FAQ

PHH requires all Sellers to maintain a quality control plan within their own company to help guard against errors, omissions, and fraud. A general overview of the components of a sound QC plan are outlined below, however, detailed requirements of FHA, VA, Ginnie Mae, Fannie Mae, Freddie Mac and USDA must be followed by all Sellers originating and selling Loans under these products.

• All applicable laws, rules, regulations, decrees, pronouncements, directives, orders, and contractual requirements with respect to the origination, closing, underwriting, processing, and servicing of each loan.
• Any and all other applicable federal, state, county, municipal, or other laws, including, without limitation, those laws relating to truth in lending, real estate settlement procedures, consumer credit protection, usury limitations, fair housing, equal credit opportunity, collection practices, and real estate appraisals.
• All applicable anti-money laundering laws and regulations including, but not limited to, the Bank Secrecy Act and its subsequent revisions and enhancements, the Customer Identification Program requirements of the USA Patriot Act, and the Office of Foreign Assets Control (OFAC) requirements (collectively the “Anti-Money Laundering Laws”).

• Loan Originator Compensation
• Escrow Rule for Higher Priced Mortgage Loans
• Disclosure and Delivery Requirements for Copies of Appraisals and Other Written Valuations Under the Equal Credit Opportunity Act (Regulation B)
• Ability to Repay and Qualified Mortgage Standards Under the Truth in Lending Act (Regulation Z)
• High-Cost Mortgage and Homeownership Counseling Amendments to the Truth in Lending Act (Regulation Z)
• Homeownership Counseling Amendments to the Real Estate Settlement Procedures Act (Regulation X)
• Integrated Disclosure Rule Under the Truth in Lending Act (Regulation Z)

• Making loans based on borrower’s equity without regard to the proper underwriting of the borrower’s payment ability;
• Making loans that unreasonably jeopardize the borrower’s equity;
• Frequent refinancing of loans with fees that can strip the equity from a borrower and which simply generate fee income with no benefit to a borrower;
• Using pricing terms that far exceed the true risk and cost of making the loan;
• Including in the loan unearned or otherwise unwarranted fees for services;
• Making it difficult for borrowers to reduce their indebtedness by adding unreasonably restrictive loan terms and structures; or
• Targeting customers who are less financially sophisticated or otherwise are vulnerable to abusive practices.

• Encouraging a borrower to default on an existing loan in connection with the refinance of all or part of the existing loan.
• Financing single premium credit life, disability or unemployment insurance products with the proceeds of the Loan.
• Refinancing of a Special Subsidized Mortgage. A Special Subsidized Mortgage means a residential Loan that is originated or subsidized by or through a state, local or tribal government or nonprofit organization and that in some circumstances does not have to be completely repaid or requires only partial payments be made. Examples include, but not limited to, a mortgage granted by organizations such as Habitat for Humanity or a local housing authority.
• Contracting for a prepayment penalty on any product or loan unless specifically allowed within PHH guidelines.
• Executing documents to evidence or secure the loan which contain an arbitration clause.

• Payments to a home improvement contractor from the proceeds of the Loan other than by a check made payable either to the consumer, or jointly to the consumer and home improvement contractor, or through an independent third-party escrow agent.
• Payment of Loan payments in advance from the loan proceeds.
• Contracting for an increase in the interest rate upon default of the loan at a level not commensurate with risk mitigation.

• The Seller must use best efforts to ensure that each loan offered to a borrower is consistent with his or her needs, objectives and financial situation.
• Each Loan, the proceeds of which have been used to refinance a previous Loan, offers a documented, demonstrable, tangible net economic benefit to the borrower. The Seller must provide any state-specific documentation, such as, but not limited to, Net Tangible Benefit Worksheet, as required by state or local law.
• Appropriate assessment and documentation must be performed of the borrowers’ ability to repay each Loan in accordance with its terms. The borrowers must be provided sufficient and accurate information concerning each Loan's terms, costs, risks and benefits, including but not limited to, disclosure of:
  • The existence of a prepayment penalty, if applicable, prior to closing
  • Disclosure on products containing a prepayment penalty of the availability of similar products with no prepayment penalty
  • On limited documentation products, disclosure of the availability of a lower interest rate in exchange for higher levels of documentation
  • Total loan compensation of each Loan, including compensation to third party originators, must be structured to avoid providing any incentive to originate a loan with predatory or abusive characteristics

The maximum points and fees applicable to a Qualified Mortgage vary based upon the loan amount. In addition, all dollar amounts, including loan amounts, will be adjusted for inflation annually on January 1 by the CFPB. All Loans submitted for purchase must pass the qualified mortgage points and fees test, as well as the associated ability to repay provisions.

PHH will require a fully completed “points and fees” detail form on all files submitted for purchase. The Seller can provide this information by including one of the following in the Loan File:

• PHH Fee Details Form as published on the PHH Capital Website. This is the preferred form, but PHH will also accept as alternative documentation;
• Ellie Mae’s Mavent Compliance Report with Expanded Fee Details

NOTE: In order for PHH to accept the Mavent Compliance Report as an alternate to the PHH Fee Details Form, the Mavent Compliance Report must include the Expanded Fee Details.

• A review of the vendor forms to ensure they contain the loan level data required to complete our pre-purchase review. If the loan-level data is not sufficient, it may delay the purchase of the Loan by PHH.

NOTE: We are not endorsing or approving the results of any vendor’s compliance screening, nor will we rely on any vendor’s compliance screening in lieu of our prepurchase review.

• Similar points and fees forms (i.e. one generated from a LOS system) provided the form contains all loan level data required to complete our pre-purchase review. If the loan level data is not sufficient, it may delay the purchase of the Loan by PHH.

Points and Fees Thresholds – 2021

The applicable points and fees thresholds for 2021 are listed below: Limits are effective for loan closings on or after 01/01/2021.

Points-and-Fees Calculation

The points-and-fees calculation is the same as that used in the HOEPA points-andfees calculation.

To calculate the points-and-fees, a creditor will add together the amounts paid in connection with the transaction in six categories of charges:

• Finance Charge – In general, all items included in the finance charge under 1026.5(a) and (b) will be included, except the following:

  • Interest or the time-price differential

  • Mortgage Insurance Premiums

    • For federal or state government sponsored MIPs, exclude up-front and annual FHA premiums, VA funding fees, and USDA guarantee fees
    • For PMI, exclude monthly or annual PMI premiums. Can also exclude up-front PMI premium if it is refundable on a prorated basis and a refund is automatically issued upon loan satisfaction. However, if the premium can be excluded, you must still include any portion exceeding the up-front MIP for FHA Loans.
  • Bona Fide Third-Party Charges - Cannot be retained by the creditor, loan originator, or an affiliate of either

  • Bona Fide Discount Points

    • Exclude up to 2 bona fide discount points if the interest rate before the discount doesn’t exceed the APOR by more than 1 percentage point; or
    • Exclude up to 1 bona fide discount point if the interest rate before the discount doesn’t exceed the APOR by more than 2 percentage points.

• Loan Originator Compensation – Compensation paid directly or indirectly by a consumer or creditor to a loan originator that is not an employee of the creditor or mortgage broker must be included.

  • Compensation paid by the creditor to its own employee loan originator on a transaction can be excluded;
  • Compensation paid by a mortgage broker to its own employee loan originator on a transaction can be excluded;
  • Compensation paid by a consumer directly to a mortgage broker can be excluded (so long as the amount has already been included in the points-and-fees under the finance charge);
  • Compensation paid by a creditor to a mortgage broker that is not its own employee is to be included

• Real Estate-Related Fees – The following categories of charges are excluded if (i) the charge is reasonable; (ii) the creditor receives no direct or indirect compensation; and (iii) the charge is not paid to an affiliate of the creditor:

  • Title related fees
  • Loan-related documentation preparation fees
  • Notary and credit-report fees
  • Property appraisal or inspection fees
  • Amounts paid into escrow or trustee accounts that are not otherwise included in the finance charge

• Premiums for credit insurance; credit property insurance; other life, accident, health or loss - of-income insurance where the creditor is beneficiary; or debt cancellation or suspension coverage payments

  • o Do not include these charges if they are paid after consummation of the Loan
  • For purposes of this provision, credit property insurance is defined as insurance that protects the creditor’s interest in the property and d

• Maximum Prepayment Penalty

  NOTE – PHH does not purchase loans that contain a prepayment penalty.

• Prepayment Penalty Paid in a Refinance – If a creditor is refinancing a loan that it or its affiliate currently holds or services, then any penalties charged for prepaying the previous loan must be included.

HPML Requirements Loans that exceed points and fee limits at the time of loan disbursement are not eligible for purchase by PHH.

QM-Safe Harbor and QM-Rebuttal Presumption Loans: A qualified mortgage (QM) loan will receive either a safe harbor or rebuttable presumption status, as calculated below:

QM Safe Harbor (QM – Non HPML) loans, including QM Safe Harbor Agency Loans, FHA Loans, and VA Loans using the Price Based Limit.

QM Rebuttable Presumption (QM – HPML) loans are subject to the following:

• Income and assets must be fully documented
• Maximum DTI is 45%
• Refer to the Product Summaries for detailed requirements
• If a Loan is HPML, it receives a rebuttable presumption status

• Intentional abuse of truth in order to induce another to part with something of value or to surrender a legal right
• An act of deceiving or misrepresenting

• Federal law (HOEPA Section 32 of the Truth in Lending Act)
• Investor/Agency requirements
• State law
• City/village/municipality code
• County ordinance

Note: PHH will not purchase any loan, regardless of occupancy type, that exceeds Freddie Mac’s 5% points and fees test threshold.

• The annual percentage rate applicable to the transaction will exceed the average prime offer rate (APOR), as defined in § 1026.35(a)(2), for a comparable transaction by more than:
  • 6.5 percentage points for a first-lien transaction;
  • 8.5 percentage points for a first-lien transaction if the dwelling is personal property and the loan amount is less than $50,000; or
  • 8.5 percentage points for a subordinate-lien transaction; or
• The transaction’s total points and fees exceed:
  • 5 percent of the total loan amount for a transaction with a loan amount of $21,549 or more; the $21,549 figure shall be adjusted annually on January 1 by the annual percentage change in the Consumer Price Index that was reported on the preceding June 1; or
  • The lesser of 8 percent of the total loan amount or $1,077 for a transaction with a loan amount of less than $21,549; the $1,077 and $21,549 figures shall be adjusted annually on January 1 by the annual percentage change in the Consumer Price Index that was reported on the preceding June 1.

• If the loan is a jumbo mortgage, the APR may not exceed the APOR by 2.5 or more percentage points.
• If the loan is a first lien, but not a jumbo mortgage, the APR may not exceed the APOR by 1.5 or more percentage points.

• • Conventional Loans –
  • Escrow accounts are required to be set up and maintained for a minimum of 5 years
  • Loans must pass FNMA points and fees test, ATR/QM and any applicable state high costs tests
• • FHA loans –
  • Escrow accounts for the life of the loan are mandatory
  • Not permitted for Non-credit qualifying streamline refinance. If a NCQ loan is determined to be a HPML loan, it can be converted to a Credit Qualifying Streamline.

• Loans with Prepayment Penalties
• Adjustable Rate Mortgages with an initial repayment period less than 7 years
• Loans with a Balloon Term with a 5 year reset period

• An unexpired lock agreement between the originating Seller and the borrower
• A Seller-generated unexpired lock confirmation
• Higher Priced Covered Transaction (Conventional Loans)

• Proper identification of affiliates and use of the AFBA disclosure.
• Aggregate Escrow Account Analysis and related disclosures.

• A completed initial 1003 or redesigned URLA signed and dated by the MLO.
• The correct NMLS ID for both the Company and the MLO who signed the application:

• In the event there are multiple applications in the Loan File signed by different mortgage loan originators, a review will be conducted for each MLO.
• For FHA loans, the correct NMLS IDs for the Company and the mortgage loan originator (MLO) must be entered in the appropriate places in FHA Connection.

• Promote the informed use of consumer credit by requiring disclosures about the terms and cost associated with the credit
• Ensure that consumers are provided with greater and more timely information on the nature and costs of the residential real estate settlement process
• Effect certain changes in the settlement process for residential real estate that will result in more effective advance disclosure to home buyers and sellers of settlement costs

• Courier/wire/delivery/messenger fee
• Attorney/settlement/closing/escrow fee
• Copy fee
• Subordination/subordination agreement fee
• Attendance fee
• Service fee
• Assignment fee
• Condo questionnaire fee
• Closing protection letter fee
• Document preparation/document review fee in Texas to the attorney

• The under-disclosed amount must be refunded to the borrower—a copy of the check to the borrower will be required.
• A post consummation Closing Disclosure disclosing a new preparation date—no changes to the actual figures, just the preparation date.
• A copy of the letter to the borrower explaining the reason for the refund.
• Proof of delivery of all of the above to the borrower—overnight carrier’s tracking information that confirms delivery or a USPS Confirmation of Receipt slip.

• The under-disclosed amount must be refunded to the borrower—a copy of the check to the borrower will be required.
• A post consummation Closing Disclosure disclosing a new preparation date—no changes to the actual figures, just the preparation date.
• Rescission must be reopened—provide a new Right to Cancel to each borrower.
• Wait three days or more after the borrower receives the Right to Cancel, post consummation CD, and refund for the rescission period to end. PHH will not purchase a loan with an open rescission period.
• A copy of the letter to the borrower explaining the reason for the refund.
• Proof of delivery of all of the above to the borrower—overnight carrier’s tracking information that confirms delivery or a USPS Confirmation of Receipt slip.

Please do not mail the documents. We appreciate your support of a paperless environment.

To upload in TPO Connect:

1. Open the loan via your pipeline
2. Under Documents, scroll down to the document placeholder shown in the below chart.
3. If the document placeholder listed is not available, please click “+Add Document”, then scroll until you locate the document placeholder. Check the box next to the placeholder to add, then click Save.
   
4. Click on “Browse for Files” or “Drag and Drop files here” to attach the document.
5. Exit the loan.

   Final Document	Document Placeholder
   Mortgage Insurance Certificate (MIC)	FHA Mortgage Insurance Certificate
   Loan Guarantee Certificate (LGC)	VA Loan Guarantee Certificate
   USDA Loan Note Guarantee	USDA Loan Note Guarantee
   Title Policy	Final Title Insurance Policy
   Recorded Mortgage/DOT	Recorded Security Instrument

   If you have any questions, please contact your Correspondent Specialist or the Final Doc Team at PHHCLPost-Funding@phhmortgage.com.

• Prescribed by the FHA, with respect to any FHA insured loans, as set forth in the applicable FHA Regulations
• Of prudent mortgage lending institutions that service Loans of the same type and quality as such Loan in the jurisdiction where the related property is located
• That comply with applicable federal, state and local law
• That are in accordance with the terms of the Seller Agreement, applicable requirements and the respective loan documents, including the Mortgage, Mortgage Note and Loan File

• All contractual obligations of a party, including, but not limited to, those contractual obligations contained in the Seller Agreement, in any agreement with any insurer or investor, and in the loan documents, including the mortgage, Mortgage Note and Loan File.
• All federal, state and local legal and regulatory requirements (including statutes, rules, regulations and ordinances), as may be amended from time to time, including, but not limited to, the following:
  • Truth-in-Lending Act (TILA)
  • Equal Credit Opportunity Act (ECOA)
  • Home Mortgage Disclosure Act
  • Civil Rights Act of 1968
  • Fair Housing Act
  • Real Estate Settlement Procedures Act (RESPA)
  • Fair Credit Reporting Act
  • Flood Disaster Protection Act
  • Financial Institutions Reform, Recovery and Enforcement Act (FIRREA)
  • Financial Services Modernization Act (Gramm-Leach-Bliley Act or GLBA)
  • Dodd-Frank Wall Street Reform and Consumer Protection Act
  • Home Ownership and Equity Protection Act of 1994 (HOEPA)
• All other applicable requirements and guidelines of each governmental Agency, board, commission, instrumentality and other governmental body or office applicable to, and having jurisdiction over a party, including, but not limited to, those of any insurer.
• All other applicable final judicial and administrative judgments, orders, stipulations, awards, writs and injunctions applicable to a party.

• Information, whether reduced to writing or not, disclosed by a party or the party’s agents, contractors, representatives and/or affiliates relating to such party’s product development strategy and activity, corporate assessments and strategic plans, customer lists, financial and statistical information (past, current and future), accounting information, hardware, firmware, software (including, but not limited to, object code and source code), systems, processes, formulae, inventions, product specifications, data, know-how, graphs, samples, research and development (past, current and future), distribution methods (past, current and future), customer requirements (current and future), price lists, market studies, business plans, marketing plans, marketing methods, discoveries, policies, guidelines, procedures, practices, disputes or litigation.
• Other confidential, proprietary or trade secret information of a party that is identified in writing (including, but not limited to, electronically) as such at the time of its disclosure; all other confidential, proprietary or trade secret information of the party, which a reasonable person employed in the mortgage industry would recognize as such or is recognized as such under Applicable Requirements.
• Customer Information, including, but not limited to, any nonpublic personal information pertaining to any applicant or mortgagor obtained by a party in connection with the transactions contemplated by the Seller Agreement, regardless of whether such information is communicated to the other party.
• Compilations, Notes or summaries that contain or reflect confidential Information.
• The Seller Agreement.

• applies to a party or an affiliate thereof, either directly or indirectly, for a financial product or service, including a loan applicant;
• has obtained any financial product or service from a party or an affiliate thereof; or
• has a loan serviced or subserviced by a party or an affiliate thereof.

• a customer’s name, address, telephone number, loan number, loan payment history, delinquency status, insurance carrier or payment information, tax amount or payment information;
• the fact that a customer has a relationship with a party; and
• any other personally identifiable information.

Loans that are originated, underwritten, and closed by the Seller.

A Seller approved as delegated and responsible to ensure each Loan meets the eligibility and underwriting guidelines as outlined in this Guide.

Fannie Mae’s automated underwriting system, including any successor system.

The failure by the mortgagor to make any of the four payments next due after the purchase date and such payments remain unpaid for 90 days.

When a loan purchased by PHH is paid in full within 180 days of the purchase date.

All first mortgage loans which satisfy all the selling requirements and product guides referred to in this Guide for which loans are delivered as defined in the commitment.

A transferable record as defined by Electronic Signatures in Global and National Commerce Act or the Uniform Electronic Transactions Act, whichever is applicable, stored electronically rather than using traditional paper documentation that has a pen and ink signature.

With respect to any locked loan, that date which the Loan File, Credit File, and any additional information required by PHH must be received by PHH for the purchase price percentage to be honored.

Liability insurance coverage for errors, mistakes, and negligence in the usual activities of mortgage banking, but excluding fraudulent behavior.

The amounts constituting ground rents, taxes, assessments, water rates, sewer rents, municipal charges, mortgage insurance premiums, fire and hazard insurance premiums, flood insurance premiums, and other payments required to be escrowed by the mortgagor with the Mortgagee pursuant to the terms of any documents included in a Loan File or program documents.

The Securities Exchange Act of 1934, as amended.

Federal National Mortgage Association, a federally chartered and privately owned corporation, organized and existing under the Federal National Mortgage Association Charter Act, or a successor thereto.

As per this Guide, any noncompliance with all applicable loan delivery instructions and product guidelines will result in various fees and penalties to Seller. PHH reserves the right of off-set against any outstanding fees against any proceeds due Seller including servicing release premiums.

The Federal Housing Administration, an agency within HUD, or any successor thereto, and including the Federal Housing Commissioner and the Secretary of Housing and Urban Development where appropriate under the FHA regulations.

A residential Loan, the payment of which is insured by the Federal Housing Administration or any successor thereto. Seller must be a HUD-approved Mortgagee to sell FHA loans to PHH.

Insurance that generally covers losses caused by dishonest or fraudulent acts by employees and others.

Fitch Ratings or its successor in interest.

Any Loan File document which, in the reasonable judgment of PHH, is falsified, defective, misleading, or inaccurate in any material respect.

Federal Home Loan Mortgage Corporation, a congressionally chartered corporation that purchases  Loans on the secondary mortgage market.

The payment by PHH to the Seller or its designee of the purchase price of a loan on the related funding date.

The date PHH sets up the loan for funding to the Seller.

Intentional abuse of truth in order to induce another to part with something of value or to surrender a legal right, an act of deceiving or misrepresenting, or any intentional act of concealing information.

The Government National Mortgage Association (GNMA) or any successor thereto.

Any party that executes a Guaranty and Support Agreement covering Seller’s obligations.

Any agreement executed by a Guarantor guarantying the Seller’s obligations under the Seller   Agreement and this Guide.

The complete written Seller Guide establishing PHH’s guidelines, procedures, rate reservation, credit policy, and document delivery requirements for a Credit File and Loan File being purchased by PHH, as amended by PHH from time to time in its sole discretion, and including any notices, announcements, or bulletins issued by PHH.

USDA's automated underwriting system, and any successor system.

A calculation to determine if a loan contains above-average fees or interest and falls within the state or federal definition of high-cost home loan or any similar term including, without limitation, “rate spread home loan,” “high rate, high fee mortgage,” “subprime home loan,” and satisfies all special requirements and restrictions on such high-cost home loans.

The Department of Housing and Urban Development, which is a governmental entity responsible for the implementation and administration of housing and urban development programs.

The audited net worth of the Seller, less any unacceptable assets per the HUD guidelines. The calculations of adjusted net worth must be prepared by a CPA as part of the audit of the Seller.

Any and all rights and privileges associated with the ownership of a loan including, but not limited to, the right to receive all payments of principal and interest paid by a mortgagor.

Kroll Bond Rating Agency, Inc. or any successor thereto.

Any assets to be readily converted into cash.

One to four-unit first lien, residential mortgage loans including conventional loans, USDA Loans, FHA Loans, and VA Loans (including investor rights and servicing rights), which are subject to the Seller Agreement and meet all of the requirements of this Guide and the program documents.

With respect to each loan and Mortgage Loan Package, the Lock Confirmation Letter provides for the sale by Seller and the purchase by PHH of the Mortgage Loan Package on the related Closing Date.

All documentation required for a loan as established by this Guide including, but not limited to, the original Mortgage Note, executed endorsement or assignment of the Mortgage Note from Seller, the loan application (1003 or redesigned URLA), verification of employment, deposits and income, credit reports, appraisal report, state and federal disclosure statements, fair lending and equal credit notices, certified copy of the mortgage in recordable form, certified copy of the assignment of mortgage in recordable form, preliminary title report and evidence that an ALTA title policy will be issued, survey of the property, evidence of hazard insurance showing proper coverage and loss payable endorsement has been ordered for PHH, evidence of delivery of flood insurance disclosures, and flood insurance coverage with loss payable endorsement in effect or ordered for PHH (if the property is in a required flood zone).

Freddie Mac’s automated underwriting system, including any successor system.

The obligations imposed by:

• Title V of the Gramm-Leach-Bliley Act, 15 U.S.C. §§ 6801 et seq.
• The applicable federal regulations implementing such act and codified at 12 CFR Parts 40, 216, 332, and/or 573
• Interagency guidelines
• Other applicable federal, state and local laws, rules, regulations, and orders relating to the privacy and security of Customer Information, including, but not limited to, the federal Fair Credit Reporting Act, 15 U.S.C. §§ 1681 et seq., and similar state laws