Written By: Glenn Michaels, Op-Ed Writer
Buried in the new HUD – Single Family Handbook (SFH) – 4000.1 is the requirement for cases on or after September 14, 2015 to contain in each FHA case binder a “Pre – endorsement Review of Uniform Case Binder Stacking Order.”The review cannot be performed by the mortgage loan originator (MLO), the mortgage loan processor and by the Direct Endorsed Underwriter. It can be done by any other employee or third party consultant. The Single Family Handbook (SFH) 4000.1 contains the stacking order for both forward and the Home Equity Conversion Mortgage (HECM) more commonly known as a “reverse” mortgage. The forward stack order takes into account the purchase money mortgage, refinance programs, the 203(K) rehabilitation mortgage program and more. This is a new requirement by lenders that originate, process, underwrite, close, insure, and ship their FHA mortgage loans with case numbers on or after September 14, 2015. The handbook does not specifically state how to review the documents in the required stacking order but you must place the review in the case binder. To assist my company to be in compliance I have created a new form entitled, “Pre – endorsement Review of Uniform Case Binder Stacking Order”. What I did was to utilize the Excel Computer Program and put the “Left side” and the “right side” all the documents in the required stacking order.
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Then I added three columns next to each document for the “left side” and for the “right side”. The columns all have the following heading:
1. Have document. Yes No N/A
2. Complete. Yes No N/A
3. Signed. Yes No N/A
The loan reviewer when reviewing the Uniform Case Binder Stacking Order now has to circle the appropriate word, Yes, No, N/A.
The above form placed on Excel and printed “landscape” allows the reviwer to review each and every file and gives the reviewer the ability to realize the form is or not present, incomplete or complete, signed or not signed. If the reviewer does this correctly they will soon see if the loan file is correct as far as documentation, completeness and signed.
The new Single Handbook does not state what happens to a mortgage lender where the review form is missing. Now that this is a new requirement, it should be done on every FHA loan on or after September 14, 2015. Everyone must remember that the FHA’s role in each and every transaction is a mortgage insurer. The mortgage insurer will look for ways to get out of paying claims. Failure to include the review of a mortgage stacking order could lead to FHA requesting indemnification should files default.
About The Author
Glenn Michaels - As an op-ed writer, Glenn Michaels is a mortgage underwriting instructor for CampusUnderwriter (www.MortgageUnderwriter.org). As a BBA & FHA DE Underwriter, Glenn is a Pace University graduate who also graduated from New York University’s School of Mortgage Finance. Glenn has conducted numerous training classes and has worked in the mortgage banking industry for 38 years.