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.