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MLO Flow Chart

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by

cody clark

on 17 September 2014

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Transcript of MLO Flow Chart

MLO Flow Chart
FICO SCORE
680 and Up - Prime "A Paper"
660 and Below - Subprime
*Statement on Subprime lending
620 - FNMA/FDMC Cut-off
580 and Below - FHA, But 10% down payment
THINGS TO LOOK FOR ON CREDIT REPORT
"two" 30 day lates in 12 months
"one" 60 day late in last 2 years
bankruptcy in last 5 years
no judgement/tax liens/repo in last 24 months
FICO CALCULATIONS
35% Payment History
30% Credit Utilization
15% Length of Credit History
10% Types of Credit Used
10% Recent Search Credit
= 100%
Disclosures Triggered
Notice of Adverse Action
FACTA Credit Score Disclosure
THE 4 C's
CAPACITY - LTV

COLLATERAL - front and back end

CREDIT - credit score

CASH - assets and liabilities
LOAN PRODUCTS/PROGRAMS
Conventional Loans
conforming
non-conforming

Non-conventional loans
FHA
VA
USDA
CONVENTIONAL LOANS
CONFORMING Loans are backed by Fannie/Freddie/ Ginnie Mae
Seller Concessions
<10% down - 3%
>10% down - 6%
DTI - 28% Front End / 36% Back End
PMI
<20% down (80% or upLTV) you pay
>20% down (80% or down LTV) you DON'T pay
COMES OFF AFTER 78%
MAX Loan Limits - Set by FHFA (Oct. - Oct.)
1 unit $417,000
2 unit $533,000
Can be designated into "high cost areas!"
$625,000 loan limit

NONCONFORMING LOANS
Jumbo
Alt-A
Suprime
Niche
Nontraditional ARMs
Option-ARM
Interest-Only
CONFORMING LOANS
Fixed
Hybrid-ARMs
ARMs
Super Conforming
NO SPECIFIC GUIDELINES ARE SET!
RISKIER!!!
NON-CONVENTIONAL LOAN PROGRAMS
"GOVERNMENT PROGRAMS"
Loans that are either insured or guaranteed by the U.S. Government
FEDERAL HOUSING AGENCY
Primary Residents only
Type of client (Benefits)
Low down payment (3.5%)
No prepayment penalty
Front end 31% / Back end 43%
UFMIP - 1.75%
MIP
15 yrs or over is 1.3 - 1.55%
15 YRS or under is 0.45 - 0.95%
LTV over 90% - 30 yrs
LTV under 90% - 11 yrs
Seller Concessions up to 6%
No "Flipping Rule"
Assumable
Loan Limits set by the county
VETERANS ADMINISTRATION
Primary Residents only
Type of client (Benefits)
NO down payment
Need COE or the DD 214
Back end 43% DTI
Origination Fees are 1%
Funding Fee is 2% for purchase, 0.5% for refi
Seller Concessions up to 4%
Entitlement
$36,000 for loans under $144k, 25% for anything over
Assumable
Certificate of Reasonable Value
US DEPT. OF AGRICULTURE
Primary Residents only
Type of client (Benefits)
NO down payment
Rural Areas
Population of 10,000 or less
Can use to build, move, purchase, or refi home
2 loan programs
SFGHLP
Section 502 - Low Income 33/38 yr fixed
Seller Concessions have no limit
DTI Front end 29% / 41% Back end
Annual Fee
0.3% of amount still owed from the loan
Assumable
LTV up to 102% (2% of guaranty fee)
STEPS OF HAVING AN ESSENTIAL APPLICATION
1.) NAME

2.) MONTHLY INCOME

3.) SOCIAL SECURITY #

4.) ADDRESS OF PROPERTY

5.) EST. VALUE OF PROPERTY

6.) LOAN AMOUNT



6 PIECES TO COLLECT FROM THE CLIENT
1.) TYPE/TERM

2.) PROPERTY/PURPOSE

3.) BOROWERS INFO

4.) EMPLOYMENT HISTORY

5.) MONTHY INCOME/HOUSING EXPENSES

6.) ASSETS AND LIABILITIES

7.) DETAILS OF TRANSACTIONS

8.) DECLARATIONS

9.) ACKNOWLEDGMENT & AGREEMENT

10.) INFO FOR GOVT. MONITORING
ECOA says we have to ask
HMDA requires us to report



URLA (CLIENT'S RESPONSIBILITY
URLA TIME
DISCLOSURES
INITIAL DISCLOSURES
GFE
TIL
MSDS "We might sell YO' Loan!"
AFBA - If Referring

Initial ESCROW statement - 45 days or closing
Settlement Cost Booklet - 3 days of app

CHARM booklet - general
Early ARM disclosure - specific

Counseling Disclosure
When Your Home is on the Line (HELOC)
BIGGIES!!
3 Days of App
3 business days after App
Right to receive appraisal
3 days after app

Regulation P Initial Privacy Notice
"We might sell yo' info"
ASAP or 3 business days

Opt-out Notice - same time as privacy statement
HOEPA DISCLOSURES
Counseling
Loan Information
HECM COUNSELING / HEY DUMMY
Counseling is needed for this
Loan Information about how the HECM works
PROCESSOR COMES INTO PLAY
Can be MLO or underwriter
Verification of Docs
Will order Title Report/appraisal
USPAP says you cant choose appraiser but you can pick the Appraisal Company
APPRAISALS
1004 URAR Form
3 types of Appraisals normally
Market approach/Sales Comparison
1 mile radius, 3 comparables, sold regularly in last 12 months
Cost Approach
what does it cost to build/rebuild house
Income Approach
For investment properties
Determine how much you can rent it for
Net and Gross Adjustment for Market Approach
Net Adjustment = 15%

Gross Adjusment = 25%


Level Comps - adjustment value must be <25%
Fannie/Freddie Require 1004 MC
Market Conditions
Adendum
"Why we came up with vakues"

BPO (Broker Price Opinion)
Real Estate Broker gives opinion on what they think they can sell your house for
AKA competitive Market Analysis
TITLE
Abstractors dig through records to try to find liens
Run through legal review
Title company issues deed
Strongest General Warranty
"All good, clean, ready to go"
Special Warranty Deed
Quit Claim Deed
you can take someone off the deed
Deed handed off to title insurance so unfound liens can be paid
Lender's - protect incase of foreclosure
Borrower's - protect against unfound liens
Everything Comes back to the PROCESSOR, who hands it to the UNDERWRITER
UNDERWRITER
Verifies Everything
Verify insurance appraisals - protects lender's $ by analyzing risk
Can't require you to et insurance policy that is worth more than your house
CLOSING
WET settlement - funds distributed a closing
DRY settlement - funds distributed after closing
Table Funding - broker acting as a lender
CLOSING AGENT
Coordinates
Gives Docs
Provides General Info
Term talk goes to MLO
RECORDING
NERDS TAKE DOCS TO COUNTY COURT
CLOSING DOCUMENTS
SERVICING
FORECLOSURE
THE END
Full transcript