VanDyk Mortgage News: October 6, 2023

October 6, 2023

• Floify Roundup

We had some exciting Floify updates last week (see attached Newsworthy News email). Let’s review some of the highlights:

• SimpleNexus access has been extended. If your borrower completed their initial disclosures in SN and their closing is before 12/31/23, they can stay in SimpleNexus. Any new files, TBDs, or loans that haven’t been disclosed yet need to be moved to Floify. See the attached Switch Guide for more details. We STRONGLY ENCOURAGE you to take this opportunity to reach out to your TBD borrowers and those who may be on the fence with a personal call/email – this is an excellent opportunity to get in front of them.
• The Mobile Mailbox has been disabled – any new loans submitted by borrowers will be imported by the Floify team and the branch will be notified. We will likely see a handful of old applications coming through – either from borrowers who started an app prior to Floify going live, or by partners/realtors giving out old links.
• Soft credit pulls must be obtained in Floify. More details on that below.

Check out the Floify Resources folder for recorded trainings and how-to guides. At the VDMC.net blog, the Howee’s Helpful Tips category is where you’ll find tips and tricks for Floify.

• SimpleNexus – Closing Documents + Login Reminders

When you’re utilizing SimpleNexus for closing, please advise borrowers to use the link that gets emailed to them to access their docs. If they go to the LO’s VanDyk website (name.vandykmortgage.com), it will incorrectly redirect them to Floify. Make sure those SN borrowers are logging in at https://simplenexus.com/login to access their existing loans.

• Soft Pulls in Floify

Currently, soft pulls are only available via Floify and are no longer available in SimpleNexus or on the Sarma website.  Please DO NOT request soft pulls directly from Encompass. See the attached how-to for pulling soft pulls in Floify. Like re-scores, the cost of a soft pull cannot be passed on to the borrower.  If you need access to an old report, please contact Production Support for assistance.

• Prism Income Calculation

Check out the Prism Income Calculation Resources folder for a step-by-step guide for using Prism, with embedded video walkthroughs of using the tool. We also have attached a comprehensive reference sheet that compiles all 4 of the live training sessions, lists the topics, and has timestamped links to the training to watch. We recommend using Ctrl+F if you use this guide as it’s quite extensive!

• Broker Updates
  • AFR has brought back site-built FHA Construction loans! Previously, site-built construction was only available on USDA and VA. (Note that Conventional Construction is still not available for site-built properties.)
  • Newrez will be joining us for product training on October 16 at 1pm Eastern. Since our in-house NonQM options are no longer available, we are happy to host NewRez on the broker side for a refresher! Watch your inbox for a training invitation – they will be sent this afternoon.
  • REMN 5 day HELOC loans are easy and require only a little effort on our part.  If you want to be paid the commission earned, the “little effort” you MUST complete includes creating the Encompass file, requesting/obtaining approval from Secondary to broker and uploading any docs REMN provides to you.
• .99 Interest Rates in OB

We are excited to announce that as of September 28, .99% rate options have been added to Optimal Blue. This is not an error – you may originate and lock loans with these interest rate options now.

• COCs and CDs – SLA and Training Opportunities

When you need a re-disclosure package (COC) sent out or a CD delivered, you are more than welcome to submit your request in Encompass and the compliance department will happily prepare and send for you.  That’s some great news!  Our SLA for these requests is by the end of the 2^nd business day.  Example – you submit your request on Monday, the package will be generated and sent by end of business Wednesday at the latest.  If you need something sent urgently, shoot an email over to compliance@vandykmortgage.com after you have submitted your request, and we will determine the ETA we can accommodate.  The REALLY GREAT NEWS is our compliance team is ready, willing, and excited to teach you and/or your designated branch team member how to prepare and deliver YOUR OWN COCs and CDs!  HOLY AWESOME!!!!  Take back the power and learn how to generate disclosures when you need them.  Contact compliance@vandykmortgage.com to schedule a one on one or team training – we look forward to hearing from you!

• New Form to Replace Credit Card Authorization Form

We are doing away with the payment authorization form in Encompass that requires credit card information.  To charge the borrower for fees outside of closing, the new CC Link Request form will be required.  The CC Link Request form is available in Howee and Seafile here.

Once form is received by accountingclerk@vandykmortgage.com, a payment link will be emailed to the person (Borrower/Co-Borrower) listed on the form.  Be sure to include the Encompass loan number on your form.  Intent to proceed is ALWAYS required before the borrower can be charged, and we will not be able to request payment for any non-disclosed fees.

The below example is what the borrower will receive in their email.

When they Click to view/pay invoice, they will be taken to the specific transaction details where they can see the details and make a payment.

Borrowers not able to pay online can call the Accounting department to make a payment over the phone.

• Freddie Mac LPA with a Soft Pull

We have negotiated pricing for Sarma soft pulls – they will now be $5.50 per bureau per borrower, with a $2.25 mailing disclosure fee per borrower – but there is no reissue or Encompass fee if we run through Freddie Mac’s LPA.  That comes to $18.75 for an individual tri-merge soft pull – all in. Note: We cannot pass the cost of the soft pull over to the borrower (same as with a rescore).

At this time, Xactus is not able to provide us with the tri-merge soft pulls needed for running LPA, so we are only offering this option with SARMA.

Be mindful that the credit data could change in the time between the soft and hard pull (FICO score, balances, payments, inquiries etc).  If a soft pull is obtained after a tri-merge, a new tri-merge will be required and the most recent tri-merge used to qualify the borrower.

SARMA is all set up for a 3-bureau soft pull that can be run through Freddie Mac’s LPA.  Here are the important details:

1. Soft Pull MUST be pulled in Floify as a tri-merge.

1. If not running through LPA, a single or two bureau report can be pulled instead of a tri-merge.
2. Production Support can assist with the initial set up.

1. ALL soft pulls are required to be obtained via Floify.

1. For those few instances where borrowers are not in any LOS and deliver items face to face, contact Production Support for an exception/assistance.

1. All loan types can be run through LPA with a soft pull (except USDA which require GUS)

1. Fannie Mae DU is not eligible.
2. Manual UW/Bond programs are not eligible.

1. Loans can be conditionally approved in UW with the LPA + soft pull.
2. Processors should clearly list on the UW Cover Letter a soft pull is being used.
3. AI UW and/or manual UW condition(s) will be added to the file indicating a hard pull is needed.
4. Loans CAN be locked using a soft pull.
5. Loans CANNOT have a CD issued or be re-submitted for CTC with a soft pull.

• Xactus – Credit Provider

Reminder for those interested in an alternate credit option, XACTUS is available.  The A/E info is below – Kimberly is excited to talk with you and provide one on one or group training whenever you like.

• Chenoa Fund Update

Great news from Chenoa: loans with AUS approval will not have payment shock calculations applied!

• NexBank

As announced in the September news, NexBank is offering reduced LLPAs on Second Home and Investment properties under their Mortgage Connect product. Reminder – these are portfolio products for the bank, so these loans will be underwritten by NexBank.

Currently, after a loan is locked and the lender specified as NexBank, DO must be run instead of DU.  UW will add a condition specifying this to ensure proper delivery.  Once DO is run, DU will NOT work.  We have set DO credentials accordingly and wanted you to be aware that you will receive an error message if you try to run DU after DO has been completed (and vice versa).  We are hopeful the requirement for DO can be removed in the future and will advise if the procedure changes. For assistance or questions, contact ProductionSupport@vandykmortgage.com

• Marketing Updates

New Training Resource: We’re excited to introduce the Real Estate Agent Co-marketing Training Journey, now available in your Total Expert accounts. This training is designed to assist your Real Estate Agent partners in maximizing the benefits of our Co-marketing tools.

Floify Marketing Materials: During the week of 9/26, we dispatched Floify marketing materials to your agent partners via your weekly marketing piece. Even if you opted out of sending the weekly piece for that week, you can still access this email in your Total Expert account.

Daily Office Hours: Have questions about either of these topics or anything related to Total Expert or other marketing technology? Join our daily office hours at 2:30 pm EST. Add office hours to your calendar.

• QC Update: Income Misrepresentation

Did you know that income fraud increased by 27.3% from 2021 to 2022? Most industry experts and risk managers say the increase in income fraud risk is their number one concern, methods of committing income fraud is through doctored paystubs.

• Compliance Corner with James Beebe

You have likely noticed recent guidance and clarifications around compliance rules – for instance, when it comes to getting authorization to pull credit. As we know all too well, the industry is constantly changing. We need to ensure that we are compliant, secure, and keeping up with state and federal rules. In an effort to provide transparency and clarify VanDyk’s best practices, James Beebe, our Chief Compliance Officer & General Counsel, has put together important memos regarding three topics which we recommend you review and become familiar with.  The memos are attached with a few important takeaways below:

• Information Security – do not accept unencrypted/unprotected document delivery of anyone’s private information and do not store these private documents anywhere outside of the Encompass or POS system (Floify/Simple Nexus)
• Credit Pull Authorization– get permission in writing from the borrower before credit is pulled.
• Pre-Approval Letters– Use only company approved letters, which can be generated in Floify and Encompass.  Uploading a copy of the letter into the Encompass file eFolder is a requirement.

Fair Lending Policy – Consistent Lender Fees

As a reminder, our Fair Lending Policy states that itemized lender fees must remain consistent for all borrowers, except in cases where there are legitimate, well-documented justifications for differentiation. When adjustments are necessary, we must adhere to our established practice of lender crediting the 801 fees rather than removing them entirely.

Agency Updates

Fannie Mae is beginning to align more with Freddie Mac in regard to Rental Income and Self-Employed Borrowers.  Where we previously had some flexibilities, this is changing for all loans with application dates on and after January 1, 2024.  Here are some bullet points of these impending changes:

Rental Income:

1. Non-Subject Rental Properties acquired in the last 12 months will require the borrower to have a primary housing expense and at least a one-year history of property management experience to use the full amount of rental income towards qualifying, otherwise the amount may be limited.
2. Lease Agreement use – Form 1007 or Form 1025 must support the income reflected on the lease agreement or the lease agreement must provide evidence the terms of the lease have gone into effect with proof of receipt for at least two-month’s rental payments.

Self Employed:

1. Less than a two-year history – Personal and Business Federal Tax Returns must reflect a minimum of 12 months of self-employment income from the current business (if a business was opened 2/1/2022, the 2022 tax return would not have a full 12 months of self-employment income and therefore could not be considered).
2. Using one-year of Tax Returns – This will only be allowed when ALL self-employed businesses have been in existence for five years and the borrower has had a 25% or greater ownership interest for the last 5 consecutive years.

BIG NEWS coming for DU Casefiles created on and after or resubmitted on and after the weekend of November 18, 2023!!!  LTVs are increasing to 2- and 3-4-unit properties up to 95%!!  Additional messaging updates will also be occurring over November 18^th weekend for changes announced in our previous news surrounding Limited Cash-Out Refinances, Gift Donors, and Trust Income.  See the attached DU V 11.1 Release Notes and the Newsflash email for full details.

. . .

Freddie Mac is also making updates to Rental Income requirements for Settlement Dates on and after April 1, 2024.

Lease Agreements:

1. Lease term of a minimum of one-year is being removed – This is a flex!
2. Newly Executed Leases must require the due date of the first rental payment be no later than the first payment due date of the Mortgage.
3. Evidence of receipt of the security deposit plus first month’s rent OR receipt of two month’s rental payments AND must have evidence that the payments were cashed or deposited into the Borrower’s depository account or transferred into a third-party money transfer application account owned by the borrower.

ADU:

1. At least one-comparable sale must have an ADU that is rented, when rental income generated from and ADU on a subject 1-unit Primary Residence is being removed as an appraisal requirement.

For the complete Freddie Mac Bulletin visit https://guide.freddiemac.com/app/guide/bulletin/2023-19

We will be working on an updated Rental Income Cheat Sheet for publishing by the end of the year with the changes!

Also attached for Freddie Mac are LPA Release Notes and updated Feedback Messages for your reading pleasure!

*  *  *

Upcoming Events and Reminders

Miss a training? You’ll find our monthly newscast and Iron Sharpens Iron recordings in the VDM Vault. Department-specific trainings are shared in their respective Seafile folders.

Don’t forget: you can find invitations on our shared calendar under Upcoming Events at VDMC.net.

• Deal Desk: Loan Save with Dave: Every Tuesday at 1pm Eastern
• Deal Desk: Feature Topic + Loan Save with Dave: Every Thursday at 1pm Eastern
• VanDyk Mortgage Newscast: Friday, October 13 @ 1pm Eastern
• Newrez Broker Product Refresher: Monday, October 16 @ 1pm Eastern
• Iron Sharpens Iron: Tuesday, October 17 @ 11am Eastern
• Production Roundtable: Oct 24th @ 12 PM EST – National Bologna Day REMINDER: ATTENDANCE IS MANDATORY for all LPs and TCs/LOAs who perform TC functions.

Rent Free Letters

When a borrower is living Rent-Free and a Rent-Free Letter is required, evidence that the person providing the letter is either the owner of the home or the person on the existing lease is required.
A letter just from the borrower is not acceptable.

*  *  *

Sarma + Freddie Mac LPA

As a reminder, when running LP with a Sarma credit report, make sure you are choosing MeridianLink (2) as the provider, with SARMA in the second dropdown.

*  *  *

Floify/SimpleNexus Pipeline Tip
You can add the Loan Source and Floify ID columns to your Encompass view to help manage your pipeline.

If the loan is active in Floify, it will have a Floify ID. If it’s blank, it hasn’t been set up in Floify yet.

For loans that were started in SimpleNexus but won’t close before 12/31, or for any new loans or TBDs, we want to make sure we see a Floify ID! If you don’t see a Floify ID, add your loan to Floify.

*  *  *