FAQ

All loans must adhere to Agency guidelines, PHH product parameters and underwriting guidelines.

Refer to the PHH Non-Agency Underwriting Standards and associated Product Descriptions for Non-Agency guidelines and requirements.

All appraisals on Loans offered for sale to PHH must be compliant with Appraiser Independence Requirements (AIR) specified by the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the FDIC and the Office of Thrift Supervision. AIR was developed by Fannie Mae, the Federal Housing Finance Agency (FHFA), Freddie Mac and key industry participants to replace the Home Valuation Code of Conduct (HVCC), effective October 15, 2010, and Property Data Collector Independence Requirement (PDCIR). The updated requirements maintain the spirit and intent of the HVCC and continue to provide important protections for mortgage investors, home buyers and the housing market.

PHH requires compliance with all applicable laws by appraisers to ensure appraisals of the market value of a property are not based (either completely or in part) on race, color, religion, gender, gender expression, age, national origin, disability, marital status, source of income, sexual orientation, familial status, employment status, or military status of either the present or prospective owners or occupants of the subject Property, or of the present owners or occupants of the properties in the vicinity of the subject property, or any other basis prohibited by the federal Fair Housing Act of 1968. PHH provides data collection options for complaints about appraisals/appraisers and PHH requires education requirements for appraisers.

An appraiser must be, at a minimum, licensed or certified by the state in which the property to be appraised is located.
No employee, director, officer, or agent of the Client, or any other third party acting as joint venture partner, independent contractor, appraisal company, appraisal management company, or partner on behalf of the Client, shall influence or attempt to influence the development, reporting, result, or review of an appraisal through coercion, extortion, collusion, compensation, inducement, intimidation, bribery, or in any other manner including but not limited to:

• Withholding or threatening to withhold timely payment or partial payment for an appraisal report.
• Withholding or threatening to withhold future business for an appraiser or demoting or terminating or threatening to demote or terminate an appraiser.
• Expressly or impliedly promising future business, promotions, or increased compensation for an appraiser.
• Conditioning the ordering of an appraisal report or the payment of an appraisal fee or salary or bonus on the opinion, conclusion, or valuation to be reached, or on a preliminary value estimate requested from an appraiser.
• Requesting that an appraiser provide an estimated, predetermined, or desired valuation in an appraisal report prior to the completion of the appraisal report or requesting that an appraiser provide estimated values or comparable sales at any time prior to the appraiser’s completion of an appraisal report.
• Providing to an appraiser an anticipated, estimated, encouraged, or desired value for a subject property or a proposed or target amount to be loaned to the borrower, except that a copy of the sales contract for purchase transactions may be provided.
• Providing to an appraiser, appraisal company, appraisal management company, or any entity or person related to the appraiser, appraisal company, or appraisal management company, stock or other financial or non-financial benefits.
• Removing an appraiser from a list of qualified appraisers or adding an appraiser to an exclusionary list of disapproved appraisers, in connection with the influencing or attempting to influence an appraisal (this prohibition does not preclude the management of appraiser lists for bona fide administrative or quality-control reasons based on written policy).
• Any other act or practice that impairs or attempts to impair an appraiser’s independence, objectivity, or impartiality or violates law or regulation, including, but not limited to, the Truth in Lending Act (TILA) and Regulation Z, or the Uniform Standards of Professional Appraisal Practice (USPAP).

A Client must not order, obtain, use, or pay for a second or subsequent appraisal in connection with a mortgage financing transaction unless

• there is a reasonable basis to believe that the initial appraisal was flawed or tainted, and such basis is clearly and appropriately noted in the Loan File;
• such appraisal is done pursuant to written, pre-established bona fide pre- or post-funding appraisal review or quality control processes or underwriting guidelines, and so long as the Client adheres to a policy of selecting the most reliable appraisal, rather than the appraisal that states the highest value; or
• a second appraisal is required by law.

The Client shall ensure that the borrower is provided a copy of any appraisal report concerning the subject property promptly upon completion at no additional cost to the borrower, and in any event no less than three days prior to the closing of the mortgage. The borrower may waive this three-day requirement if such waiver is obtained at least three days prior to the closing of the mortgage. The Client may provide the borrower at closing, a revised copy of an appraisal and information as to the nature of any revisions, so long as the revisions had no impact on value.
The Client may require the borrower to reimburse the Client for the actual cost of the appraisal; however, the borrowers cannot be charged a fee for a copy of their appraisal. If this fee is shown on the Closing Disclosure, PHH will require a refund to the borrower prior to purchase.

The Client or any third party specifically authorized by the Client (including, but not limited to appraisal companies, appraisal management companies, and correspondent lenders) shall be responsible for selecting, retaining, and providing for payment of all compensation to the appraiser. The Client will not accept any appraisal report completed by an appraiser selected, retained, or compensated in any manner by any other third party (including mortgage brokers and real estate agents).
There must be separation of a Client’s sales or mortgage production functions and appraisal functions. An employee of the Client in the sales or mortgage production function shall have no involvement in the operations of the appraisal function.
Certain parties are prohibited from the following actions:

• Selecting, retaining, recommending, or influencing the selection of any appraiser for a particular appraisal assignment or for inclusion on a list or panel of appraisers approved or forbidden to perform appraisals for the Client; and
• Having any substantive communications with an appraiser or appraisal management company relating to or having an impact on valuation, including ordering or managing an appraisal assignment.

These parties include:

• All members of the Client’s mortgage production staff
• Any person who is compensated on a commission basis upon the successful completion of a mortgage
• Any person whose immediate supervisor is not independent of the mortgage production staff and process

Client’s personnel not described above are not subject to the restrictions, and may engage in communications with an appraiser. In addition, any party, including the parties described above, may request that an appraiser provide additional information or explanation about the basis for a valuation, or correct objective factual errors in an appraisal report.
If absolute lines of independence cannot be achieved as a result of the Client’s small size and limited staff, the Client must be able to clearly demonstrate that it has prudent safeguards to isolate its collateral evaluation process from influence or interference from its mortgage production process.
Any employee of the Client (or if the Client retains an appraisal company or appraisal management company, any employee of that company) tasked with selecting appraisers for an approved panel or substantive appraisal review must be 

• Appropriately trained and qualified in the area of real estate appraisals; and in the case of an employee of the Client, wholly independent of the mortgage production staff and process.

In underwriting a mortgage, the Client may use an appraisal report prepared by an appraiser employed by:

• The Client
• An affiliate of the Client
• An entity that is owned, in whole or in part, by the Client
• An entity that owns, in whole or in part, the Client

The Client may also use an appraisal prepared by an appraiser employed, engaged as an independent contractor, or otherwise retained by an appraisal company or any appraisal management company affiliated with, or that owns or is owned, in whole or in part, by the Client or an affiliate of the Client, provided that the Client complies with the provisions of these Appraiser Independence Requirements.
The Client may use in-house staff appraisers to:

• Order appraisals
• Conduct appraisal reviews or other quality control, whether pre-funding or post-funding
• Develop, deploy, or use internal Automated Valuation Models (AVMs)
• Prepare appraisals in connection with transactions other than mortgage origination transactions (e.g., mortgage workouts), if the Client complies with the provisions of these Appraiser Independence Requirements

PHH does accept loans where the appraisal was transferred from another lender provided the file includes the following:

• First generation appraisal.
• Successful FNMA and FHLMC Submission Summary Report (SSR).
• Appraisal delivery certificate from transferring lender evidencing delivery of appraisal to the borrower. If appraisal was sent electronically, the borrower may forward the email they received when the appraisal was delivered.
• Appraisal transfer letter that includes the following:
  • Must be on the letterhead of the original transferring financial institution
  • Current Date
  • Borrower Name
  • Property Address
  • A statement transferring the ownership of the appraisal to the Client
  • The following statement: “(Original Transferring Financial Institution) certifies and warrants that the reference appraisal was prepared in accordance with, and is compliant with, the Appraisal Independence Requirements (AIR), Truth in Lending regulations, and all applicable laws.”
  • Signature of an Officer of the transferring financial institution that is not in Loan Production. (Note: Loan Officers, LO Assistants etc. are not eligible to sign the transfer letter)
  • Compliancy of ordering and processing according to, but not limited to, Dodd Frank, FIRREA, Appraiser Independence Requirements, and Consumer Protection Acts; and
  • Assurance of most recent complete appraisal assignment (i.e., 1004, 1025, 1073 etc., but not 1004D, 1075, 2000, 2000A, 2070, 2075, 2095 or any “Subject To” or Recertification of Value assignments)

Any Client that has a reasonable basis to believe an appraiser or appraisal management company is violating applicable laws, or is otherwise engaging in unethical conduct, shall promptly refer the matter to the applicable State appraiser certifying and licensing agency or other relevant regulatory bodies.

Clients must adopt written policies and procedures implementing these Appraiser Independence Requirements, including, but not limited to, adequate training and disciplinary rules on appraiser independence. Additionally, Clients must ensure that any third parties, such as appraisal management companies or correspondent lenders used in conjunction with the sale and delivery of a mortgage to PHH are also in compliance with these Appraiser Independence Requirements.

Conventional Loans with properties that have Collateral Underwriter (CU) scores of 5 will be ineligible for purchase by PHH.
For loans with CU scores of 4.0-4.9, PHH will pull Automated Valuation Model (AVM) If value is not supported by the AVM, PHH will require additional documentation to support the value.

Clients must follow the requirements of the applicable agency in the event of a request for a Reconsideration of Value, either client or borrower initiated. In addition, no costs associated with the Reconsideration of Value may be charged to the borrower. 

To submit a Loan File for review, the Client selects the loan under the Pipeline View via PHH Correspondent portal. After the commitment is open, under the Loan Summary option on the toolbar the Client will click on the "Upload Closed Ln Pkg Here" link. Once all files have been uploaded, the Client will select Submit for Review under the Loan Summary Toolbar to complete. Notification will indicate the file has been submitted for review.
Note: The 3.4 file must be uploaded prior to a loan being submitted for review and the Submit For Review step must be completed for the loan to be considered a good delivery.
Upon completion of the upload, the Client must review to ensure accuracy.
The Delegated Loan - Document Delivery Checklist is required on all PHH loans being submitted for purchase. The Client must include all documentation listed within the PHH Delegated Loan - Document Delivery Checklist as applicable. Items not provided as indicated on the form may cause a delay in the review and purchase of the loan.
The information contained in this section does not reflect all required documentation. The Client must use the Delivery Checklist for additional submission requirements and submit any and all documents/information as per Agency guidelines and PHH product parameters and underwriting guidelines.
The information contained in all commitments, advices, schedules, computer tapes or other documents prepared by the Client or on behalf of the Client or otherwise provided to PHH relating to the Loan is complete, true and correct.

Important Tips

• The Client must re-run AUS prior to closing once final numbers are determined.
• If funds required for closing increase and/or funds available for closing and reserves decrease, Client must re-run AUS.
• The Client must ensure all AUS conditions have been satisfied. AUS provided must match program selected at the time of lock. There may be pricing implications if the provided AUS does not match the program selected.
• The borrower must initial any corrections made.
• The borrower’s name must agree with typed or signed name(s) on the application, sales contract, Mortgage Note and Security Instrument.
• The Mortgage Note and Security Instrument must be on forms acceptable to Fannie Mae, Freddie Mac, USDA, FHA and VA.
• UCD and LCA must show Satisfied status.

Electronic Upload of Documents for Delivery
Closed Loan Files must be submitted by 11:59 p.m. ET for the documents to be received by PHH Correspondent Lending on that day.

Outstanding Conditions
Any questions related to outstanding conditions should be addressed with the PHH Correspondent Support Team. Outstanding conditions on the loan will delay final purchase. Documents to clear outstanding conditions should be uploaded to the loan via PHH Correspondent portal by attaching the document to the Purchase Condition and clicking Ready for Review. The Ready for Review step alerts PHH that the document has been uploaded. Not completing this step will delay the review of the document.

Seasoned Loans
A Seasoned Loan is a loan which the next payment due to PHH is two or more payments after the first payment due date. If the closed loan has aged greater than 60 days up to a maximum of 90 days of the Mortgage Note date, it may be eligible for an exception through the Rate Lock Desk. PHH will purchase Loans have had one to two payments applied. Seasoned Loans will only be considered if all of the following are satisfied:

• There are no more than two payments received from the first payment due date,
• The Loan has no transfer of servicing issues, and
• The Loan has a current pay history with no delinquencies.

PHH will not purchase loans with incomplete documents. If a document or qualification deficiency is determined, the loan will be suspended.
Client may incur late fees in the event that PHH does not receive the information or documentation needed to purchase the loan within the following timeframe:

• Five (5) calendar days from the later of the commitment expiration or the initial suspense notification

If the Client does not provide complete and compliant funding documents within the timeframe listed above, PHH may, at its discretion, allow or require any of the following (either singly or in any combination):

• Allow Client additional time subject to payment of an extension or suspense fee (2 bps/day)
• Allow Client additional time subject to PHH 's re-pricing the loan
• Reject the delivery
• Reject the delivery and require payment by Client of a pair-off fee

A delivery is not deemed accepted by PHH unless and until PHH acknowledges receipt of the closing and Credit Files, and in addition, wires applicable funds to Client via wire instructions provided. A Purchase Advice detailing the funds sent will be posted to the secured website for the Client to review.
After 30 days of suspense, if the deficiencies are still not cleared, the loan will be determined to be un-purchasable. Loans with suspense items that cannot be cleared or loans where Client does not appear to be actively working to resolve will be canceled, and the Loan Files returned to Client. These loans will be paired-off, and all extension fees and suspense fees will be taken into account when determining the adjusted pair-off price.
Exceptions to this process will be at the discretion of PHH whereas an exception, the Client may be permitted to have a loan remain in suspense longer than 30 days in order to accommodate special Client circumstances. If PHH purchases a Loan that has been in suspense for more than 30 days, the loan will be relocked, subject to the greater of either the accrued suspense fees for 30 days or worst-case market re-price. Worst-case market pricing will be determined by comparing base price to base price for the same rate lock terms. The delivery expiration will be reset to reflect the date relocked, no additional time will be provided. All previously applied fees such as extension charges will remain on the loan.
Any loans suspended greater than 30 days must also meet all current pricing and product guidelines and eligibility. Suspense fees and policies are at the discretion of PHH and are subject to change without notice.

Mortgage Payments
Prior to the transfer date, if applicable, any payments received by the Client with respect to each Loan shall be properly applied by the Client to the account of the related mortgagor.

MERS Registration
All Loans purchased by PHH from the Client must be registered with MERS as a MOM (MERS Original Mortgagee) loan. The Client shall promptly take all necessary steps to insure that all loans purchased by PHH are properly selected in the MERS system indicating PHH as the holder of the beneficial interest as the servicer. PHH will not purchase non-MERS loans.

Government Loans
If the Loan was sold by the Client to PHH pursuant to a commitment which provided that such Loan would be guaranteed by the VA or USDA or insured by the FHA, the Loan shall be fully guaranteed or insured, as applicable and all insurance premiums or guarantee fees due on or before the purchase date shall be paid in full.
Payment of Hazard Insurance Policies
The Clientshall pay prior to the transfer date, all hazard insurance premiums due within 45 days from the closing/settlement date, provided that the Client has received bills for such insurance premiums prior to the transfer date. The Client shall immediately deliver to PHH all bills and correspondence related to the Loan and received by it subsequent to the transfer date.
Property Taxes
The Client shall ensure payment prior to the transfer date of all tax bills (including interest, late charges, and penalties in connection therewith) due within 45 days from the closing/settlement date. Tax amounts due while the loan is still in suspense or that are due within 30 days of the purchase date must be paid by the Client with evidence of the tax payment provided to PHH.
The Client, or its tax service provider, shall immediately forward to PHH all tax bills received by the Client after such date.

Collateral package must include:
• Original Mortgage Note, signed and properly endorsed
• Original Bailee Letter
Original collateral package delivery address:

Computershare ATTN: PHH TEAM 275 Commerce Drive, Ste 120 Fort Washington, PA, 19034

 

The Client agrees that PHH may act as attorney-in-fact in order to endorse the Mortgage Notes from the Client to PHH, and to execute necessary documents, such as, but not limited to assignments of mortgages, deeds of trust, deeds to secure debt and other documents securing those Mortgage Notes, giving PHH the authority to do each action fully as Client. This power of attorney can only be revoked or discontinued by notification to PHH in writing. If the contract between PHH and Seller is terminated, this power of attorney will remain with PHH for a minimum of three years after termination.

PHH requires the delivery of the complete and correct original, properly endorsed, Mortgage Note before purchase as part of the collateral package delivery. The original Mortgage Note must be received on or before the commitment expiration date. A copy of the original Mortgage Note with proper endorsements must be provided in the imaged package. Refer to state guidelines for additional information regarding the acceptance of electronic signatures on collateral documents.

• The borrower signature and printed name on the original Mortgage Note must match the closing documents exactly. If over signed or undersigned, a notarized name affidavit is required and must include all of the various signatures exactly.
• The Mortgage Note must include all borrowers listed on the URLA.
• Any strikethroughs to the original Mortgage Note must be initialed by all borrowers prior to submitting the closed Loan File to PHH for purchase. White-outs and/or lift-offs are not acceptable.
• Borrower initials must be present if space is provided at the bottom of the page.
• There cannot be more than 62 days between the Mortgage Note date and the first payment date.
• The Client’s name must read exactly the same on the front of the Mortgage Note and on the endorsement.
• The original Mortgage Note (including any applicable addenda and riders) must be endorsed as follows:

• The endorsement cannot be abbreviated. Please ensure that systems are updated with the correct legal entity and notify your warehouse banks accordingly. If the Mortgage Note is endorsed by the warehouse bank, a copy of the POA from the Client to the warehouse bank giving the warehouse bank authority to endorse the Mortgage Note must be included with the closed Loan File.
• PHH requires the use of original signatures for endorsements on original Mortgage Notes and allonges. Facsimile signatures are not acceptable.

An allonge to the Mortgage Note is acceptable when there is not enough room on the original Mortgage Note to endorse. The allonge must be original and must be referenced on the original Mortgage Note as an attachment. The information below is required when using an allonge:

• Borrower name
• Property address
• Loan amount
• Mortgage Note date
• Must be properly endorsed (refer to requirements above)

If a loan is cleared for purchase, but the original Mortgage Note has not been marked as received by the custodian, PHH may reach out to the Client to request the tracking number for the Mortgage Note package. This request does not mean that the custodian has not received the Mortgage Note; tracking is requested to expediate the review of the Mortgage Note so PHH can purchase the loan.

In hybrid closings, eSigning of certain disclosures are acceptable, but wet ink signatures are required on recorded and legal documents such as the Notice of Right to Cancel, Note, Security Instrument, and Closing Disclosure. 

At this time, PHH does not accept any loans with a prepayment penalty unless the loan is originated as a PHH Non-Agency product. 

The following criteria apply to any loans with a prepayment penalty:

• the Loan must be non-owner occupied (investment properties) only
• ​the Loan must be secured by mortgaged property that is located in a state that allows prepayment penalties. The prepayment penalty must be permitted by all applicable laws and regulations, including high cost thresholds.
• Acceptable prepayment penalty structures (when permitted by all applicable laws and regulations) any include the following:
  • Fixed percentages of 3%, 4% or 5%
  • Declining structures that do not exceed 5%. For example, (5%/4%/3%/3%/3%) or (5%/4%/3%/2%/1%) would be acceptable declining structures.

A certified, true copy of the Mortgage or Deed of Trust including any applicable riders must be included in the closed Loan File delivered to PHH. The certification must be stamped on the document and read “Certified to be a true and exact copy of the original which is being recorded.”
An assignment of Mortgage to PHH must be included, if applicable, in recordable form under the laws and jurisdiction in which the Mortgage property is located.
The Client must utilize MERS, with a MOM (MERS as original Mortgagee) Security Instrument, including the MIN # with complete MERS information signed by the borrower. The Client must transfer using MERS On-Line using Transfer of Servicing or Transfer of Beneficiary within seven days of purchase. A Mortgage secured by property in any state in which MERS is not the original Mortgagee of record, but is a subsequent assignee, is not eligible for purchase by PHH.

• Any strikethroughs to the Mortgage/Deed of Trust must be initialed by all borrowers prior to submitting the closed Loan File to PHH for purchase. White-outs and/or lift-offs are not acceptable.
• Borrower initials must be present if space is provided at the bottom of the page.
• Borrower names must match other legal documents.
• Property address must match the Mortgage Note and other legal documents.
• Loan amount and term (first and maturity date) must match the Mortgage Note and other legal documents.

The following information must match the closed loan documents exactly:

• Borrower names
• Complete property address
• Legal description
• Dates of documents (closing, first payment date, maturity date, notary acknowledgement, etc.)
• Client name and address
• Signatures must match typed names exactly
• MERS identification number (MIN #) must be included
• Notary acknowledgement information must be present and complete and correct
• The following riders must be attached to the Mortgage or Deed of Trust (if applicable):
  • PUD Rider
  • Condo Rider
  • One- to Four-Family Rider
  • Second Home Rider
  • VA Rider

A notarized name affidavit may be required. The borrower’s typed name on all documents in the closed Loan File should match his signature. The name affidavit must provide all variations of a person’s name and/or signature. If applicable, the name affidavit must be included in the closed Loan File:

• PHH requires the name affidavit.
• It must be properly notarized.
• The name of the borrower, as it appears typed on the face of the Security Instrument and under the signature line, must be consistent with the closing documents.
• The signature of the borrower must match exactly the name typed below the signature line. It is acceptable for the borrower to oversign the document (example: borrower’s typed name under the signature line does not include a middle initial and the borrower’s signature does include a middle initial).
• Name affidavits are not acceptable for errors. Errors must be corrected on the original document, if necessary.

If applicable, a certified true copy of the POA must be included in the closed Loan File. The certification must be stamped on the document and read “Certified to be a true and exact copy of the original.”

• Borrowers name must match exactly the names on the URLA, Mortgage Note, Mortgage, and closed Loan File. If a refinance, the names must also match the name currently vested in title.
• The document must be specific to the property by referencing either the property address or legal description.
• General POAs are not acceptable. The POA must be specific to the loan transaction.
• The POA must be executed no more than 30 days prior to the date of the initial disclosures or the sales contract.
• The attorney-in-fact may not be the Client, appraiser, broker, etc., or anyone with direct or indirect financial interest in the transaction.
• The grantor’s signature must be notarized. (If executed outside of the U.S., it must be notarized at a U.S. Embassy or a military installation.)
• POA must be executed and notarized with all blanks completed and be effective through the date of closing.
• A separate POA must be executed for each borrower not present at closing.
• The attorney-in-fact must execute all closing documents and must sign exactly as typed and the name on the POA must match the closing docs exactly.
• The final title policy or commitment/binder must not contain any exceptions due to the use of the power of attorney.
• The POA must be executed prior to the closing documents and recorded prior to the recording of the mortgage/Deed of Trust.
• A statement from the Client must be attached to the Mortgage Note, stating that they have determined that applicable law requires the use of a POA.
• POAs for VA Loans and USDA Loans must also meet VA or USDA, as applicable, specific requirements and an Alive and Well Certification must be obtained.
• PHH does not allow the use of a POA on a Texas Section 50(a)(6) Loan.

A blanket authorization is required on all loans and must be signed by each borrower. This is a requirement of all originating Clients and allows PHH and/or its successors or assigns to re-verify information contained in the file post funding. Clients may use their own version of the form but must ensure the verbiage contains its successors and/or assigns language.

A current survey is required if the title policy contains any survey exceptions that will not be deleted from the final title policy. If the title company does delete any survey exception from the final title policy, a survey is not required. If required, the survey must be in the borrowers’ name(s).

Requirements for hazard insurance on a PUD are similar to those specified in above Section 15.
The homeowners’ association must maintain a property insurance policy, with premiums being paid as a common expense. The policy must cover all of the common elements except for those that are normally excluded from coverage, such as land, foundation, excavations, etc. Fixtures and building service equipment that are considered part of the common elements, as well as common personal property and supplies, should be covered.
If the project’s legal documents allow for blanket insurance policies to cover both the individual units and the common elements, a blanket policy is satisfactory. Coverage must be in an amount equal to the full replacement value of all of the PUD units, without deductions for depreciation or coinsurance, including the structural portions and fixtures owned by the PUD unit owners. Premiums must be a common expense of the PUD Corporation or HOA and must be included in the regular common assessments of the unit owners. Coverage should be in the name of the HOA or PUD Corporation as the insured for the benefit of the unit owners.
Each policy must contain the standard mortgagee clause endorsed to provide that any proceeds will be paid to the PUD Corporation or HOA for the use and benefits of Mortgagees as their interest may appear.

The appraisal obtained in connection with the origination of the Loan, as well as the appraiser who performed it, must meet all of the applicable requirements of this Guide and applicable laws and regulations. The Client must ensure that the value is supported.

For closed-end credit transactions secured by real property (other than exempt transactions), the Client is required to provide the consumer an initial disclosure within three business days of receipt of application to enable understanding of basic terminology of a loan and its costs immediately and over time. This disclosure is called the Loan Estimate.
The Loan Estimate must contain a good faith estimate of credit costs and transaction terms

• The Loan Estimate must be in writing and contain the information prescribed in 12 CFR 1026.37
• Delivery of the Loan Estimate to the consumer must satisfy the timing and method of delivery requirements
• PHH may only use revised or corrected Loan Estimates when specific requirements are met

For applicable loans in which a Loan Estimate has been issued and the loan proceeds to closing, the Client must provide a final disclosure reflecting the actual terms of the transaction. This final disclosure is called the Closing Disclosure.
The disclosure is five pages long and may require the use of an addendum if there is more required information than a section of the form can accommodate.

• The Closing Disclosure generally must contain the actual terms and costs of the transaction
• The Closing Disclosure must be in writing and contain the information prescribed in 12 CFR1026.38
• If the actual terms or costs of the transaction change prior to consummation, then the Client must provide a corrected disclosure that contains the actual terms of the transaction and complies with the other requirements of §1026.19(f), including the timing requirements and requirements for providing corrected disclosures due to subsequent changes.
• If the Client provides a corrected disclosure, it may also be required to provide the consumer with an additional three-business-day waiting period prior to consummation.

The Client must use aggregate accounting in the calculation of the escrow/impound account. Escrow/impound accounts must be established for the payment of taxes, special assessments (only if taxing authority requires these to be paid with the taxes), ground rents, hazard insurance, flood insurance, private mortgage insurance, Guaranteed Rural Housing annual fee, etc. Adequate funds must be calculated and collected at closing by the Client to ensure that a sufficient amount will be available to pay the next installment of taxes and insurance. If the taxing authority offers a discounted annual amount for paying on a particular payment schedule or a particular payment date, the escrow reserve account must be established accordingly. The account balance cannot go into the negative. The Initial Escrow Account Disclosure must be included in the closed Loan File.

Unless otherwise required by applicable state law, the maximum cushion that the Client may maintain in the escrow/impound account is two months, except there is no cushion requirement for Zero-Option Monthly Premium PMI.

An Initial Escrow Account Disclosure is not required on non-escrowed loans.

A copy of the first payment letter from the Client to the borrower must be provided with the closed Loan File. The first payment letter should include the borrowers’ mailing address if different than the property address (second home or investment property). All information below must be included:

• The breakdown of the monthly payment
• The date the first payment is due
• The address where to make the first payment

PHH requires a current pay history if one or more payments are due or have been paid at the time of loan purchase. The history is preferred to be system generated and must include the following on the Client’s letterhead:

• Borrower’s name
• Date payments made
• Any curtailments
• Amount of payment
• Breakdown of payment
• Current principal balance
• Escrow balance including any escrow disbursements

A W-9 is required for each borrower on all loans:

• Must include a form for each borrower
• Must be signed and dated by borrower
• The form must reflect the borrower(s)’ SSN

Our Servicing Division must have sufficient time to process the loan before the first full monthly payment is due, therefore, an interest credit to the borrower at closing can only be made up to the 10th day of the month.

An Itemization of Amount Financed must be included in the closed loan fil. This information is typically included on page five of the Closing Disclosure.

Closed Loan Files should not be delivered to PHH until the rescission period has expired. PHH requires a properly executed Notice of Right to Cancel on all primary residential refinance loans that meet the following standards:

• The notice must be given to all borrowers with an interest in the property even if the person does not sign the original Mortgage Note
• All dates must be correct
• The notice must be signed and dated by all borrowers
• Notice of Right to Cancel is not required on the refinance of an investment property or second home
• Sundays and federal legal holidays cannot be included in the three-business day rescission period
• The holidays include New Year’s Day, Martin Luther King, Jr. Day, Presidents’ Day, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans’ Day, Thanksgiving Day, and Christmas Day

A higher-priced mortgage loan (HPML) is secured by the borrower’s principal dwelling with an annual percentage rate that exceeds the Average Prime Offer Rate (APOR) for a comparable transaction as of the date the interest rate is set by a certain percentage, based on the type and size of the loan.
Clients must include evidence documenting the borrower’s interest rate set date in all loans delivered for purchase. Acceptable documents, in effect at time of closing, include the following:

• An unexpired lock agreement between the originating Client and the borrower
• A Client generated unexpired lock commitment form
• A screen-print of a populated FFIEC rate spread calculator

The VA funding fee must be collected on the Closing Disclosure and must be paid to VA by the Client. A copy of the funding fee receipt from the Funding Fee Payment System (FFPS) reflecting the correct amount paid is required.
PHH requires the Loan Guaranty Certificate (LGC) before purchase if there are 60 days or more from the Mortgage Note date to the purchase date.

The annual guarantee fee must be collected on the Closing Disclosure. A copy of the check or printout reflecting the correct amount paid is required. PHH requires the Client to collect two months of the annual fee on the Closing Disclosure to be placed in the escrow account.
PHH requires the Loan Note Guarantee before purchase if there are 60 days or more from the Mortgage Note date to the purchase date.

Request for Single Family Housing Loan Guarantee Form RD 1980-21 is required for all Rural Housing loans (USDA):

• Form RD 1980-21 must be fully completed by the approved Client or their authorized representative and by all applicants that will be parties to the Mortgage Note
• Must include completed, signed, and dated Client and applicant certifications page

The Federal Emergency Management Agency (FEMA) announces Presidentially declared major disasters and emergencies. The declaration is usually made after the event has already occurred.
It is the Client’s responsibility to determine and act upon any Loans impacted by a disaster prior to the sale to PHH. PHH is not responsible to provide notification to the Client of disaster declarations. If at any time after loan purchase, PHH or a subsequent investor determines that the subject property was damaged and not in fully marketable condition at time of sale, the loan is subject to repurchase.
PHH considers a disaster any event that causes substantial damage. Disasters include, but are not limited to:

Hurricanes/Tropical Storms    Wildfires
Earthquakes                            Volcanic eruptions
Floods                                     Nuclear accidents
Landslides                              Terrorist attacks
Tornadoes                               Thunderstorms

The disaster requirements apply to all of the following:

• FEMA declared disaster areas eligible for individual assistance.
• Areas identified by PHH.
• Properties that the Client has a reason to believe sustained damage in a disaster.

The Client must warrant that the subject property is in marketable condition and that there are no repairs or other detrimental conditions to the subject property.
Documentation Requirements
In addition to Agency requirements, the following must be met for any property located in a disaster area to confirm the property has not been adversely affected by the disaster at the time of sale:

• An exterior disaster inspection certification with photographs is required, if the Agency does not require a disaster inspection, when:
  • An appraisal was not originally needed, or
  • The appraisal was completed on or before the disaster incident period end date.
• In addition to accepting an Appraiser’s inspection with photos for declared disaster areas, PHH will allow for lender certifications and photos when the following requirements are met for conventional loans:
  • The lender’s certification must be executed by an officer of the company.
  • The lender’s certification must be specific to the property in the declared disaster area and must indicate that there is no damage to the property.
  • Photos taken/provided by the lender must be date stamped.
  • PHH will not accept a certification or photo from the borrower OR a processor’s cert that the borrower verbally indicated that the property has not been damaged. The certification must come directly from the lender and meet the above requirements to be accepted.
• Disaster inspection certification must be completed after the incident period end date as defined by FEMA.
• Disaster inspection must indicate any repairs needed and evidence repairs have been completed must be provided.
• This policy must be followed for 90 days. 90 days is measured from the incident date to the Note Date.

Properties Appraised Prior to Date of Disaster
A 1004D or a Disaster Inspection Certification and photographs are required of the exterior of the property and subject neighborhood.
The inspector must provide a certification, on the inspector’s letterhead, stating the following:

• An exterior inspection has been completed
• The property is free from damage and is in the same condition as previously appraised
• Marketability of the property is unchanged
• If repairs were needed and have been completed, this must be stated and repairs evidenced as complete
• The inspection may be completed by any of the following:
  • A properly licensed property or building inspection company
  • A properly licensed general contractor
  • A building or safety inspector from a local municipality
  • A properly licensed engineer if necessary
  • A licensed appraiser is required to complete the inspection for a conventional purchase

Note: If the loan type is FHA, the Client must follow FHA guidelines for re-inspection of the property. The disaster inspection report must be completed by an FHA Roster Appraiser.

Properties Appraised After the Incident Period End Date of Disaster

The appraiser must note any damage and its effect on marketability and value. The appraiser must make any applicable repair requirements.

Loans closed with escrow holdbacks are only eligible for purchase by PHH if the work cannot be completed due to weather or unless all funds have been disbursed.

In accordance with state regulations, the following states require a written commitment letter be delivered to the borrower. A copy of the commitment letter meeting the state requirements must be included in the original submission of the loan for delivery.

• DC
• NJ
• NY (purchases only)
• VT
• WI

Subject to satisfaction of the prior approval requirements set forth in Section 2.7.9 and subject to the provisions of this Chapter, PHH Mortgage may elect to purchase eMortgages of such types or products which are eligible for sale to Fannie Mae and/or Freddie Mac and which otherwise meet the requirements of this Guide for possible purchase by PHH.

The provisions of this Chapter control over any inconsistent or conflicting provisions in this Guide with respect to eMortgages. Except as provided in this Chapter 9, all other provisions of this Client Guide apply to e- Mortgages.

As used in this Client Guide, the following terms (whether or not capitalized) have the have the meanings set forth in the Glossary, and for convenience are reproduced below:

“Authoritative Copy” the single copy of an eNote which meets the requirements of applicable eMortgage Laws to be the “authoritative copy” of the eNote.

“Controller” the entity named in the MERS eRegistry as the entity which has control of the Authoritative Copy of the eNote.

“eClosing System” the system used by a Client to originate and close eMortgages (including the eSignature System and any eNotarization System used in connection with the closing).

“eDocument Provider” the vendor that generates loan documents relating to an eMortgage.

“eMortgage” a mortgage loan evidenced by an eNote that is a valid and enforceable Transferrable Record pursuant to eMortgage Laws. The loan documents, other than the eNote, evidencing an eMortgage may be in paper form or comprise an eRecord.

“eMortgage Laws” (a) the E-SIGN Act, UETA, and any and all other applicable laws in effect from time to time related to the legal effect, validity and/or enforceability of electronic signatures or eRecords (including the formation of contracts or the creation or perfection of liens using electronic signatures or eRecords), (b) any and all applicable laws governing eNotarization, (c) any and all applicable laws in effect from time to time that govern any subject matter related to or similar to the foregoing laws, and (d) any amendments and/or supplements to or modifications and/or replacements of any of the foregoing.

“eNote”, an eRecord which would otherwise qualify as a negotiable be a promissory note if it were issued on paper, and for which the maker expressly agreed and intended to issue as a Transferrable-Record.

“eNotarization” means the electronic notarization of a document in accordance with applicable eMortgage Laws.

“eNotarization System” the electronic system used to perform eNotarization.

“eRecord” information which is stored in an electronic or other medium and is retrievable in a perceivable form.

“E-SIGN Act” the Electronic Signatures in Global and National Commerce Act (E- SIGN), 15 USC §§ 7001 et seq., as the same may be amended, supplemented or replaced from time to time.

“eSignature System” the electronic system used to create an “electronic signature” under applicable eMortgage Laws.

“eVault” or “eVault System” means an electronic storage system which uses computer hardware and software to store and maintain eNotes and other eRecords.

“Fannie Mae eMortgage Guide” the current version of Guide to Delivering eMortgage Loans to Fannie, as amended, modified, supplemented or replaced from time to time, together with any other written policies, procedures and other requirements of Fannie Mae in effect from time to time with respect to its purchase of eMortgages.

“Freddie Mac eMortgage Guide” the current version of Freddie Mac eMortgage Guide, as amended, modified, supplemented or replaced from time to time, together with any other written policies, procedures and other requirements of Freddie Mac in effect from time to time with respect to its purchase of eMortgages.

“Interstate Remote eNotarization” the Remote eNotarization of a document related to a mortgaged property (including a loan document) in which the notary public is licensed and present, at the time of the Remote eNotarization, in a state other than the state where the mortgaged property is located.

“Intrastate Remote eNotarization” the Remote eNotarization of a document related to a mortgaged property (including a loan document) in which the notary public is licensed and present, at the time of the Remote eNotarization, in the same state where the mortgaged property is located.

“Location” the entity named on the MERS eRegistry that stores and maintains the Authoritative Copy of the eNote either as Controller or as a designated document custodian on behalf of the Controller.

“MERS eDelivery” a MERS system which is used by MERS eRegistry members to deliver documents and data from one member to another.

“MERS eRegistry” an electronic registry operated by MERS or an affiliate which, among other things, serves as the system of record to identify the current Controller and Location of the Authoritative Copy of an eNote.

“PHH's eVault” an eVault established at PHH’s eVault Provider to store and maintain eNotes and other eRecords for the benefit of PHH from time to time.

“PHH’s eVault Provider” Wells Fargo Bank, N.A. and any other entity or entities engaged by PHH to establish and maintain an eVault or eVault System on behalf and for the benefit of PHH.

“Remote eNotarization” eNotarization in which the notary notarizes the document remotely using real-time, two-way audio/video communication in accordance with applicable eMortgage Laws.

“Transferrable Record” means a “transferrable record” as described in UETA and the E-SIGN Act and/or other applicable eMortgage Laws.

“UETA” means the Uniform Electronic Transactions Act of 1999 promulgated by the National Conference of Commissioners on Uniform State Laws, and the version of such act enacted in each applicable jurisdiction, as amended or replaced from time to time.

The Client is required to deliver and submit copies of the documents related to an eMortgage (including a copy of the eNote) in the same manner and by the same deadline for the documents set forth in the other provisions of this Client Guide, the Seller Agreement and the other transaction documents.
In addition, no later than the delivery deadline for the corresponding paper documents in a Loan File set forth in this Guide.

1. The Authoritative Copy of the eNote must be delivered to PHH's eVault using MERS eDelivery, together with any other loan document constituting an eRecord.
2. The Client must transmit (or cause to be transmitted) a Transfer All (Control, Location, and Servicer) to the MERS eRegistry to identify PHH (or its designated custodian) as the Controller and Location of the Authoritative Copy of the eNote; and PHH (or its designated custodian)  must be identified on the MERS eRegistry as the Controller and Location of the Authoritative Copy of the eNote.
   NOTE: For best practices, it is recommended that Clients have the ability to Auto-Accept eNotes into their eVault.
   • The Correspondent Client must initiate and complete on the MERS eRegistry a transfer of servicing rights such that PHH or its designee is identified as the Servicer.

If some of the loan documents relating to an eMortgage are in paper form (and do not constitute eRecords), then the paper loan documents will be delivered to PHH Mortgage as otherwise required by this Client Guide.

In addition to the representations, warranties, and covenants set forth in this Seller Guide or Seller Agreement, the Client represents and warrants to PHH, and covenants and agrees with PHH, as of the date of the Seller Agreement, and as of each Purchase Date, that:

• The Client has identified to PHH, all of its eClosing Systems, eDocument Providers and eVault Systems. The Client will provide prior written notice to PHH of any proposed material change in Client's eClosing Systems or eVault Systems.
• Each vendor and eClosing System and eVault System used by the Client either (a) listed as Freddie Mac and/or Fannie Mae reviewed and approved vendors or (b)has been reviewed and approved by Freddie Mac and/or Fannie Mae.
• The eClosing Systems and eVault Systems used by the Client comply with the requirements of the current version of the Fannie Mae eMortgage Guide and/or the current version of Freddie Mac eMortgage Guide.
• The Client will allow PHH to perform periodic reviews and re-approvals of the Client's eClosing Systems and eVault Systems to ensure their compliance with the provisions of this Seller Guide. Upon request, the Client must promptly provide to PHH documentation and information related to the Client's eClosing Systems and eVault Systems reasonably requested by PHH. PHH  may, in its discretion, withdraw the approval of any eClosing System or eVault System.
• The Client has complied and will comply with the eNote recourse requirements and transfer warranty requirements of the Fannie Mae eMortgage Guide and/or Freddie Mac eMortgage Guide.
• The Client has complied and will comply with all applicable eMortgage Laws.
• The Client will cooperate with PHH in any enforcement of an eNote or other mortgage loan document, including, by providing or causing the Client's vendors to provide certifications and affidavits, in form and content reasonably required by PHH, regarding the creation and/or maintenance of the eNote and other related loan documents constituting eRecords.
• Each of the statements and representations made by the Client in the Correspondent Lender eMortgage Questionnaire are true, correct and complete as of each such date and are incorporated by reference herein.

In addition to the representations, warranties, and covenants set forth in this Guide, the Seller Agreement or the other transaction documents, as to each eMortgage, the Client represents and warrants to PHH, and covenants and agrees with PHH, as of the Purchase Date for the eMortgage, that:

• The eMortgage was originated on an eClosing System, prepared by an eDocument Provider and stored on an eVault System approved by PHH and in compliance with the he requirements of the Fannie Mae eMortgage Guide and/or the Freddie Mac eMortgage Guide Mortgage.
• The eMortgage constitutes a mortgage type or product eligible for sale to Fannie Mae and/or Freddie Mac as an eMortgage.
• The eNote and any other loan document which is an eRecord complies with the requirements of the Fannie Mae eMortgage Guide and/or the Freddie Mac eMortgage Guide.
• Corrections of any errors or omissions in an eNote or other loan document which is an eRecord must be delivered to PHH no later than the deadline set forth in this Guide for the corresponding paper document and must be made in accordance with the requirements of the Fannie Mae eMortgage Guide and/or the Freddie Mac eMortgage Guide.
• The representations and warranties set forth in the Fannie Mae eMortgage Guide and/or the Freddie Mac eMortgage Guide are incorporated herein as if made by the Client to PHH and are true and correct with respect to the related eNote.
• The eNote and any other loan document which is an eRecord comply with the requirements of the Fannie Mae eMortgage Guide and/or the Freddie Mac eMortgage Guide.
• The Client will retain for the life of the loan plus seven years, and will promptly provide to PHH upon request, records (including system logs and audit trails) which can be used to establish and verify (a) the electronic signature and its attribution to the signer's identity, (b) the existence of a single Authoritative Copy of the related eNote which is unique identifiable and unalterable, (c) the integrity and reliability of the process and systems by which the related eRecords were created, signed, stored and transferred, and (d) that PHH is the Controller of the Authoritative Copy of the related eNote and in control of any other related eRecords. Upon request, the Seller will provide (or cause its vendors to provide) certifications and affidavits regarding the foregoing, in form and content reasonably required by PHH in order to enforce an eNote or any other loan document.
• The eMortgage is in compliance with, and is valid, effective and enforceable under, all applicable eMortgage Laws and other laws.
• The loan documents are in a format acceptable to Fannie Mae and/or Freddie Mac.
• The related eMortgage otherwise satisfies all of the requirements of the Fannie Mae eMortgage Guide and/or the Freddie Mac eMortgage Guide, as applicable, for the purchase of the Lloan by Fannie Mae or Freddie Mac.

Subject to the provisions of this Section, loan documents related to eMortgages may be notarized using eNotarization (including Remote eNotarization). In states that do not permit Remote eNotarization, each borrower must be physically in the presence of the closing agent and/or a notary public coordinating the signing of the eNote and other eRecords. All borrowers do not have to be in each other’s presence at the time of signing. In states that permit Remote eNotarization, Loans with closing documents which have been notarized through Intrastate Remote eNotarization are eligible for purchase by PHH Mortgage. Loans with closing documents which have been notarized through In states that permit Remote eNotarization, closing documents which have been notarized through Interstate Remote eNotarization ismay be eligible for purchase by PHH only allowed with upon an additional prior written approval by PHH Mortgage (which approval will be granted or denied on a loan-by-loan basis in itsPHH’s sole discretion).

In addition to the representations, warranties, and covenants set forth elsewhere in thise Seller Guide, the Seller Agreement or the other transaction documents, as to each eMortgage for which a loan document has been notarized by eNotarization, the Client represents and warrants to PHH and covenants and agrees with PHH Mortgage, as of the Purchase Date for the eMortgage, that:

• If the eNotarization is an Interstate Remote eNotarization, the Client has obtained the prior written approval of PHH Mortgage for the Interstate Remote eNotarization related to the specific applicable eMortgage.
• If the eNotarization is an approved Interstate Remote eNotarization, the notary public was licensed to engage in eNotarizations and physically located, at the time of the eNotarization, in a state whichthat authorizes a licensed notaryies public to engage in Interstate Remote eNotarization.
• If the state in which the related mortgage property is located does not permit Remote eNotarization at the time it was performed, each borrower was physically in the presence of the notary public that notarized the loan document by eNotarization.
• If the eNotarization is a Remote eNotarization, the laws of the state in which the mortgaged property is located either (a) expressly permit the use of Remote eNotarizations at the time of the eNotarization or (b) in the case of an approved Interstate Remote eNotarization, expressly accept, at the time of the eNotarization, Remote eNotarizations performed out of state in accordance with the laws of the state in which the notarial act is performed, unless this requirement is expressly waived in writing by PHH.
• The eNotarization has been performed in accordance with, and is legally valid and enforceable under, the laws of the state in which the eNotarization was performed, at the time it was performed.
• The documents which have been notarized by eNotarization: (a) comply with all applicable eMortgage Laws and all other applicable laws of the state in which the related mortgaged property is located; (b) are legal, binding, valid, effective and enforceable in accordance with their terms; (c) evidence and create, as applicable, a valid first liens on the related mortgaged property; and (d) as applicable, are recordable in the land records of the locality in which the mortgaged property is located.
• The title insurance company providing the title insurance policy that insures the related security instrument did not make or take any exception to (and such title insurance policy does not contain any exclusion relating to) the fact that any loan document was notarized by eNotarization.
• The Client will retain for the life of the Lloan plus seven years, and will promptly provide to PHH upon request, records (including system logs and audit trails) which can be used to establish and verify (a) the proper and valid eNotarization, and (b) the integrity and reliability of the process and systems by which the eNotarization was created. Upon request, the Client will provide (or cause its vendors to provide) certifications and affidavits regarding the foregoing, in form and content reasonably required by PHH Mortgage in order to enforce an eNote or any other mortgage loan document.
• The related eMortgage otherwise satisfies all of the requirements of the Fannie Mae eMortgage Guide and/or the Freddie Mac eMortgage Guide for the purchase of the loan by Fannie Mae and/or Freddie Mac.

Upon obtaining prior written approval withfrom PHH, Mortgage the Client may sell most eligible conventional first lien mortgages to PHH as eMortgages. This includes fully amortized fixed-rate and adjustable-rate mortgages. The following are not permitted currently for purchase by PHH:

• Loans that are insured by the FHA and Loans guaranteed by the, VA or USDA
• Mortgages in which a Power of Attorney is used for any Borrower
• Texas Equity Section 50(a)(6) Mortgages
• Mortgages in which the Borrower is a trust of any kind

Upon delivery of each Loan originated as an eMortgage, the Client must provide PHH with the borrower’s consent to receive and sign documents electronically from each borrower who signs a document electronically, as well as each borrower to whom a document or disclosure is required by applicable law to be provided (electronically or in writing). In addition, each eMortgage must be delivered with the applicable audit trails documenting the signer’s signatures.

Note: The borrower’s consent must be obtained before any initial loan documents are provided to any borrower electronically or are to be signed electronically (as applicable) and a new consent of such borrower must be obtained on the date the eNote is signed.

When a loan is eligible for purchase, PHH will net fund loans based on the calculation of:

• Base price as registered in the system
• Accrued interest - interest is calculated based on 365 days for all Loans
• Applicable pricing adjustments
• Escrow amounts
• Buydown fees (if applicable)
• Outstanding\ fees due to PHH unpaid for 90 days (e.g., EPO fees, Pair-off Fees, etc – not to exceed premium over par)

If a loan payment is already due (loans purchased on or after the first day of the month the payment is due) or purchased on or after the 16th of the month, PHH will purchase the loan at the amortized balance including the escrows. This includes all monthly mortgage insurance premiums due for FHA loans unless the Client has remitted the monthly premium to HUD. If the Client has remitted to HUD, it must be shown as paid on FHA Connection.
In the event a borrower remits a payment to the Client that is due to PHH, the Client should forward that payment via the following means and email PHH at PHHServiceTransfer_payments@mortgagefamily.com to alert Servicing that the funds have been sent.

Wire Instructions: