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#2260964 - 10/08/21 07:48 PM Secondary Market Mortgage Loans
Anonymous
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We have been out of consumer RRE mortgage lending for several years, due to the fact that the products (ARMs and HELOCs, not long term fixed rate loans) we offered and the demand we had, didn't justify the risk involved with all the applicable rule and regulations we had to comply with. Management has recently decided to get back into RRE lending, and we are looking to use another entity to underwrite, process, accept, and purchase these loans with servicing released to them. These loans will not be on our books, we would take in the application, enter it into the software portal, and this other entity takes the process from there, providing us with all required documents/disclosure, etc.

How do the mortgage servicing rules play into this set-up? Is there anything we'll need to comply with if we release the servicing? What other compliance-related items do we need to be concerned with and what audits/reviews would we be expected of us in this type of set-up?

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#2260982 - 10/08/21 10:16 PM Re: Secondary Market Mortgage Loans Anonymous
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 77,277
Galveston, TX
If you are getting paid for only entering the loan information into a portal, then this would be a Section 8 violation. There has to be more to the process than you currently realize.
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#2260983 - 10/08/21 10:18 PM Re: Secondary Market Mortgage Loans Anonymous
Anonymous
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Who services these loans? Will you staff be equip to answer questions, take payments, etc? Or will they be forwarded to the third party? How will you address denials? Will there be something other than a portal to assist your staff?

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#2261017 - 10/12/21 03:11 PM Re: Secondary Market Mortgage Loans Anonymous
RR Sarah Offline
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RR Sarah
Joined: Mar 2004
Posts: 2,479
Up North
Will the bank be closing the loan in their name and then selling to the investor? We have two or three investors we work with and we close all of the loans in our name and then transfer the loan and servicing to the investor. They are usually on our books for a very short time. We do not retain any servicing.

As far as mortgage servicing rules, you'll have to make sure your mortgage servicing disclosure includes the transfer of services to the investor if you are not retaining servicing.
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#2261026 - 10/12/21 06:12 PM Re: Secondary Market Mortgage Loans Anonymous
Truffle Royale Offline

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Joined: Jul 2003
Posts: 17,285
Originally Posted by Anonymous
We have been out of consumer RRE mortgage lending for several years, due to the fact that the products (ARMs and HELOCs, not long term fixed rate loans) we offered and the demand we had, didn't justify the risk involved with all the applicable rule and regulations we had to comply with. Management has recently decided to get back into RRE lending, and we are looking to use another entity to underwrite, process, accept, and purchase these loans with servicing released to them. These loans will not be on our books, we would take in the application, enter it into the software portal, and this other entity takes the process from there, providing us with all required documents/disclosure, etc.

How do the mortgage servicing rules play into this set-up? Is there anything we'll need to comply with if we release the servicing? What other compliance-related items do we need to be concerned with and what audits/reviews would we be expected of us in this type of set-up?

My FI is a TPO that operates as the red sentence indicates. If you're looking to work with someone like us, we're operating as your mortgage department backroom, processing, underwriting and preparing closing docs for applications you take and enter into the portal. But the loan closes in your name and is yours until we purchase it. Part of the package we prepare has a Servicing Disclosure which tells the borrower the loan will be sold and serviced by another entity.

Strictly speaking, the loan will be on your books for a short time between closing and purchase, so I suggest you discuss that portion with the entity you're looking to deal with. You will be subject to audit and exams on these loans too. If the set-up you're looking at is like ours, the entity you set up with will help you with that and supply whatever extra documentation they have that you may need to satisfy examiners.

Feel free to pm me if you'd like to discuss this further.

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