Contents

Contents

Warranties .............................................................................................................................................................................. 2 Recourse Process .................................................................................................................................................................... 2 Reconciliation of Post Purchase Errors ................................................................................................................................... 2 MERS ....................................................................................................................................................................................... 3

MERS Registration............................................................................................................................................................... 3 Most Common MERS Registration Errors ....................................................................................................................... 3

MERS Transfers ................................................................................................................................................................... 3 FHA Mortgage Record Changes .............................................................................................................................................. 4 Mortgagee Clause ................................................................................................................................................................... 4 HMDA Purchaser Code............................................................................................................................................................ 4 Private Mortgage Insurance Notification Address.................................................................................................................. 4 Flood Certificate Transfer ....................................................................................................................................................... 4 Final Documents ..................................................................................................................................................................... 4

Submission .......................................................................................................................................................................... 4 Documentation Requirements............................................................................................................................................ 5 Insuring Documentation ..................................................................................................................................................... 5 Final Document Deficiencies............................................................................................................................................... 5 Final Document Reports ..................................................................................................................................................... 5 Penalties.............................................................................................................................................................................. 5 Transfer of Mortgage Servicing............................................................................................................................................... 6 Mortgage Payments............................................................................................................................................................ 6 Internal Revenue Service (IRS) 1098 Reporting ...................................................................................................................... 6 Recast...................................................................................................................................................................................... 7

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WARRANTIES

All warranties apply when each loan is delivered to and purchased by Franklin American Mortgage Company (FAMC). After a loan has gone through an audit or quality control review, it is still within the sole discretion of FAMC to require specific indemnification, repurchase or other remedy if a breach is discovered at a later date and to withhold any servicing release premiums or other amounts payable if it determines that the Correspondent Lender may not be able or willing to fulfill such obligations.

All warranties discussed throughout the Correspondent Lending Manual apply even if not expressly listed in this chapter. Any warranties expressly listed in this chapter do not constrain or limit any other representation, warranty or covenant that may be contained in the Correspondent Loan Purchase Agreement, this Manual, or any other agreement between the Correspondent Lender and FAMC.

RECOURSE PROCESS

If FAMC determines that a purchased loan contains deficiencies that may require some type of Correspondent Lender action, the Correspondent Lender will be issued a written notice which will:

? Identify the deficiencies; and ? Allow the Correspondent Lender a specified time period to cure the deficiencies or provide a written explanation

for its position acceptable to Franklin American Mortgage Company.

The Correspondent Lender may be required to provide specific indemnification, a repurchase, or other remedy as determined by FAMC.

Loans that are subject to remedy by the Correspondent Lender are described in the Correspondent Loan Purchase Agreement. Correspondent Lenders that have remedy requests outstanding for more than 30 days are subject to suspension from FAMC's Correspondent Lending Program.

RECONCILIATION OF POST PURCHASE ERRORS

Following loan purchase, the Correspondent Lender should carefully review the Purchase Advice to ensure accuracy in the Servicing Released Premium (SRP), discount, buy price, unpaid principal balance, loan amount, escrow account balance, fees, etc. Discrepancies must be reported to FAMC within sixty (60) days from the date of purchase through use of the Research Request Form.

Deficiencies reported by the Correspondent Lender after the sixty (60) day time period are forfeited.

FAMC reserves the right to contact the Correspondent Lender after FAMC purchases the loan to reconcile such discrepancies as taxes, private mortgage insurance, or related issues that are normally discovered as the result of yearly escrow analysis.

Errors may occur during the purchase process causing monetary overages and/or shortages. Sources of errors include, but are not limited to, the following:

? Misinterpretation of information in the closed loan file;

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? Missing documentation, such as payment histories or post-consummation Closing Disclosures; ? Escrow disbursements made by the Correspondent Lender after purchase by FAMC; ? Miscalculations at closing related to the collection of escrow; ? Policy exceptions without proper documentation; ? Non-payment of taxes and tax penalties that were due and payable within 30 days of loan purchase;

Errors in escrow account funds that (i) are due to Correspondent Lender payment of an escrowed item and (ii) cause a shortage in the Correspondent Lender's proceeds will not be refunded until Franklin American Mortgage Company receives proof of such payment.

MERS

MERS Registration All loans closed on a MERS Security Instrument must be registered with MERS in order to be eligible for purchase by FAMC. The registration must be completed in compliance with MERS policies and procedures.

Most Common MERS Registration Errors ? Property Address - The property address in the MERS system must match as disclosed on the Note, including abbreviations. ? Status - The MIN status in the MERS system must be Active (Registered). ? County - The county in the MERS system must match the county disclosed on the Security Instrument. If the property resides in more than one county, each county must be in the MERS system. ? Primary Borrower - The primary borrower in the MERS system must be the first borrower disclosed on the Note. o If the loan closed in the name of a trust, the primary borrower should be in the MERS system as the individual name disclosed on the Note and not as the name of the Trust. o Include the suffix as disclosed on the Note, if applicable. o Include any hyphenated name as disclosed on the Note, if applicable. ? Co-Borrower - The co-borrower in the MERS system must match the same order as disclosed on the Note. o A non-purchasing spouse should not be registered in MERS.

The Correspondent Lender must be identified in the MERS system as both the Servicer and Investor of the loan at the time of MERS registration.

MERS Transfers Once FAMC purchases the loan, the Correspondent Lender must execute a

? Transfer of Servicing Rights (TOS), and ? Transfer of Beneficial Rights (TOB)

Transfers must be made to Citizens Bank, N.A. (Org ID #1000103) within forty-eight (48) hours of loan purchase.

Note: Fees may apply if the servicing and beneficial rights (TOS/TOB) are not transferred within two (2) business days of the loan being purchased by FAMC.

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FHA MORTGAGE RECORD CHANGES

Correspondent Lenders must transfer FHA Mortgage Records to Citizens Bank, N.A. using lender ID 34471.

MORTGAGEE CLAUSE

All insurance policies must reflect the following mortgagee clause:

Citizens Bank, N.A. It Successors and/or Assigns ATMA

P.O. Box 202060 Florence, SC 29502-2060

HMDA PURCHASER CODE

Correspondent Lenders should use HMDA purchaser code "6- Commercial Bank, Saving Bank, or Saving Association" for reporting purposes on loans purchased on or after August 1, 2018.

PRIVATE MORTGAGE INSURANCE NOTIFICATION ADDRESS

The following address must be used for private mortgage insurance notifications:

Citizens Bank, N.A. Attn: Mail Code VAM465

10561 Telegraph Rd Glen Allen, VA 23059

FLOOD CERTIFICATE TRANSFER

Life of loan flood certificates from CoreLogic? may be transferred to Citizens Bank, N.A. under client number 2798817.

FINAL DOCUMENTS

Submission Final documents must be submitted to FAMC, under cover of the FAMC Final Document Transmittal to:

Franklin American Mortgage Company 5221 North O'Connor Blvd. Suite 900 MC: 1700-30 Irving, TX 75039

Final documentation must be submitted within ninety (90) calendar days after the date the Correspondent Lender

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funded the loan. Loans requiring government insuring must be submitted to the applicable agency for insuring within thirty (30) days of the loan closing and insured within sixty (60) days of the loan closing.

FAMC prefers that final documents for each loan be delivered simultaneously. However, if the ninety (90) day delivery period has expired, all documents on hand should be delivered immediately, and any documents outstanding should be delivered on an as-received basis.

FAMC requires all final documentation to be shipped separate from the original closed loan file, in a separate envelope or package.

Documentation Requirements Final documentation includes the following items:

? Original, recorded Security Instrument and all applicable Riders; ? Original, recorded Modification Agreement and all applicable Exhibits (if applicable); ? Original, recorded Assignment(s) of Security Instrument (non-MERS loans only); ? Mortgagee Policy of Title Insurance including all applicable endorsements; ? Mortgagee Affidavit (if applicable); ? Correction/Ratification Agreement (if applicable); ? Power of Attorney (if applicable).

Refer to the Final Documents Checklist for specific information required on each of these documents.

Insuring Documentation ? VA Loan Guaranty Certificate (LGC); ? FHA Mortgage Insurance Certificate (MIC); ? USDA Loan Note Guarantee (LNG)

Refer to the Final Documents Checklist for specific information required on each of these documents.

Final Document Deficiencies FAMC requires all final document deficiencies be corrected and returned within thirty (30) days after initial notice. Any documents requiring re-recording will be returned to the Correspondent Lender for correction. Any expense involved in correcting and/or re-recording of documentation is the responsibility of the Correspondent Lender.

Final Document Reports Two Final Document reports are available for use on the FAMC Correspondent Lending website at , under the Loan Status tab, Reports. These reports disclose the Lender's pipeline of loans and the outstanding documentation for each loan that is required to be delivered to FAMC.

Penalties FAMC reserves the right to charge penalties for late final documents. Correspondent Lenders will be charged thirty dollars ($30) each month for each loan with final documents outstanding more than nine (9) months. FAMC also reserves the right to obtain late final documents or final documents it believes will not be delivered either by the

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