a.

QM or ATR Validation / Review of 8 Key Underwriting Factors

i.

Income / Assets

•

Validate borrower(s) monthly gross income

•

Validate funds required to close, required reserves

•

Review file documentation for required level of income and asset verifications

ii.

Employment Status

•

Review file documentation for required level of employment

iii.

Monthly Mortgage Payment

•

Confirm program, qualifying rate, terms

iv.

Simultaneous Loans

•

Validate all concurrent loans are included in the DTI to properly assess the ability to repay

v.

Mortgage Related Obligations: PITI, HOA, PMI, etc.

•

Validate subject loan monthly payment (PITI) and associated obligations

vi.

Debts / Obligations

•

Validate monthly recurring liabilities

vii.

DTI and/or Residual Income

•

Validate debt-to-income ratio (DTI) based upon income and debt documentation provided in the file

•

Documentation meets Appendix Q requirements for QM Loans

viii.

Credit History

•

Review credit report for credit history and required credit depth including any / all inquiries

•

Determine representative credit score from credit report

b.

Validate loan-to-value (LTV) and combined loan-to-value

c.

Review borrower's occupancy

d.

Validation through third party resource of the subject properties most recent twelve (12) month sales history

e.

Confirm sufficient evidence in loan file, by reviewing the underwriter’s decision to approve the loan based upon the borrows income, debt, and credit history, to support borrower's willingness and ability to repay the debt

f.

Confirm that Final 1003 is sufficiently completed

g.

Provide Audit 1008 with accurate data based on file documentation

h.

Confirm Loan Approval conditions were met

i.

Review condominium questionnaire to verify all information is complete, prepared by an authorized representative, and address any red flags that may deem condominium project ineligible

j.

General QM for any loans originated under the GQM Rule

i.

Pricing Thresholds:

a.

Pricing for First Lien Loans:

i.

2.25% for a first-lien covered transaction with a loan amount greater than or equal to the applicable dollar amount threshold; and

ii.

3.5% for a first-lien covered transaction with a loan amount greater than or equal to the applicable dollar amount threshold; and

iii.

6.5% for a first-lien covered transaction with a loan amount less than the applicable dollar amount threshold.

b.

Pricing for Subordinate Lien Loans:

i.

3.5% for a subordinate-lien covered transaction with a loan amount greater than or equal to the applicable dollar amount threshold; and

ii.

6.5% for a subordinate-lien covered transaction with a loan amount less than the applicable dollar amount threshold.

c.

Pricing for Manufactured Homes:

i.

2.25% for a first-lien covered transaction secured by a manufactured home with a loan amount equal to or greater than the applicable dollar amount threshold; and

ii.

6.5% for a covered transaction secured by a manufactured home with a loan amount less than applicable dollar amount threshold.

ii.

Consider Income and Assets:

o

Consumer’s current or reasonably expected income or assets (other than the value of the dwelling that secures the loan;

o

The consumer’s debt obligations, alimony, child support; and

o

The monthly DTI or residual income.

iii.

Verification of Income and Assets:

a.

Verification in compliance with one of the “safe harbor” guidelines will meet the QM verification requirement. A creditor is allowed to “mix and match” provisions of the different guidelines rather than only apply one guideline per loan.

i.

Chapters B3-3 through B3-6 of the Fannie Mae Single Family Selling Guide, published June 3, 2020;

ii.

Sections 5102 through 5500 of the Freddie Mac Single-Family Seller/Servicer Guide, published June 10, 2020;

iii.

Sections II.A.1 and II.A.4-5 of the Federal Housing Administration’s Single Family Housing Policy Handbook, issued October 24, 2019;

iv.

Chapter 4 of the U.S. Department of Veterans Affairs’ Lenders Handbook, revised February 22, 2019;

v.

Chapter 4 of the U.S. Department of Agriculture’s Field Office Handbook for the Direct Single Family Housing Program, revised March 15, 2019; and

vi.

Chapters 9 through 11 of the U.S. Department of Agriculture’s Handbook for the Single Family Guaranteed Loan Program, revised March 19, 2020.

a.

Test Loan Estimate(s) for accuracy and completeness as well as timing requirements as required by TRID Regulations

b.

Test Closing Disclosure(s) for accuracy and completeness as well as timing requirements as required by TRID Regulations

c.

Tolerance Testing

i.

Compare Loan Estimate and Closing Disclosures

ii.

Identify Tolerance Violations and applicable cost to cure

d.

Comprehensive review of Closing Disclosure to determine transaction accuracy

e.

Recalculation of APR and Finance Charge

f.

Testing of:

i.

Federal High Cost Mortgage provisions

ii.

Federal Higher Priced Mortgage Loans provisions

iii.

Local and/or State Anti-predatory and High Cost provisions

iv.

HOEPA Points and Fees

g.

Determine whether specified federal disclosures were provided timely based upon comparison of the application date to the dates on such disclosures

i.

Service Provider List

ii.

Home Ownership Counselling Disclosure

iii.

ARM Disclosure

h.

Compliance with QM as it relates to:

i.

APR Test

ii.

Points & Fees Test

iii.

Prepayment Penalty Test

iv.

Product Eligibility Testing

i.

Notice of Right to Cancel (Rescission) Review

i.

Confirm transaction date, expiration date, and disbursement date

ii.

Confirm document is properly executed by all required parties to the transaction

iii.

Confirm the correct Right of Rescission document was executed for the transaction type

j.

Confirm through NMLS the loan originator and originating firm's license status was active and properly disclosed on appropriate loan documents

k.

Check the Loan participants against the exclusionary list provided by Clients or by the purchaser of the Loan(s)

l.

Review closing documents to ensure that the Mortgage Loan information is complete, accurate, and consistent with other documents; Confirm collateral documents have been recorded or sent for recording

a.

Review original appraisal, determination that property is in "average" condition or better, or property requires cosmetic improvements (as defined by the appraiser) that do not affect habitability. Should an area of concern be identified with the condition of the property, Consolidated Analytics will alert Clients.

b.

Review appraisal, determination that property is completely constructed and appraisal is on an “as is basis,” or property is identified as not completely constructed by originating appraiser.

c.

Review and determine if the appraisal report was performed on appropriate GSE forms and if the appraiser indicated in the body of the subject appraisal that the appraisal conforms to USPAP standards.

d.

Review and determine the relevance of the comparable properties and ensure that a rational and reliable value was provided and supported as of the effective date of the Origination Appraisal.

e.

Review adjustments (line item, net and gross adjustments) to ensure they are reasonable.

f.

Ensure that the appraisal conforms to the guidelines provided from the Clients.

g.

Review appraisal to ensure all required documents were included.

h.

Review location map provided within the appraisal for external obsolescence.

i.

Ensure highest and best use and zoning complies with guidelines.

j.

Confirm there are no marketability issues that affect the subject property.

k.

Ensure subject property does not suffer any functional obsolescence.

l.

Where applicable, determine if the file did not contain the appraisal or other valuation method and a review could not be performed.

m.

Additional valuation products were not required when the CU score provided was 2.5 or below or the appraisal LCA risk score was eligible for Collateral Rep and Warranty relief. In the event the CU score was greater than 2.5 or the LCA score was not eligible for R&W relief, an additional valuation product was obtained to confirm value was supported within 10% tolerance. In some instances, based on guidance from the seller, CDA’s were ordered on loans that had an acceptable CU score or R&W eligibility.

Fields Reviewed	Discrepancy Count	Percentage
Lock Date	32	21.33%
Lock Expiration Date	30	20.00%
Cash Disbursement Date	25	16.67%
Closing/Settlement Date	21	14.00%
Property Type	8	5.33%
ULI	6	4.00%
Borrower 1 Self-Employment Flag	6	4.00%
Application Date	6	4.00%
Borrower 1 First Name	4	2.67%
Mortgage Origination Channel	3	2.00%
Borrower 2 Origination FICO	3	2.00%
Borrower 2 First Name	2	1.33%
Property Value	2	1.33%
Property County	1	0.67%
Qualifying FICO	1	0.67%
Grand Total	150	100.00%