Seller Responsibilities
Loan documents used by the Seller must conform with the specifications of the applicable mortgage loan program and all applicable federal, state and local laws and regulations.
Mortgage loans must incorporate the most current Fannie Mae/Freddie Mac Note and Security Instruments, including all applicable riders and addenda.
Seller warrants that all delivered loans comply with the restrictions on transactions with Specially Designated Nationals and Blocked Persons and the Sanctioned Nations administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury.
Note Endorsement
For each mortgage delivered to Pennymac, the original of the Note must be delivered pursuant to the requirements of this Non-Delegated Seller Guide and the Note must bear the following endorsement by the Seller:
| PAY TO THE ORDER OF PENNYMAC LOAN SERVICES, LLC WITHOUT RECOURSE ___________________________________________________________________ ___________________________________________________________________ |
All other names are considered unacceptable and will result in the pending of the loan for purchase. Notwithstanding any endorsement language placed on the Note, all representations, warranties, covenants and obligations set forth in this Non-Delegated Seller Guide and/or the Seller Loan Purchase Agreement survive and remain effective and enforceable after endorsement and delivery of the Note.
Allonge
Pennymac will accept an Allonge for both conventional and government. Seller may use an Allonge if the following conditions are met:
- The Allonge is permanently affixed to the Note
- The Allonge references the Borrower’s name, the property address and the original principal balance of the Note
- The form of the Allonge and its use complies with all applicable laws
- The use of the Allonge does not impair Pennymac's status as a ‘holder in due course’ or any of Pennymac's rights under the Purchase Documents.
The Seller further agrees to indemnify Pennymac from any loss or damage incurred as a result of the use of an Allonge for the Note endorsement(s).
Due-On-Sale Clause
The uniform instruments include provisions governing whether the loan will be accelerated if the borrower sells or transfers the mortgaged premises or any interest in the mortgaged premises or whether instead the loan may be assumed by a third party who acquires the mortgaged premises, or any interest in the mortgaged premises by sale or transfer. These provisions are sometimes referred to as "due-on-sale" clauses.
- Uniform instruments for different mortgage products may have different due-on-sale clauses.
- The type of due-on-sale clause set forth in the uniform instruments used to originate a particular mortgage determines whether or not the mortgage is assumable by the party to whom the mortgaged premises are transferred.
Initial Application Date
At the time of registration/commitment of a Best Effort loan, the Seller must identify the initial application date.
For AOT/Mandatory loans, the application date must be provided on a copy of the dated application (clearly identified as “initial”) and must be included in closing file delivered for purchase.
Signature Specifications
Signatures on all closing documents must meet the following specifications:
- Each borrower’s name and signature must be consistent on all closing documents; matching to the names appearing in the title insurance policy.
- Signatures must appear exactly as they are typed on the document, in ink. Each borrower’s signature must appear directly above his or her typed name in the signature portion of each signed document.
- If corrections to the documents are required, then ONLY strike-overs are permitted; initialed by each borrower. Corrective coverings (i.e. white out) must never be used.
Initial Application
- Interviewer must sign either the Initial or the Final Application Form 1003
- Must be signed by borrower if face to face or mail
Final Application
- Interviewer must sign either the Initial or the Final Application Form 1003
- Must be signed by borrower on all loans
Please Note: Pennymac will audit all loans for these signatures as stated above
Late Charge
The Note for a conventional first mortgage must provide for the borrower to pay a 5% late charge on any installment that is not received by the 15th day after it is due. If state law does not allow a charge that high, the maximum amount that is allowed should be used. The late charge should be computed on the principal and interest (P&I) installment only, not on the full monthly payment (PITI).
Mortgagee Clause
The lender's name should be shown as the mortgagee.
It is the Seller’s sole responsibility to ensure that all insurance carriers or agents are notified to change the mortgagee clause to:
| PennyMac Loan Services, LLC |
HUD-1 Settlement Statement
A completed and signed original/certified copy of the Final HUD-1 Settlement Statement is required by Pennymac, and must be included in the closing file for purchase.
Cross Default Leaseholds
A cross-default provision, which provides that a default on the lease is a default on the mortgage, must be contained on the mortgage rider for mortgage loans secured by leasehold estates.
Interest Credits at Closing
Pennymac will allow interest credits at closing through the seventh calendar day of the month in which the mortgage loan is closed.
A Hardship/30 day letter must be signed by the borrower acknowledging that the first payment is due in less than 30 days.
Occupancy Rider
Completing an Occupancy Rider for conventional loans of two or more units, in which the borrower(s) has indicated the subject property will be owner-occupied within 60 days, is suggested by Pennymac.
In order to clearly establish remedies on the occasion a discrepancy in occupancy is later discovered, an Occupancy Rider to the Mortgage/Deed of Trust/Security Deed, or a similar form is recommended for use.
Inclusion Zoning
Inclusionary Zoning Restrictions allow state/local governments the ability to require zoning restrictions that call for a specified percentage of new development in a selected area to be set aside to supply houses for low and moderate income persons.
A property subject to Inclusionary Zoning Restrictions is acceptable if:
- The property is owner-occupied;
- The zoning restrictions are subordinate to the mortgage;
- The right to remedy a default under the mortgage is not impaired; and
- No restrictions are placed on the resale of the property if it is obtained through foreclosure or deed in lieu of foreclosure.
Satisfaction of Underwriting Conditions
All underwriting conditions, such as; prior-to-close and at-closing, must be satisfied prior to purchase.
IRS Form 4506-C and Tax Transcript Requirements
IRS Form 4506-C Requirements
In conjunction with enhanced enforcement from the GSEs, Pennymac will begin the review and remediation of inaccurate or improperly executed 4506-Cs at loan delivery. Pennymac requires that:
- Section 5a (IVES participant name, ID number, SOR mailbox ID, and address) contains an approved Pennymac vendor IVES vendor. The approved vendors are listed below.
- Sections 5b and 5c be left blank to ensure the form can be processed by the selected IVES participant.
Failure to properly complete the 4506-C form with these requirements may result in a purchase delay and/or loans being conditioned for an updated 4506-C form or an appropriate tax transcript.
As a reminder, a signed and executable 4506-C is not a requirement for the following:
- Loan files delivered with the applicable tax transcript(s),
- Fannie Mae mortgages using the DU Validation Service where all of the borrower’s income has been validated, and DU returns Approve/Eligible recommendation on the final submission of the loan casefile and meets the requirements in the Fannie Mae Selling Guide,
- Freddie Mac mortgages using automated income assessment (AIM) with Loan Product Advisor® (LPA) using employed income data or account data that receive a Risk Class of Accept on the final loan submission to LPA and meet the requirements in the Freddie Mac Selling Guide.
Note: IRS form 8821 is not an acceptable alternate form in lieu of IRS form 4506-C
Please refer to Announcement 23-32 and Announcement 24-90 for more details.
Tax Transcripts
Tax transcript requirements can be found on the Product Profiles. Requirements vary by loan program and qualifying income.
Compliance Certification
Pennymac will consider seller provided compliance certification as evidence of loan compliance. At a minimum, Pennymac requires all files be documented with certification of compliance for the following regulations:
- The loan is not a High Cost Mortgage under HOEPA (and is not a High Cost loan under state or local regulations)
- Truth in Lending Act, including ATR and QM requirements
- GSE Points & Fees
- Notice of Right to Cancel (if applicable)
The certification must clearly evidence compliance with these regulations. While the required scope of the report/certificate is limited, Sellers are reminded of the compliance Representations and Warranties outlined in the Non-Delegated Seller Guide.
Satisfaction of Risk Screening Conditions
Pennymac may, at their sole discretion, utilize third party risk screening services for any group or category of loans. And, while not published, there are certain categories of loans upon which Pennymac will always do risk screening prior to purchase. When the lender locks a loan and Pennymac can determine at the time of lock that this loan fits Pennymac's criteria for risk screening prior to purchase, Pennymac will place a notice to the lender on the loan commitment, informing them of the same.
Eligible Loan Modifications
Any eligible loan modification must be signed by all borrowers on the note and/or mortgage, as appropriate based on the scope of the modification, and the signed modification must be provided to Pennymac prior to funding of the loan. Loan modifications presented to Pennymac after funding may not be honored.