conditions, Loan Purpose, Use of Cash Out (if applicable), etc.

5. Character: Will the borrower repay the loan?
Consider: Borrower Attitude, Payment History, Credit Score, etc.

Your Responsibilities

  1. Underwrite the loan using either an Automated Underwriting System (AUS) or manually.
    • For loans underwritten using Fannie Mae’s Desktop Underwriter® (DU®) or Freddie Mac’s Loan Product Advisor℠ (LPA℠) automated underwriting system, follow the AUS feedback requirements for the applicable GSE and not the manual underwriting guidelines of the MPF® Traditional Selling Guide.
    • The only MPF program requirements that supersede DU and LPA requirements are the following:
      • Max LTV: 95%
      • Minimum FICO: 620
      • Full Interior/Exterior Appraisal, unless an Appraisal Waiver Amendment is executed on the Master Commitment and DU grants an appraisal waiver (see MPF Guides for full requirements)
      • Occupancy Requirements
      • Property Type Eligibility (for example: Co-ops are not eligible under the MPF Program)
      • Products or loan attributes on the ineligible list (see Selling Guide Chapter 2.7)
      • Texas 50(a)(6) loans
    • For manually underwritten loans: Originators must follow the underwriting and eligibility guidelines of the MPF Traditional Selling Guide.
    • Per the MPF Traditional Selling Guide, the FHLBank San Francisco reserves the right to request reimbursement for any premiums paid in connection with Mortgage Loans paid off within 120 days of the Funding Date.  FHLBank San Francisco also reserves the right to increase the premium pricing reimbursement period to within 365 days of the funding date for PFIs that exceed certain payoff speeds as determined by FHLBank San Francisco from time to time. 
  2. Determine if the loan meets all of the documentation and eligibility requirements of the MPF Guides.
    • This includes all approval conditions generated on the feedback report (if using an AUS) or any additional conditions the underwriter may require.
    • If more information is needed, the borrower is contacted to supply more information and/or documentation.
    • If the loan is acceptable as submitted, continue on with the next steps in the loan process.

For additional Underwriting training, please register to attend one of our Live Webinars!

Step 6: Closing

Overview

It’s the big day for your borrower!

It’s also an important milestone for your institution, as this is the final step before selling the loan to MPF®. During this stage, we will cover the steps you will need to complete to sell your loan.

How it Works

  1. Proceed with your normal closing procedures.
    • Prepare the closing documents.
      • The loan will close in your institution’s name.
    • Be sure to use only the most current standard Fannie Mae/Freddie Mac uniform instruments.
    • Use the FNMA/FHLMC state-specific Mortgage or Deed of Trust.
      • If you are a MERS member, you may use a MOM mortgage. 
    • Use the following FNMA/FHLMC riders if applicable:
      • Multiple units require the use of 1-4 Family Rider (FNMA 3170)
      • PUD Rider (FNMA 3150)
      • Condo Rider (FNMA 3140) 
      • Second Home Rider (FNMA 3890)
  2. Close with the borrower.

Your Responsibilities

  • Meet all federal and state regulations. 

Step 7: Selling

Overview

It's time to sell your loan and reap the rewards of the MPF® Program.

Now that your loan is closed with the borrower, you will need to sell the loan to MPF. Your loan will be purchased by MPF the same day you request funds via the eMPF website.

Funding is an overnight transaction; even though the loan funds the same day, the funds will show in your STA account on the following day.

Prior to beginning this process

  • You must have the delivery commitment (lock) number found on the delivery commitment confirmation.
  • Loan must be closed and disbursed.
  • Loan data must be submitted in eMPF and consistent with the documentation in the loan file.
    • If any data is not consistent, correct and resubmit.
      If selling MPF a seasoned loan, see Traditional SG 14.1.

See how loan funding is calculated.

The interest calculation is based on the net/pass-thru rate (note rate less 25 bps) using 30/360.{Tooltip}

See Sample Funding calculation with Interim Interest

See Sample Funding calculation with Accrued Interest

Your Responsibilities

  1. Submit funding request via the eMPF website between 8:30 AM - 3:30 PM CST.
    You must use the same method to fund as you used for loan presentment (i.e., if you used automated submission for loan presentment, you must use automated submission to fund).
    • Automated (Batch) Submission: Utilizes the Fannie Mae 3.0 ULDD & MPF Additional Data File (can be used to fund single or multiple loans)
    • Manual Submission: Manual input of data fields (can be used to fund a single loan only)
    • You will receive a "Transaction Confirmation and Loan Funding Activity Report" via email on the day you request funds.
  2. Receive funds from MPF.  
    • MPF credits your STA account on the day following the funding date
    • Types of activity you will see in your STA account include:
      • Loan fundings
      • Extension fees
      • Pair-off fees
      • Over-delivery/Price adjustment fees
      • Custody fees
      • Credit enhancement fees

Step 8: Post-Closing

Overview

Congratulations, you've sold your loan to MPF®!

Now that you have funded your loan, you need to overnight the custody file to the document custodian.

Your Responsibilities - Delivering the Custody Package

The MPF Document Custodian (Wells Fargo) maintains the safekeeping of your custody file documents until conditions warrant their release (document corrections or loan payoff).

  1. Prepare the custody file folder.
    You must submit a manila, legal-sized folder containing your custody documents for each loan file you mail to the document custodian. 
    • You must attach a label to the top right corner of the folder. 
    • Labels must contain the following information:
      • FHLB (MPF Program)
      • PFI Name: (Use name of servicing PFI)
      • Master Commitment Number:
      • Borrower Name:
      • FHLB MPF Loan Number: (from funding confirmation)
      • PFI Loan Number:

        Use our handy label template!

        For New PFIs Only: MPF Provider will provide the first set of file labels. You are responsible for creating labels after those are depleted.

  2. Prepare the documents to be included in the custody file folder.
    Use the MPF Initial Certification Review Checklist (Exhibit K) as a job aid to ensure all documents in the collateral file are executed and delivered to the Custodian in accordance with the requirements of the MPF program. This checklist compares the custody package information to the information submitted to MPF at the time of purchase. The custody file must contain the following information: 
    • Original note (endorsed from your bank to _______ [blank]). See sample. 
    • Original Assignment leaving the Assignee line blank (Assignment is not recorded)
      • If a MOM mortgage was used in lieu of the Assignment, provide a certified copy of pages 1 & 2 of the MOM mortgage. 
        • If you are a MERS member and you used a MOM Mortgage: You would register with your institution as the Servicer and FHLB Chicago as the Investor #1000491
    • If applicable:
      • Certified copy of borrower’s power of attorney
      • Certified copy of trust agreement
      • If third party originated: certified copy of all intervening assignments
        The first page of any copies in the custody folder must be stamped “True and Certified Copy” and initials or signature below the certification.Do not include these checklists with the document package you send to Wells Fargo.
    • If any information within this custody package is inconsistent with the information you submitted to MPF at the time your loan was purchased, you must email MPF-Help@fhlbc.com and they will work with you to correct this information.
      Learn more about Custody Fees.
  3. The custody file must be shipped to the document custodian and certified within 7 calendar days of MPF Funding.
    File must be overnighted via UPS or FedEx to the following address:

    Wells Fargo Bank, NA
    MPF Program
    751 Kasota Avenue
    Minneapolis, MN 55414-2842

    To avoid an excess overnight mailing fee, proof the document package using the MPF Initial Certification Review Checklist (Exhibit K) prior to delivering the custody package to the document custodian.

  4. Retain the original final/trailing documents.
    • As a servicing PFI, the recorded mortgage and final title policy will be retained in the loan file.

Step 9: Custody Reports

Overview

Custody reports provide you with the status of the loans submitted to the document custodian for certification. 

You are required to have your custody package certified by the document custodian (Wells Fargo) within seven (7) calendar days of the loan being purchased by MPF®

You will find the MPF exception process very different from other investors you work with. MPF does not delay the purchase of your loan due to exceptions. MPF purchases the loan before you deliver the custody package to the document custodian.

How it works

  1. Monitor custody reports.
  2. Review for exceptions.
    • Monitor the Certified Loans report. This report shows you a list of loans reviewed and accepted by the Document Custodian. If your loan is showing on this report, there were no exceptions and your custody report is accepted.
    • If your loan was not on the Certified Loans report, view the Initial Loans Funded - Not Reviewed report. This report means that your loan has not yet been reviewed by the Document Custodian.
    • If your loan is not showing on the Certified Loans report or the Initial Loans Funded - Not Reviewed report, view the Initial Document Exceptions report. This report will notify you of any discrepancies between the loan presentment data/XML data (“scheduled information”) and the information delivered in the custody package. You must determine which information is correct: the “scheduled information” or the document custody package, and clear all exceptions to receive the initial certification
      • If the scheduled information is incorrect, you must contact the MPF Help Desk at (877) 463-6673 or mpf-help@fhlbc.com.
      • If the custody package is incorrect, you must request the document back from the custodian by faxing Wells Fargo the “Request for Release of Documents (Form SG340).”
        • The collateral file will be returned using PFI’s overnight courier.
        • Correct/replace the document and return the file to Wells Fargo via overnight mail.
          Wells Fargo Bank, NA
          MPF Program
          751 Kasota Avenue
          Minneapolis, MN 55414-2842
    • In addition to correcting the data, some corrections will require the funding to be reversed and refunded:
      • Loan amount
      • First payment date
      • Interest rate
  3. Manage custody fees charged by the Document Custodian.

    • There are two custody reports which will show the fees charged to you from the document custodian for correcting exceptions:
      • Uncertified Loan Fees (initial invoice and a final bill)
        • Shows fees for files delivered/certified after the 7 day requirement
      • Exception Fees (initial invoice and a final bill)
        • Shows fees for exceptions found by the document custodian
    • These initial billing reports are posted shortly after month end; the final billing report is posted just prior to the 18th of each month and will reflect the amount that will be charged to your account. Remember to have sufficient funds in this account to cover these costs, as insufficient funds will result in an overdraft fee.
    • For New PFIs Only: MPF will not charge exception fees within the first 60 days from receipt of the first collateral file or receipt of the first 100 collateral files (whichever comes first).

Uncertified loan fees will be assessed after 7 calendar days

Learn more about custody fees

Step 10: Investor Reporting

Overview

Contact your MPF® Training team for investor reporting training.

Step 11: Quality Control

Overview

Now it's time to ensure your mortgage production continues to operate at a high level.

You should conduct quality control reviews to evaluate the investment quality of your home loans, as well as detect possible fraud and false representation. 

This step outlines the requirements for a Quality Control (QC) program for Mortgage Loans originated and serviced under the MPF® Program. (Refer to MPF Guide Chapter 8.) You must perform the QC duties in compliance with the MPF Guide.

There are 2 types of Sample Selections needed:

  • Pre-Closing
  • Post-Closing

Your Responsibilities

  1. Randomly select loans for quality control audit that meet the requirements of the MPF Guide.
    • The MPF Guide states the sample size must be no less than 10 percent. Choose either:
      • 10% of your residential 1-4 family mortgage production;
      • 10% of your secondary market 1-4 family mortgage production; or
      • 10% of all your MPF loans
    • A review appraisal will be required on 10% of the loans selected for QC Audit.
      • A desk review must be completed by someone experienced in analyzing residential mortgage appraisals for the remaining loans.
    • Each loan selected for post-closing review must have a new tri-merged credit report. 
    • Two types of reviews are required:
      • Random – full file review (based on the 10% rule)
      • Targeted – review one element of the loan file (these are in addition to the 10% rule)
    • A comprehensive review is required for 2 stages of the closing process:
      • Pre-Closing
      • Post-Closing
  2. Meet the requirements of the MPF Guide for both pre and post-closing reviews.