(5)
Asset Review
In
connection with the credit re-underwrite, CRES reviewed all origination documentation to determine conformity to the applicable
underwriting guidelines and other regulatory requirements described below, including (if applicable) the Ability to Repay and
Qualified Mortgage requirements. Review areas included, but are not limited to:
Credit
Review and Methodology
Credit
Report: Analyzed the Borrower’s credit report/credit history, confirming that credit scores, liabilities and public
records met guideline requirements. Liabilities gathered from the credit report were included in the re-calculation of the debt-to-income
ratio as appropriate. In addition the following data was also captured and reviewed to confirm compliance with guideline and ASF
reporting requirements: (i) credit report date, (ii) bankruptcy date, (iii) bankruptcy discharge date, (iv) bankruptcy chapter,
(v) foreclosure date, (vi) short sell date, (vii) longest trade line (active), (viii) longest trade line balance (active), (ix)
months reviewed, (x) number of trade lines, (xi) credit scores, (xii) revolving debts and (xiii) installments debts.
Loan
Application (1003): Reviewed the Borrower’s Loan Application including comparison of initial loan application against
the final loan application, or other loan applications found in the file, to identify potential discrepancies. In addition the
following data was also captured and reviewed to confirm compliance with guideline and ASF reporting requirements: (i) purpose,
(ii) years in primary residence, (iii) number of mortgaged properties (as compared with the credit reports disclosed mortgages),
(iv) application date, (v) borrower information (name, date of birth, social security number and number of family members), (vi)
borrower’s address, (vii) borrower(s)’ employment information (including address, years at job, years in field), (vii)
monthly income and (ix) citizenship.
Loan
Approval/Exception Form (if applicable): Reviewed the Lender’s approval and Client’s exception approval documentation
to confirm appropriate risk mitigating factors were present when granting exceptions.
Sales
Contract (if applicable): Reviewed the sales contract to confirm buyer(s) and seller(s), sales price and property address
matches other documents.
Title:
Reviewed the title policy or commitment to identify possible judgments or other liens that may have existed at origination.
In addition, proper vesting and parties (as disclosed on sales contract, note, and deed) were reflected accurately.
Hazard
and Flood Insurance: Reviewed hazard and flood (if applicable) insurance to ensure policy met the minimum required amount
of replacement coverage.
Employment
and Income (DTI Loans): Reviewed borrower(s)’ employment and income documentation used for qualification purposes and
as applicable, Appendix Q or Ability to Repay, including recalculation of debt-to-income ratio (DTI) to confirm compliance
with underwriting guidelines. Items reviewed included: (i) verbal or written verifications of employment, (ii) pay stubs, (iii)
W-2’s, (iv) federal tax returns, (v) bank statements, (vi) profit and loss statements, and (vii) IRS tax transcripts (when
provided).
Leases
and Market Rents (DSCR Loans): Reviewed lease agreements and third-party market rent documents
to confirm compliance with Debt-Service-Coverage-Ratio requirements. Note, the documentation that can be used to establish market
rents can vary from lender to lender. CRES reviews the market rent source, to ensure compliance with applicable guidelines. In
some cases, lenders may not require proof of market rents, if a sourced payment history can be provided along with the lease agreement.
Assets:
Reviewed (i) bank statements, (ii) verification-of-deposit (VOD) and (iii) stock or security account statements to ensure
adequate assets were provided verifying down payment, closing costs and reserves required by the guidelines and as applicable
Ability to Repay.
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