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The intent of the following article is to provide an overview of common mortgage loan documents and detail one of the methods that mortgage industry investors use to track and report statistics for loan packages with missing or outstanding documents.


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Mortgage Loan Documents Overview

Various federal, state and local laws, in addition, to investor specific product requirements, dictate the documentation required for a complete mortgage loan file.

Mortgage industry investors tend to group mortgage loan documents into two broad categories - Legal / Compliance and Credit.

Legal / Compliance documents address required government reporting and loan disclosures. Failure to include this documentation in the loan package subjects the lender to penalties from various federal agencies. This article is not intended to address each of these agencies and/or documents individually; however, the following is a list of the more important regulations that govern required mortgage loan compliance documentation.
Credit documents address the borrower's ability to repay the loan and the property's value in case of loan default. Failure to include this documentation in the loan package subjects the lender to increased credit risk. The following is a list of some of the most common credit documents that are included in a mortgage loan file:
  • Sellers Underwriter’s Analysis Worksheet
  • Underwriting Condition Sheet
  • FNMA form 1008
  • Uniform Residential Loan Application (Fannie Mae Form 1003/Freddie Mac 65) Application
  • Original Standard Factual Credit Report
  • Original Credit Report Supplements, Credit Evaluations
  • Verification of Employment
  • 1040 Tax Returns
  • Verification of Deposits, Bank Statements, etc.
  • Verification of Mortgage/Rent
  • Uniform Residential Appraisal Report with Addendum(s)
  • Original Well, Septic, and Roof Certifications
  • Certified Termite Report
  • Title Report/Title Commitment/24 Month Chain of Title
  • Original Survey
Documents that the investor requires in the mortgage loan package for legal or compliance purposes that are not included, incomplete, or are filled out incorrectly by the loan originator are listed on the investors "Outstanding Document" report. There are typically two ways that documents end up on the Outstanding Document report:
  • The investor reviews the loan file, prior to purchase, to verify the completeness and accuracy of the documentation and that the loan conforms to the eligibility requirements for the investor's product. During the review of the loan file, if it is discovered that correction is needed and/or required documentation is missing. The investor adds discrepancies to an outstanding document report and notifies the seller that the loan is not eligible for purchase until the document exceptions are cleared. In some instances, depending on the level of risk associated with the missing documentation the investor may choose to purchase the loan prior to receipt of the missing documentation. The missing, incomplete or incorrect document is still added to the outstanding document report for tracking and reporting purposes.
  • The investor reviews the loan file, post purchase, to verify the completeness and accuracy of the documentation and that the loan conforms to the eligibility requirements of the investor's product. During the review of the loan file, if it is discovered that correction is needed and/or required documentation is missing. The investor adds discrepancies to the outstanding document report and notifies the seller that the loan is missing required documentation. In some instances, depending on the level of risk associated with the missing documentation the investor may require the seller, if the required documentation is not provided, to repurchase the loan.
The "Reporting Mortgage Loan Outstanding Documents" section of this article details steps for creating a report that an investor may use to track and report the number of outstanding documents for loans that a seller has delivered to the investor. The Sample Mortgage Loan Outstanding Document Report in this article can be used as a model for a stand alone report or incorporated into a comprehensive Seller Scorecard report.

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