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Presented by the Document Custody

Sub-committee Education Workgroup

re u General s Document Custody lo c Training Session re o F p to .S w

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ra F Catch the Energy! re u s lo c re o F p to Release Your Potential! .S w w w

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General Training Session Objective

Did you know that Seattle is the home of where the FISH! Philosophy emerged from a film produced by John Christensen — current CEO of ChartHouse Learning — about Seattle's world-famous Pike Place Fish Market. Using the “FISH!” philosophy, it is our goal that in today’s session we will:
 Have some fun

 Make your day

 Make a difference

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Session Agenda
Initial Certification Recertification Transfer Requirements Refreshment break Q & A

re Requirements Annual or Recurring Reporting o F Custodial Responsibilities p to Audit Tips and Most Common Findings .S Q & A w w w

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E reNDA u s AG

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Document Custody General Training Session

Today’s Speakers Are:

 Lydia Thornton – Fannie Mae  Tom Kumi – Ginnie Mae  Kathleen Davidson – MPF Program with the Federal Home Loan Bank of Chicago  Carole Andrade – Freddie Mac

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Document Custody General Training Session

Today’s Moderators Are:

ra  Angee Nolan – JP Morgan Chase F reInformation  Linda Gentry – Stewart Mortgage u  Linda Rogers- GMAC Banks Document Custodial o– l Division c  Kelly Crunican- LaSalle Bank - Collateral Services re o F p to .S w w w

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Sample “Go Fish” Question

Ginnie Mae

Fannie Mae

Speaker Names

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Tom Kumi

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Freddie Mac

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MPF

Program

Debra Thompson

Carol Andrade

Kathleen Davidson

Q & A Sessions

 Q&A Sessions
 End of Phase 1  End of Phase 2  Stick to questions related to topics discussed

re aisles  Pass them towardo middle F p – We’ll Send  Leave Business Card to Transcript. .S w w w

 Q&A Cards Are for Submitting Questions

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Q&A CARD

TER-MI-NOL-O-GY

For today, ‘Agency’ = GSE, Investor, etc. Related Terms:

 Ginnie Mae: ‘Issuer’  Fannie Mae: ‘Lender’  Freddie Mac: ‘Seller/Servicer’  MPF: ‘PFI’ (Participating Financial Institution)

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Initial lo c re Certification o

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re u Ginnie s o Mae l c re Initial Certification o F p to .S

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Ginnie Mae – Form Requirements

 HUD11706 - Schedule of Pooled Mortgages

re  HUD11711A – Release of Security Interest u s loand Agreement  HUD11711B - Certification c re o F p to .S w w w

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Ginnie Mae –

Initial Certification Procedures

 Document Custodian Procedures:
 Form HUD 11706:

 Total number of loans reported = Collateral files received  Completed for both issuer and custodian.  Filed in related Pool Master File.

 Form HUD 11711B:

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 Pool number = Ginnie Mae pool/loan package number on related form HUD 11706  Ensure one of the two boxes on the form has been checked.  Verify original executed form HUD 11711A for any mortgages with a second-party security interest.  Filed in related Pool Master File.

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Ginnie Mae – Initial Certification

When is the Initial Certification due to Ginnie Mae by the Custodian?
 Ginnie Mae I and Ginnie Mae II Custom Securities:
 No later than 2 business days from the settlement date.  Settlement: 3rd business day

 Ginnie Mae II Multiple issuer single family securities
 No later than the date published by Ginnie Mae on its web site.

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Ginnie Mae – Document Requirements
 Original Note

ra through  Complete Endorsement Chain (Originator F pooling issuer to blank) re u  Complete Assignment Chain s (Originator to current lo Issuer or MERS) c re  MOM Loans – No Assignments o  Assumptions pF to  Addendums, Riders, etc. .S w w w

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Ginnie Mae – Document Requirements
 Lost Instrument Bond with Limited Liability Requirements:
        

Name of issuer purchasing the bond Loan number of current issuer Name of original mortgagor Legal address of property Amount of bond Name of surety or insurance company (Obligor) Date bond executed by surety or insurance company Signature of representative for surety or insurance company Appropriate POA and certification as required by surety or insurance company

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Ginnie Mae - Data Verification
 Mortgagor Name(s)

 Property Address, City & State (No zip code!) (if property address is included on the note)

re  Principal Loan Amount (alphau s and numeric) o lnumeric)  Interest Rate (alpha and c re  P & I (alpha and numeric) o and last payment due dates) F  Term of the loan (first p to .S w w w

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Ginnie Mae – Arm Data Verification Interest Rate Change Date Mortgage Margin

re u s Interest Rate Cap Structure loHUD 11706 must  Pool type suffix on ec Form r rate cap structure on the o correlate to Interest F p Note. to .S w w w

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Ginnie Mae – Note Endorsement

 Complete chain of endorsements from the loan originator to the pooling issuer.

ra by an  Endorsement in blank and without recourse F re authorized officer of the issuer u s  Facsimile signatures acceptable for endorsements: lo c re o F p to .S w w w

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 Acceptable under the laws of the relevant jurisdiction in which the property is located.  Not prohibited under the issuer’s corporate charter and bylaws  Such signature authorized by Corporate Resolution  Such signature be notarized when required by law

Ginnie Mae – Allonge Requirements
 Allonges may be used:

 Acceptable practice in the jurisdiction in which the property is located.

 Allonges must be:

re o the Allonge but such F  Note may reference p required. reference is not to .S w w w

 Original  Affixed (Stapled) to the Note  And clearly reference the Note

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Ginnie Mae – Electronic Documents
 Proposed Minimum Functional Requirements:
    Registration Transfer Interface Identification

 Prior to accepting an eNote

 Formal application submitted to Ginnie Mae  Approval received to act as a Ginnie Mae approved eCustodian

 At the present time the only eRegistry that has been evaluated by Ginnie Mae is the MERS® eRegistry

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Ginnie Mae – Collateral Review Collateral Review:

re uoriginal lender to s Complete chain of title from lo issuer. c Verification of datae r agrees with form HUD 11706. o F p to .S w w w
 Compliant with investor guidelines for delivery.

Ensure presence, completeness, accuracy and correctness of required collateral documents.

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Fannie Mae - Form Requirements

 Fannie Mae Form 2005 (Schedule of Mortgages)

 Initial certification occurs within MCCS or the Document Certification Application.

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Fannie Mae –

Initial Certification Procedures

 Document Custodian Procedures:  Form 2005 – Schedule of Mortgages

 Lender transmits schedule electronically to both Custodian and Fannie Mae simultaneously.

 Custodian compares the Schedule of Mortgages to the documents:
 To ensure the presence of required documents and  Information on the documents corresponds to that on the Schedule.

 The document custodian should review the documents for the individual mortgages in the pool to ascertain:
 Conformity to Fannie Mae's documentation requirements  Properly executed  Complete, and sufficient on their face.

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Fannie Mae –

Initial Certification Procedures

Document custodian electronically transmits its certification to Fannie Mae through the MORNET Custodian Certification System or the Document Certification Application.

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Fannie Mae - Document Requirements
 Original Note  Riders, Addendums, etc.  Modifications, Assumptions, etc.

re u  Complete Endorsement Chain (Originator to blank) s lo to Fannie Mae  Original unrecorded Assignment c re (MERS – no assignment) o F  Power of Attorney p to .S w w w

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Fannie Mae - Allonge Requirements
 Comply with State, County and Federal law  Affixed (Stapled)
 Preferred but not required

 References the Note

e rAcceptable  Facsimile Signatures o F p to .S w w w

 Loan Amount  Borrower or Address of Secured Property  Requires Corporate Resolution – Held by Custodian  Corporate Resolution must include the Officer’s Name(s) who facsimile signatures are authorized.

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Fannie Mae – NY CEMA

New York – Consolidation of Prior Notes and Mortgages:
 Fannie Mae requires:

 A recorded (or certified copy) New York Consolidation, Extension and Modification Agreement

re o F are advanced: p  If additional funds to .S w w w
 New Note and Mortgage

 Form 3172  Or an equivalent form that is Fannie Mae approved.

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 An assignment to Fannie Mae (unrecorded, but in recordable form)

Fannie Mae -

Cooperative Share Loan Documentation

Co-Op Loans:

ra Mae  Lenders should contact their lead Fannie F regional office to determine specific re u cooperative share loan documentation s projects located requirements for cooperative lo in most states. c re o F p to .S w w w

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Fannie Mae –

NY Co-Op Loan Documentation

d u For share loans from cooperative projects ra located in New York: F re certification:  Documentation required for initial u s lo c re o F p to .S w w w

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 Original recorded UCC-1  Original UCC-3 - Assignment of the UCC financing statement to Fannie Mae, in a recordable form but not filed  Certificate of Stock, shares, membership certificate, or other contractual agreement evidencing ownership  Original Co-op Recognition Agreement

Fannie Mae –

NY Co-Op Loan Documentation

For share loans from cooperative projects located in New York:
 Required Documentation for Collateral File:
 Executed Blanket Assignment of the Co-op Recognition Agreement’s to Fannie Mae (Fannie Mae approved form)  Original recorded Intervening Assignment of the UCC financing statement (UCC-3) (if applicable)  Executed blank Stock Power  Original Security Agreement  Original Proprietary Lease or Occupancy Agreement  Original Assignment of the Proprietary Lease or Occupancy Agreement, (if applicable)  Original recorded Continuation Statement(s), (if applicable).

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Fannie Mae - Data Verification
 Property Address – City, State, Zip  Original Loan Amount  First Payment Date  Original Note Rate  Principal and Interest (P&I)

re o  Mortgage Loan Type Fmonths)  Original Term p (in oDate (if applicable) t  Balloon ‘Call’ .S w w w

 Amortization Type (if applicable)

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Fannie Mae - Arm Data Verification All of the Fixed Rate Fields plus:
 First Interest Rate Change Date  First Payment Change Date  Interest Rate Ceiling  Interest Rate Floor

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re  Rounding (May 2007) o  ARM Plan Number, if F p
present

re u  Mortgage Margin s lo c Lookback (May 2007)

 Original Index Value (If applicable)

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Fannie Mae - Interest Only Requirements

All ARM Fields or Fixed Fields (as applicable) Interest Only End Date

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Fannie Mae - Electronic Documents

Custodial Requirements:

ra F  Execute an Amendment to their Custodian e Agreement with Fannie Mae r u for s  Training – certification guidelines lo eMortgage Notes through a consultation c process with Fannie Mae. re o F p to .S w w w

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Fannie Mae - Collateral Review

d is  Data elements should match exactly what u ra printed on the Schedule of Mortgages. F re delivered to  Custodian must assure that u data s the Fannie Mae is the same lo that was certified c data by the custodian. re o F p to .S w w w

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Fannie Mae – Collateral Review Tips:

 Custodial and Issuer Collateral Review Tips:

 Key Points per Required Documents – Custodians should have:
 Clear policies and procedures.  Understand Fannie Mae certification and custody guidelines.

 Exception:

 Documented policy and procedures for tracking and resolving exceptions.  Issuers should work with custodians to clear exceptions quickly.

 Quality Control:

 Custodian must have a quality control program that addresses at the very least, certification, custody and release.

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Freddie Mac - Form Requirements
 Selling System

 Our primary delivery and certification tool  1034E: Selling System Schedule Or Note Delivery Cover Sheet

 MIDANET® Deliveries
    

Used primarily for negotiated bulk deals 1034: Fixed-Rate Schedule 1034A: ARM Schedule 1034S: Custodian Certification Summary 1034SM: Custodian Certification Schedule for Multiple Contracts

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Freddie Mac - Form Requirements

Freddie Mac Form 1034E from the Selling System

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Freddie Mac - Initial Certification Process

 Selling System Deliveries Certified by Custodian

 Certification Status must be updated in the system no later than 8:00 p.m. eastern time.

 Selling System Deliveries certified by Freddie Mac’s DCS
 Form 1034E and the notes must be delivered to DCS no later than 12:30 p.m. eastern time on the final delivery date and certification must be entered in the system no later than 8:00 p.m. eastern time.

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Freddie Mac – Initial Certification Process
When is Initial Certification due to Freddie Mac by the Custodian?  All loan data and documentation is complete

 Certification by approved Custodian or Freddie Mac  Freddie Mac has taken possession of all data, documentation and/or information required for submission  Midanet® Deliveries
 Form 1034S or 1034SM delivered to Freddie Mac by 12:30 p.m. eastern time on the final delivery day for the Guarantor; on the prior day to be requested funding for Cash

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Freddie Mac - Initial Certification Process
 Custodian must verify the following requirements have been met:
 Loan Data:

 Note = Data in the Selling System or MIDANET® and Forms 1034E, 1034 and 1034A.  The Custodian is not required to verify the Seller/Servicer Loan Number.

 Freddie Mac Acceptable Endorsements
 Custodian must verify that the chain of endorsements is proper and complete from the original payee on the Note to the Seller delivering the Note to Freddie Mac and that the final endorsement is the blank endorsement from the Seller to Freddie Mac.

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Freddie Mac – Initial Certification Process

 Custodian must verify the following requirements have been met:
 Note Endorsed Using a Facsimile Signature Stamp:
 Custodian may certify.  Seller is required to maintain an opinion of counsel that use of a facsimile signature constitutes a valid signature for an endorsement on each Note so endorsed.

 Assignments of Security Instruments from original Mortgagee to Seller/Servicer or to MERS prepared, executed and recorded where required.
 Seller/Servicer provides Custodian with any documentation necessary to determine whether the Seller/Servicer has elected to hold all assignments for Mortgages registered with MERS in the Mortgage files.

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Freddie Mac - Document Requirements

 Original Note  Complete Endorsement Chain (Originator through Seller to Blank)  Complete Assignment Chain (Originator to Seller/Servicer or MERS)  MERS MOM Loans – No Assignments  Power of Attorney  Assumptions

re o  Original Riders,pF Addendums, etc.  Name Affidavit – Only If borrower signature is not to the typed name below the signature line. consistent with .S w w w

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Freddie Mac - Allonge Requirements

 An Allonge may used if the following conditions are met:

 Permanently affixed to the Note.  References the borrower’s name, property address, original principal balance.  The form of the allonge and its use applies with all applicable laws.  Does not impair Freddie Mac’s status as a “holder in due course” or any of Freddie Mac’s rights under the Purchase Documents.

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Freddie Mac - NY CEM Loans

 The Original Consolidated Note for Fixed Rate, Adjustable Rate and Balloons must have the following verbiage inserted at the top of the document:

re copy and the Seller  NY CEMA may be a certified o a true and correct copy of the F warrants the copy is p for recording. original delivered to .S w w w

 This notes amends and restates in their entirety, and is given in substitution for, the Notes described in Exhibit A of the New York Consolidation, Extension and Modification Agreement dated the same date as this note.

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Freddie Mac – NY CEM Loans:
 Exhibit A –Obligations Being Consolidated, Modified and Extended.

lo c  Exhibit B – Property Description re o F p to .S w w w

 All notes, security instruments, assignments, consolidations agreements and related agreements that modify, consolidate or extend prior underlying obligations and which predate the current NY CEMA must be listed separately in Exhibit A.

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 Copy of Schedule A to the New York Mortgage may be used but should be marked as Exhibit B to identify it as a NY CEMA exhibit.

Freddie Mac – NY CEM Loans:

 Exhibit C –Consolidated Note Copy

 Complete with any applicable addenda, with fixed-rate, adjustable-rate or Balloon Note language inserted at the top of the first page. Borrower signatures are not required.

 Exhibit D – Form 3033 (NY Single-Family Uniform Security Instrument)
 All blanks completed and any applicable riders attached. Borrower signatures are not required. May be a copy.

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Freddie Mac – Co-Ops

Mortgages secured by cooperatives

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Freddie Mac - Data Verification

 Freddie Mac Loan Number  Borrower Name  Co-borrower Name  Property Address, City, State, Zip  Original Note Date

 Interest Rate

 First P&I Date

 Maturity Date

 Original Loan Amount

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 Principal and Interest Amount (P&I)  Modification Date

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Freddie Mac - ARM Data Verification

 All of the Fixed Rate Fields plus:  First Interest Rate Adjustment  Mortgage Margin  Percent Rounded  Periodic Cap  Life Rate Cap

 Convertibility  Index

 First Adjustment Minimum

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 First Adjustment Maximum Rate  Lookback Period

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Freddie Mac – Initial Interest Requirements

 Date of 1st P&I Payment must be the date of the 1st Interest Only Payment as stated in the Note.  Monthly P&I Payment must be the first Interest Only payment as stated in the Note.

 Modification/Conversion Date must be the first amortizing payment date as stated in the note or by adding the number of months of interest only period to the due date for the 1st monthly payment as stated on the note.

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Freddie Mac – Electronic Documents

eNote

ra a F  eNotes are currently purchased only on re negotiated basis and requirements are being u refined. s lo c re o F p to .S w w w

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Freddie Mac – Collateral Review

 Custodial and Issuer Collateral Review Tips:
 Key Points per Required Documents:

 Uniform instruments are required unless the loan has been modified.  Exception:  Exceptions to Guide requirements are allowed only if expressly permitted in writing from Freddie Mac.  Quality Control:  Seller should review deliveries before forwarding for certification to ensure all documentation is present and data matches the note.

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Freddie Mac – Initial Certification Tips

What can Custodians and Issuers do to improve the Initial Certification Process?

re be reviewed  Data and Documentation should u accurate. s before delivery to ensure it is lo be familiar with  Issuer and Custodianc should e requirements andr contact Freddie Mac as soon as o possible if there is any question concerning a F p requirement. to .S w w w

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“Mortgage Partnership Finance” , “MPF” and the Mortgage Partnership Finance logo are trademarks of the Federal Home Loan Bank of Chicago

d u Mortgage Partnership ra F Finance® Program re u s (MPF Program®) lo c re o F p Initial Certification to .S w w w

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MPF Program - Form Requirements

No forms required

All information is handled electronically

re Notification ofo certification is after F funding p to .S w w w

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MPF Program – Initial Certification Process
 PFI sells or receives the funds for the loan.

 Custodian is notified via e-mail that a funding file is available for download.

re u  Custodian retrieves funding file from eMPF website s lo and imports into their system and either awaits the c Collateral File or oncee receives the Collateral File, r it it compares the Fo to the schedule information data p used to complete the original initial certification to review. S . w w w

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MPF Program – Initial Certification Process

 After receipt of the funding file, the Custodian must upload data files to the eMPF website:
 Collateral Files that have not been received by Custodian  Loans that have initial document exceptions  Loans that have obtained initial certification

 MPF Custody imports these files into the Loan Custody System and reacts accordingly based on the information provided.

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MPF Program - Document Requirements
 Promissory Note:

re Chain (Originator  Endorsement – Complete Endorsement u s through PFI to blank) lo c  Intervening Assignments: re o F p – Original, unrecorded Assignment  Investor Assignment to from PFI to ‘Blank’ .S w w w

 Original Note  Or Lost Note Affidavit/Lost Instrument Bond with a certified copy of the fully executed-Original Note

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 Certified Copy of Intervening Assignments sent for recording  Complete Assignment Chain (Originator to PFI or to MERS)

MPF Program - Document Requirements

d u MOM Loans – No Assignment Required ra Power of Attorney – Certified F Copy re Modification – Certified Copy u s lo Addendums and Riders – Original c re (If applicable) – Land Trust Agreement o F Certified Copy p to .S w w w

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MPF Program –

Allonge and Facsimile Signature Requirements

 Allonges:  2 Accurate References to the Note  Needs to state “without recourse”  Does not need to be affixed to the Note  Note does not need to reference allonge

lo  Facsimile Signatures Require: c  PFI holds MPF Bank Harmless re o  Corporate Resolution F p  Certification of Facsimile Signature to MPF Provider  Approval of .S w w w

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MPF Program - NY CEMA

New York Consolidation and Modification Agreement:

re 3172  Original or Certified Copy of form u  Exhibits A, B, C and D os lNote endorsed in blank c  Original Consolidated e without recourse r o F p to .S w w w

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MPF Program - Data Verification Fixed Rate Product Only...
 Borrower Name  Address – City, State and Zip  Loan Amount  Interest Rate  First Payment Date  Maturity Date  P&I  Label-Program Custodian Only
    PFI Name Master Commitment Number PFI Loan Number MPF Loan Number, if applicable

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MPF Program – Electronic Documents

eNote:

ra of  At this time, we do not allow the F delivery re eNotes. u of MISMO. s  The MPF Provider is a member lo technology needed to  We continually assess the c fundings. address these types of re o F p to .S w w w

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FISH! Philosophy – Choose Your Attitude

Acquire new knowledge whilst thinking over the old, and you may become a teacher of others.

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Initial Certification Summary:
Ginnie Mae Freddie

Fannie Mae

Schedule Form Number

11706

Unique Note Data Elements

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Term Loan Type

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MPF

Program

Appropriate 1034

Electronic Data File

No Zip

Co-Borrower Name Freddie Mac Number

Labels

Initial Certification Summary

Ginnie Mae

Fannie Mae

Unique ARM Data Elements

Interest Rate Cap Structure

ARM Plan, 1st

Final

Assignment

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No – chain ends w/ Issuer

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Pmt. Change Date.

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Freddie Mac

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MPF

Program

Convertibility, 1st Adj. Min, Max, Mod Date Yes – PFI or Approved Servicer to Blank NO ARM Data

Yes – Servicer to Fannie Mae

No – chain ends w/ Servicer

Initial Certification
Ginnie Mae Fannie Mae Freddie Mac

Preferred

Allonge Requirements

Affixed & references the Note

Affixed – but

not required & specified references

Facsimile Signature Requirements

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Corporate

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Program

Affixed & specified references

Not required to be affixed to Note & at least 2 references

Corporate Resolution, Affidavit & Attorney Opinion Retained by the Seller Corporate Resolution, Certification & MPF Provider Approval

Corporate Resolution – retained by the Custodian

Resolution

RECERTIFICATION lo c

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Fannie Mae –

Recertification Timing & Frequency

Required for:

 Change in Document Custodian  Change in Servicer  Fannie Mae or the Seller/Servicer request recertification

Recertify within:

re OR  6 Months of File Receipt o Effective Date (Servicing F  6 Months of Transfer Transfers) p to .S w w w

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Fannie Mae –

Initiating the Recertification Process

Servicer or Fannie Mae Initiates Service must provide:
 Trial Balance or  Schedule (Form 2005)

re within 30 Days of o Inventory recommended F transfer. op t .S w w w

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Fannie Mae –

Recertification Differences From Initial Certification

Same Documentation Requirements Limited Note Elements
 Lender Loan ID  Borrower Names  Property Address (No Zip)

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Fannie Mae - Recertification Process Change of Issuer
Custodian – no change:

Custodian must obtain manifest or schedule. Verify borrower names, property address etc. on Note to information on manifest or schedule. Assignment to Fannie Mae from the new servicer is present. Complete the recertification form when all document have been reviewed and exceptions cleared.

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Fannie Mae –

Recertification Ongoing Record-Keeping

 To complete the recertification, Custodian sends Servicer:

re o  Custodian Keeps: F p to .S w w w

 Form 2002 (Recertification Form)  Copy of Trial Balance  Or the annotated Schedule of Mortgages (Form 2005) that reflects the composition of the MBS pool on the date of the transfer and identifies the mortgages for which documents were transferred.

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 Copy of Form 2002  Trial Balance or Schedule (Form 2005)

Fannie Mae - Recertification Tips

For a successful recertification:

ra F  Review and recertify as soon as all of the re documents are available. u immediately. s  Communicate any issue noted lo the same rigor as  Approach recertification with c the initial certification. re o F p to .S w w w

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Ginnie Mae – Required for:

Recertification Timing & Frequency

 Change in Document Custodian  Change in Issuer

Recertify within:
 12 Months

Note: Ginnie Mae ‘at its discretion’ reserves the right to require reviews to protect the assets pledged in the Ginnie Mae MBS Securities program. As such, an Issuer can request a recertification from the document custodian should they feel the need to initiate one.

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Ginnie Mae –

Recertification Initiating the Process

Issuer Pursues Ginnie Mae Approval

re Request and u Ginnie Mae Reviews Transfer s lo HUD11715 c re o via GinnieNET Approval Distributed F p to .S w w w

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Ginnie Mae – Initiating the Recertification Process

Issuer provides the Custodian the following forms and all collateral files:

re  Copy of Ginnie Mae approval letter u s  HUD 11708 (Releases) lo c  HUD 11706 (Schedule) re  Trial Balance Documents o F  Original Legal Opinions or Updates p to .S w w w

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Ginnie Mae - Recertification

Standard

Streamlined: Limited Reconciliation & Data Elements

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Ginnie Mae –

Recertification Ongoing Record-Keeping

 Issuer & Custodian
 Copy of Completed Recertification

 Pool Master File

 HUD11708 (Releases)  HUD11706 (Schedule) signed and dated by the document custodian  Trial Balance Documents  Original Legal Opinions or Updates  GNMA Approval Letter

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Ginnie Mae -

Tips for Successful Recertification

 Organize files in pool and loan number order that match the 11706.

re noted on  Have copies of the form HUDu 11708 sdocuments released HUD 11706 for any loanso l or c at time of review. re o F Ginnie Mae approval letter  Have evidence of p to transfer. authorizing the .S w w w

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Freddie Mac – Recertification Timing and Frequency
 Recertification required for:
 Transfer of Servicing w/change of custodian  Transfer of Custody  Termination of Custodian

 Move files within

re  Recertify withino F 180 days p transfer date of to system for Recertification  No electronic .S w w w
 30 Days of Transfer Date

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Freddie Mac – Initiating the Recertification Process Transferee Servicer Initiates

ra the Transferor provides the Custodian Ffiles: following forms and collateral re u  Form 1034T s  Note lo c  Assignments, if applicable re o F p to .S w w w

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Freddie Mac - Recertification On-Going Record Keeping Transferee Custodian:

ra Mac &  Paper Form 1034T& Loan List to Freddie F Servicer re (1034T copy, u  Keep any related correspondence s statement, data transfer notices, error resolution lo c corrections…etc) re o F Transferor Custodian: p Form 1035  Keep Transferees’ to .S w w w

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Freddie Mac – Tips for Successful Recertification

Identify all issues as early as possible to allow time for resolution. Contact Freddie Mac concerning issues for which answers are not clear or when there seems to be no possible resolution

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MPF Program re

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MPF Program –Recertification Timing & Frequency Recertification Required for:

 Files Returned to Custodian after Release  Files transferred to new Custodians  Requests by MPF Provider

r–eSame day  Returned Files o – 60 days  CustodianF Transfers p – Same day  MPF Requests to .S w w w
Recertify within:

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MPF Program – Initiating the Recertification Process

d u No Forms for Initiating Recertification ra F Initiated by… re the Collateral  PFI – The action of the PFI returning u s File to the Custodian for reinstatement. lo c  MPF - Transfer of Custodian re Provider  MPF - Requests byo F MPF p to .S w w w

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MPF Program - Recertification Process

d Same Review as Initial Certification u ra F re Electronic Data File Provided u s  To Custodian by MPF Provider lo c  Using the eMPF website re data to obtain schedule  Custodian downloads o information F p to .S w w w

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MPF Program –Tips for Successful Recertification

 All communication - include the MPF Provider.

re u  Ensure proper staff resources in place to s lo on time. complete the recertification c reis disseminated to MPF  Ensure proper data o F Provider. p to .S w w w

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Recertification Summary:
Ginnie Mae Fannie Mae Freddie

GO FISH!

Recert Timeframe

1 Year

Initiating Event(s)

Change of

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Request

6 Months

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MPF

Program

Returns: 1 Day, Transfer: 2 Months Return of Released Collateral File, Custody Transfer, or Special Request

6 Months

Change of Custodian or Fannie Mae or Servicer

Change of Custodian Only

Recertification Summary:
Ginnie Mae

Fannie Mae

Freddie

Party Who Initiates With New Custodian
Issuer

Initiating Forms

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11706 & Trial Balance

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Servicer or

Fannie Mae

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MPF

Program

Transferee Servicer

MPF Provider

2002 & Trial Balance

1034T

Electronic Transmission

Recertification Summary:
Ginnie Mae
Variations from Initial Cert?
YES: Standard Streamlined

Fannie Mae

Freddie Mac

YES:

Streamlined

Certified

What Custodians Keep...

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11706,11708s, Trial Balance,

Trial Balance or Legal Opinion, & 2005 (Sch.) Ginnie Mae Approval Ltr.

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YES:

FM Ln ID Borrowers Address

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MPF

Program

NO: Same as Initial

1034T, All Relevant Info & Correspondence Reproducible Release Requests

Form 2002 &

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Determine that the thing can and shall be done, and then we shall find the way!

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re o Abraham Lincoln F p to .S w

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Document Custody General Training Session

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ra F COFFEE BREAK TIME! re u s lo c re o F p to .S w
PLEASE RETURN FOR IN 25 MINUTES

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lo Q & Ac Session re o F p to .S

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TRANSFERS lo c

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Fannie Mae - Transfer Types Servicing Transfers:

 During Sale to Fannie Mae (Concurrent)  After Sale to Fannie Mae

Custodian Transfers:
 Servicing Transfer  Requested Transfer

re o F Partial Pool Transfers Acceptable p to Concurrent Transfers Acceptable .S w w w

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Fannie Mae -Transfer Notification

Lenders Initiate Transfers:
 Trial Balance OR  Form 2005 (Schedule)

re 2003 If: o F  New Transferee Servicer/Custodian Relationship p to .S w w w

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Fannie Mae - Transfer Processing

System Tracking:  Ongoing Relationship with Servicer

re u Seller to Blank Endorsement Chain Ends: s lo Servicer to c Assignment Chain Ends: re Fannie Mae o F MERS Information Lender to op Provide t .S w w w

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Fannie Mae – Ongoing Record-Keeping

Record of Completion (Transferor):
 2009 (Release Request)  Written Notice of Release to Servicer

Tracking/Storage:

re (Schedule)  Trial Balance or o 2005 F  2002 (Recertification), if applicable. p to .S w w w

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Ginnie Mae re

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Ginnie Mae - Transfer Types

Transfer of Issuer Responsibilities Multiple Sites Transfer

Transfer of Custodian Responsibilities

lo or storage  Change in Custodial location c re Only Pool Level Transfers o F p Concurrent Transfers to .S w w w

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Ginnie Mae - Transfer Notification Issuers Initiate Transfers:
 Ginnie Mae Approval Required  11706 to Custodian  Must Use GinnieNet

11715 needed if:

re relationships  New Issuer/Custodial o F  New Ginnie Mae Custodian p site  New Custodial to .S w w w

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Ginnie Mae - Transfer Processing

System Tracking:
 Issuer of Record & Pool

e rChains: Endorsement & Assignment u s  Same as Initial Certification lo cif Transfer of Issuer Record Assignments re o F p to .S w w w

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Ginnie Mae – Ongoing Record-Keeping Record of Completion:

 11706 to PPA (Pool Processing Agent)

Tracking/Storage:

 Ginnie Mae Approval Letter  HUD11708s (Release Requests)  HUD 11711A or HUD11711B (if applicable)  HUD11706 (Schedule)  Trial Balance  Legal Opinions

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Freddie Mac re u

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Freddie Mac - Transfer Types

Concurrent Transfer of Servicing

re Subsequent Transfer of Servicing u s lo c Transfer of Custody re o F p to .S w w w
 After the mortgage is sold to Freddie Mac.  Result of a transfer of servicing  Servicer’s choice

 Occurs at the time the mortgage is sold to Freddie Mac.

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Freddie Mac – Notification
 Concurrent Transfers

 Approval Required. Notification via data transmission.  Appropriate 1034 utilized.  Transferee custodian certifies.

 Subsequent Transfers

 Seller/Servicer Initiates.  Form 1034T utilized.  Transferee custodian delivers form 1034T to Freddie Mac’s Document Custodial Services.  Form 1034T must be retained for a minimum of 3 months after recertification, or it can be imaged and destroyed immediately.

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Freddie Mac – Transfer Processing
 Form 1035, Tri-Party Agreement:

re with sale to  Simultaneous Transfer of Servicing u s the investor and the Seller and Servicer are two lo c different parties: re o F p to .S w w w

 Signed only once for each seller/servicer number.  New 1035 if new transferee servicer/custodian relationship.

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 Endorsement chain should match up to the Seller of the loan to Freddie Mac.  Last endorsement: Seller to blank.  Assignment Chain: Ends with Servicer.  Custodian should track loans based on the Servicer not the Seller.

Freddie Mac – Ongoing Record-Keeping

 Record of Completion (Transferor):  Concurrent: On-line in Selling System or 1034S for MIDANET®  Subsequent: 1034T

 Tracking/Storage:

 Form 1034E or Note Cover Sheet may be destroyed once certification is entered in the Selling System  Form 1034 and 1034A, or an image of Form 1034 or 1034A and Form 1034T must be retained for 3 months from certification date

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Mortgage Partnership ra F Finance® Program re u s (MPF Program®) lo

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Transfers

MPF Program -Transfer Types Transfer of Custodian

 Loans moved from one approved MPF Custodian to another  Loans must be certified by new Custodian

Transfer of Servicing

 Does not require a new Custody Agreement/ Addendum unless the transfer of servicing includes the transfer to a new Custodian

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MPF Program -Transfer Notification

Transfers Coordinated by MPF Provider
 Notification  Agreement Issues

No Standard Forms

 All information is handled electronically  Custodian will maintain electronic records for each loan held on behalf of MPF

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MPF Program - Transfer Processing

ra F  ABC Bank – DEF Servicing Released re u Concurrent Transfers: s o lSale Simultaneous  Servicing Transfer and c  Endorsements = Seller to Servicer and Servicer to re o blank FSeller to Servicer and Servicer to p  Assignments = o blank t .S w w w
System Tracking: Seller and Servicer

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Transfers – Summary:

Ginnie Mae
Concurrent Transfers of Servicing?

Fannie Mae

Freddie

YES

Who Initiates?

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Issuer only

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Servicer

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MPF

Program

YES

YES

Lender or

Servicer

MPF Provider

Transfers – Summary:

Ginnie Mae

Fannie Mae

Freddie

Standard Initiation Form/ Method?

11706 via GinnieNET

Trial Balance or 2005 (schedule)

Partial Pool Transfers?

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MPF

Program

1034 Online or

Paper. 1034T via Email or Fax

No Standard Form

NO

YES

YES – (Loan Level)

YES – (Loan Level)

Transfers – Summary:
Ginnie Mae Fannie Mae Freddie Mac

Custodian Stores Agency Approval?

YES

Common Transfer Reasons

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Concurrent Transfer of Servicing (During Sale) Subsequent Transfer of Servicing (After Sale) Transfer of Custodian Responsibilities Multiple Sites Transfer

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NO

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MPF

Program

NO

NO

re Annual Or Recurring u s lo Reporting c re o Requirements F p to .S w w w

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r o F Annual or Recurring p to Reporting Requirements .S w w w

Mortgage Partnership ra F Finance® Program re u s (MPF Program®) lo

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MPF Program – Custodian Reporting
Annual Officer’s Certification
Attestation of Compliance Due April 15th Annually

Exhibit 2 in Custody Manual

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MPF Program – Custodian Reporting Monthly Reports:
 Loans initial certified  Govt. Loans Final Certified  Govt. Loans Not Final Certified  Loan Releases

re o F Specific File Format p to Fed to MPF Banks .S w w w

5th Business Day of Month

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MPF Program - Agreements

 Internal templates distinguish between 3rd-party, affiliate and self-Custodians.  Customized service and agreements.

 Custody Agreement between MPF Provider and Custodian.

re o  Custodian Acknowledgement executed by F Custodian and PFI. p to  Agreements cover all pool and all facilities. .S w w w

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MPF Program – Reporting Requirements

d  All re-occurring reports must be in the correct u format ra F re  Data on the reports must be consistent u s o lbe accurate  Data on the reports must c re o F p to .S w w w

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Fannie MaeFra

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Annual or Recurring re o F Reporting p to SRequirements .

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Fannie Mae - Custodian Reporting

Annual Eligibility for Document Custodians: Starting March 31, 2006 Audit Report Summaries Administrative Changes Bailee Letters

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Fannie Mae - Lender Reporting

d  Reflects Status of Mortgage Operations u Fiscal at a year-end rFiscal YearF  Due by Lender Within 90 Days of its End re uFinancial s Form 1002: Mtg. Bankers lo Reporting c  Quarterly re  Submitted Electronically o F Fidelity orop Insurance E&O t  To Fannie Mae Within 30 Days .S w w w
Form 582 (Lender Record Information)

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Fannie Mae - Report Significance
 Annual Statement of Eligibility:

 Indicates Ability to Meet Eligibility and Operational Requirements

 Audit Report Summaries:
 Indicates Performance

lo  Eligibility Criteria forc Custodians and re Seller/Servicers: o  Administrative F pChanges Ratings  Net Worth o tand/or External .S w w w
 Important to Match Entity With Ratings

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Fannie Mae - Reporting Requirements

Annual Statement of Eligibility for Document Custodians
st

re  Due March 31 of Each Year. u s Oversight and  Sent Directly to the Custodian lo Mae. c Monitoring Group at Fannie re o F p to .S w w w

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Ginnie Mae re

Annual e Recurring or r Requirements o Reporting F

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Ginnie Mae – Custodian Reporting
Non-Liquidation Inventory:

All HUD11708s for:
 Code 6

Monthly 90/180 Day Reports:
 90+ Days – Report to Issuer  180+ Days – Report to Ginnie Mae

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Ginnie Mae  Custodians:

Custodian/Issuer Reporting

 Non-Liquidation Tracking (90/180 Day HUD11708 Reports)  Annual Physical Inventory

 Issuers:

 11702 – Resolution of Board/Certificate of Authorized Signatures

re o Fof Security Interest  11711A – Release p to  11711B – Certification & Agreement .S w w w

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 Used to verify various HUD forms transmitted to Ginnie Mae and the Custodian

 11711A & 11711B – form used to release prior interest and certify ownership

Ginnie Mae - Custodian Reporting Annual Pool Inventory:
 Custodians Verify Physical Pools To:
 Issuer Pool List  Master Pool Files

 Reports to Issuers

 Major discrepancies noted and provided to Ginnie Mae

 Resolution Within 120 Days  Flexible Formats

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Ginnie Mae - Issuer Reporting
11702 (Authorized Signatures):
 Officers Required  Updated Annually  To Ginnie Mae & Custodian

 Custodian To Verify 11706s, 11708s, 11715s, Endorsements, etc.

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Ginnie Mae - Issuer Reporting

11711A & B (Security Interests):
 11711B for every pool.

 GinnieNET OR Hard Copy.

 11711A per pool, if applicable.

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Ginnie Mae - Report Significance

d u Non-Liquidation Inventory: Accurate ra Release Reasons F re for Assets Annual Pool Recon: Accounting u s lo 11702: Legitimate Signers c re Ownership 11711A&B: Enforceable o F p to .S w w w

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Freddie Mac Reporting
Due March 31 Faxed to Freddie Mac

Custodians: Annual Eligibility Certification Form

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Freddie Mac - Reporting
Seller/Servicers Report (Form 16SF):
Annual Eligibility Certification
Due 90 Days after FYE Completed On-Line

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Freddie Mac - Reporting
1107SF Report:
 Seller/Servicers Only  Submit As Needed  Significant Organizational Changes

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Freddie Mac - Report Significance

Annual Eligibility Certification Form – Certification of Compliance

re Certification Form 16SF: Annual Eligibility u s Report – Notification/Awareness for lo c Freddie Mac re o Form 1107SF: Seller/Servicer Change F p Notification Form – Tracking Assets to .S w w w

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Reporting Requirements - Summary

Ginnie Mae

Fannie Mae
YES/

Freddie

Required Annual Report? Annual Report Due?

YES– Pool Inventory & 11702

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Record Information

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MPF

Program

YES –

YES– Annual Officer’s Certification

Eligibility Reports

Due w/i 120 Days

FYE + 90 Days

Cust: March 31st, S/S: FYE + 90 April 15th

Reporting Requirements - Summary
Ginnie Mae
NonLiquidation 90/180 Day Reports

Fannie Mae

Freddie

Unique Agency Reports

Common Report Reasons

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Bailee Letter Notification

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Change Notification

Monthly Data Reports

Attestation of Compliance - Accountability Proof of Rightful Ownership Performance Monitoring Change & Asset Tracking

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re DOCUMENT u s lo CUSTODIAL c re RESPONSIBILITIES o F p to .S w

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Ginnie Mae –

Custodial Insurance Requirements

ra  Financial Institution Bond to include the F following coverage's: re u s lo c  Financial Institution Bond must be underwritten by an re Best’s rating of B+ or better o insurance carrier with an A.M. F must name Ginnie Mae as the p  Loss Payee endorsement loss payee to .S  Trust Operations Errors and Omissions w w w
    Fidelity Premises In Transit Forgery or Alteration  In excess of $500 million in Ginnie Mae pool and loan documents

Document Custodians are required to maintain insurance coverage to indemnify Ginnie Mae against losses involving Ginnie Mae pool and loan documents in their custody.

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Ginnie Mae – Fire Rating Requirements Document Custodial Facilities:
 Effective January 1, 2007:

Facilities must provide a minimum of 2 hours of fire protection Attested by a written statement from:
 Insurance company of the Document Custodian  Fire Marshall of applicable jurisdiction or independent, qualified fire protection contractor.

Statement of compliance:

to Existing approved document custodial facilities .S w w w
 Prior to January 1, 2007:
 Minimum of 1-1/2 hours of fire protection.

 Updated upon any significant change in facility and available for inspection by Ginnie Mae.

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Ginnie Mae –

Custodial Safekeeping Requirements

re u in: s Access controls may be either lo c re o F p to .S w w w

A Document Custodian must maintain secure, fire resistant storage facilities with adequate access controls to ensure the safety and security of pool and loan documents:

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 Automated form  Employees to use a security card access reader to gain entry to the vault.  Electronic access record  Manual Form
 Requiring two employees to be present whenever the vault is entered.  Written access long maintained.

Ginnie Mae – Custodial Responsibilities

re should  The issuers and document custodians u s subscribe to any and all updates made by Ginnie lo c Mae. re web site address:  Please consult the o following F p www.ginniemae.gov to .S w w w

Ginnie Mae’s recommendation to Issuers and Document Custodians:

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Fannie Mae re u

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Fannie Mae –

Insurance Requirements for Custodian

 As of October 1, 2006, The Insurance Coverage for a Document Custodian Must Include:
 Fidelity Bond  Errors and Omissions Insurance

 Coverage Limits:
 E & O:

 Must be not less than $1 million per claim and $10 million in the aggregate, on a claims-made basis.

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Fannie Mae – Custodial Responsibilities

ra  Vault must be 2 hour fire rated. F re Master Pool Retention Requirements: u sfor 6 years after  Electronic or paper record lo c last pool loan has liquidated. re o F p to .S w w w
Fire Rating Requirements:

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Fannie Mae – Custodial Responsibilities

For further information you may contact:
 Debra Thompson Director of Custodian Oversight & Monitoring. debra_d_thompson@fanniemae.com

 Or visit:

 http://www.efanniemae.com or via AllRegs®

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Freddie Mac re

Document Custodial re o F Responsibilities p

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Freddie Mac – Custodial Insurance Requirements

 Maintain the following insurance coverage's, at a minimum:
 Financial institution bond, or equivalent insurance, covering any loss resulting from:

 Employee dishonesty  Physical damage, destruction or loss of Notes and assignments while on custodian’s premises  In transit (if Custodian contractually agreed to provide) between Custodian’s premises and anywhere  Errors and omissions coverage including breach of duty, neglect, misstatement, misleading statement or other wrongful acts

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Freddie Mac – Custodial Insurance Requirements

 The required insurance coverage's must:

raa (A minus)  Be underwritten by an insurer that has AFBest Company or better rating according to the re A.M. u  Be maintained in amounts deemed adequate for the s held in custody and number of Notes and assignments lo business practice appropriate based on prudent c re(GAAP) net worth or $100,000,  Have a deductible amount no more than the greater of o 5% of the Custodian’s F $10,000,00 but not greater than p to .S w w w

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Freddie Mac - Fire Rating Requirements Custodial Requirements:

 Be equipped with secure, fire-resistive storage facilities with controls on access to ensure the safety and security of the Notes and assignments  Facilities must meet fire resistive requirements set by the Custodian's regulator. If no requirements set by the regulator, a minimum of two hours fire protection.

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Freddie Mac - Custodial Safekeeping Requirements

 Maintain Notes and assignments in such a way as to ensure security and confidentiality and prohibit unauthorized access to or use of information contained in the Note and assignments.

 Use employees who are knowledgeable in the handling of Notes and assignments and the functions and duties of a Custodian.  Access the electronic version of the Guide at:

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Mortgage Partnership ra F Finance® Program re u s (MPF Program®) lo

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MPF Program - Custodian Insurance Requirements

d for u  Fidelity Bond – The Custodian is responsible ra of the provision and maintenance, at all times, F fidelity insurance and mortgagee’s E&O insurance. re u better or affiliated s The insurer must be rated B+ or lo with Lloyd’s of London.c e rBased on the total dollars of  Type of Coverage – o or Loans Serviced – F loans held in Custody p whichever to is greater .S w w w

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MPF Program - Custodian Insurance Requirements

Fidelity Bond:

 Fidelity Insurance and Mortgagee’s E & O Insurance  Insurer must be rated b+ or better by the A.M. Best Company or affiliated with Lloyd’s of London

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MPF Program - Custodian Insurance Requirements
 Types of Coverage:

 Based on total dollars of loans held in Custody or loan serviced,  Whichever is greater:
 <$100 million - $300,000  <$500 million - $300,000 plus 0.15% of base over $100 million  <$1 billion - $300,000 plus 0.15% of $400 million plus 0.125% of base over $500 million  >$1 billion - $300,000 plus 0.15% of $400 million plus 0.125% of base over $500 million plus 0.100% of base over $1 billion.

 Deductibles:

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 Fidelity- the greater of $100,000 or 5%.  E & O – the greater of $100,000 or 5% per loss or occurrence.

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MPF Program – Custodial Responsibilities

 Fire Rating Requirements:

 Minimum of 2 hours fire protection  Attested by Custodian’s insurance company, local fire marshal or an independent, qualified fire protection contractor.

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MPF Program – Custodial Safekeeping Requirements

 To assure the safety and security of Collateral Files:
 Secured facility with adequate controls of access  Fire resistant storage facility

 Controlled either by:

 An automated system to enter vault:
 Use of a security card reader  Electronic access records

 Or a manual system:

 Requiring at least two employees to be present whenever the vault is entered  Maintenance of a written access log

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MPF Program - Responsibilities

 For further information regarding the MPF program please contact:
 Kathleen Davidson - MPF Custody Manager Phone: 312-616-8049 E-mail Address: kdavidson@fhlbc.com  Dawn Castell – Senior Custody Specialist Phone: 312-565-1234 E-mail Address: dcasteel@fhlbc.com  Dan Melady – Custody Specialist Phone: 312-565-2605 E-mail Address: dmelady@fhlbc.com  General e-mail address: mpfcustody@fhlbc.com

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re u Audit Tips s& Most lo c Common Findings re o F p to .S w

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Ginnie Mae re

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Ginnie Mae - Audit

ra  On-site Custodian & Issuer reviews F re  Desk reviews only for RFP & risk assessment u s & desk Frequency varies forlo on-site c reviews. re o last 3 to 5 days. On-site Reviews F p to .S w w w
2 Types:

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Ginnie Mae – Custodian Audit Tips Designate one audit contact.

ra Ensure availability of requested documents. F re Keep current eligibility information. u s lo Prepare written explanations of extenuating c re factors. o d! F Be pare p Pre to .S w w w

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Ginnie Mae – Issuer Audit Tips
 Designate one audit contact.

 Ensure availability of requested documents.  Prepare written explanations of extenuating

lo c  List bank accounts in questionnaire. re & bank statements for  Prepare reconciliations o F review. p to forms current & available.  ConfirmS HUD all . w w w

factors.

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Ginnie Mae –

Common Custodian Findings

Fire-Resistance Attestation

re Fidelity Bond Coverage u s lo c Errors & Omissions Coverage re o F p to .S w w w

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Ginnie Mae – Common Issuer Findings Recurring Findings:
 Recurring Finding of Past Audits  Errors on 11708s (Release Request)  Errors on 11706s (Certification Schedule)

re u items: Tips to avoid repeating s othese time to make sure l Schedule c is available to the review  Prepare for the audit itself. the supporting information re o team. F reports available to  Make prior audit finding p management team. to  Q.C. review certifications on a regular basis to avoid .Serrors. repeated w w w

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Ginnie Mae – Opportunities to Improve...

ra  Continue to maintain Independence. F re u s Issuers: locycle. c  Shorten pool submission re controls.  Strengthen data o reporting F p to .S w w w
Custodians:

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Fannie Mae re

Audit Tips & Most re o F Common Findings p

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Fannie Mae - Custodial Audit
 Onsite Review Frequency:
 Large custodians – semi-annually  Small to mid-size custodian – annually

 Length of Review:
 “Variable” 2 to 3 days

 Data Audits vs. Physical On-Site Audits:
 Fannie Mae does conduct data audits occasionally; however these review’s do not satisfy the requirements for a physical on-site review.

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Fannie Mae – Custodian Audit Tips
 Gather requested information in advance.  Set aside 1st day to meet with reviewers.  Schedule daily meeting times.
 Check status of open items

re oor system resources to provide: F  Have available reports p to .S w w w
 Print policies and procedures.
 Pool listings  Drill to loan level listings within selected pools.

 Route open items to your team for follow-up.

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Fannie Mae – Issuer Audit Tips
 Gather requested information in advance  Set aside 1st day to meet with reviewers.  Schedule daily meeting times.
 Check status of open items.

re o  Be prepared to walk the reviewers through the process F p from Issuer to Custodian (e.g. shipping/delivery into tothe QC/Certification process). custodian S with . w w w
 Print policies and procedures for reviewers.

 Route open items to your team for follow-up.

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Fannie Mae – Common Custodian Audit Findings Access/Security

re Policies and Procedures u sMajor Areas, and  Updated/Current, Covering lo c Followed. e rData Errors o Certification and F p to .S w w w

 Physical and/or Electronic Access, Security, Business Recovery

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Fannie Mae – Opportunities to Improve...

Documentation & Consistent Application of Policies & Procedures:
 Certifications  Exceptions (Deficiencies)

Tracking Systems:

 Monitor Aged Outstanding & Missing Documents

Proactive Management:
 Annual or Periodic Inventory recommended

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Freddie Mac - Audit
 Seller/Servicer Review

re  Document Custodian Review u s lo c re  Length of Audit o F p to .S w w w

 Frequency varies depending on risk and exposure to customer  Range is generally 12-36 months  No set schedule, usually performed in conjunction with Seller/Servicer review.  Seller/Servicer – Varies usually 2-5 days depending on scope and number of locations  Custodian – Between ½ and 1 day.

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Freddie Mac - Custodian Audit Tips

 Designate one audit contact.  Have “experts” available.

re u  Ensure availability of requested documents. s o llargest risk.  Prepare to discuss your c re  Discuss “wish list” items. o F  Address recent changes (custodians). p to strategy (seller/servicers).  Discuss S business . w w w

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Freddie Mac - Seller/Servicer Audit Tips
 Designate one audit contact.  Have ‘experts’ available.

redocuments.  Ensure availability of requested u s risk.  Prepare to discuss yourlo largest c  Discuss ‘wish list’ re items. o  Address recent changes. F p strategy.  Discuss business to .S w w w

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Freddie Mac – Common Custodian Findings

Inadequate Policies and Procedures

re Planning Inadequate Business Continuity u s lo c Inadequate Note Tracking re o F p to .S w w w

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Freddie Mac – Common Seller/Servicer Findings

Inadequate Quality Control Program

e rlending controls Inadequate anti-predatory u s lo c Funds custody reconciliation controls re o F p to .S w w w

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Freddie Mac – Opportunities to Improve…
 Custodians:

 Seller/Servicer:

o lsound QC Program.  Implement and executec ea  Implement a sound r lending program, oanti-predatoryFederal and State antiincluding an automated check of F hard stops for violations. predatory laws with p controls around custodial funds  Implemento t proper management. .S w w w

 Keep policies and procedures updated with current practices.  Develop and test a proper Business Continuity Plan.  Institute a proper Note Tracking system.

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Mortgage Partnership ra F Finance® Program re u s (MPF Program®) lo

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MPF Program - Audit Two type of Audits
 Custodian Site Review  Collateral File Sample Review

reactivation u Both occur within one year of s l=oPerformance based Ongoing Site Reviews c re = Annual File Sample Reviews o F 2 to 4 hours p Site Review last to .S w w w

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MPF Program – Custodian Audit Tips Designate one audit contact

ra Ensure availability of requested documents F re Inform staff of visit u s# Mark copies with MPF lo loan c docs to MPF Forward trailing corrective re o Provider F p to .S w w w

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MPF Program – Issuer Audit Tips

Exposure to Issuer arrangement limited to pilot program

re u More to come as we explore off balance s lo MPF fundings sheet capabilities for future c re o F p to .S w w w
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MPF Program – Common Custodian Findings Assignments

 Incomplete Notary Sections  Missing Signatures  Missing True and Certified Copy Stamps

Living Trust Loans

re Construction Fo to Permanent Loans p  PFI and Custodian Issue to .S w w w
 PFI and Custodian Issue

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MPF Program – Opportunities to Improve...

 Training

re  Investor-specific Procedures u s lo Procedure c  Excellent Quality Control re o F p to .S w w w

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FISH! Philosophy

Never tell people how to do things. Tell them what to do and they will surprise you with their ingenuity.

re u Jr. s George S. Patton, lo FISH! Philosophy: ec r  Play o F  Make Their Day p t  Be Thereo .S  Choose Your Attitude w w w

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Audit - Summary

Ginnie Mae

Fannie Mae

Freddie

Audit or Review Types Frequency of On-site Reviews
1. On-site 2. Desk

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On-site

Site Sample

Variable TBD

Variable – 12 to 36 months

Variable – 12 to 36 months

Audit - Summary

Ginnie Mae

Fannie Mae

Freddie

On-Site Duration

3 to 5 Days

Unique Custodian Tips

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Prepare written explanation of extenuating factors

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Variable:

2 to 3 Days

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MPF

Program

Seller/Servicer: 3 to 5 days 2 to 4 Hours

Custodian: 1 full or partial

Available Reports/

Systems Resources

Discuss Recent Changes

MPF # on Loan Copies

Audit - Summary
Ginnie Mae
Prepare

Fannie Mae
Prepare to

Freddie

Unique Issuer Reconciliations walk & statements reviewers thru Tips
for review

Shared General Improvement Opport.

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MPF
N/A

Program

Prepare to

discuss largest risk

Data Integrity/Reporting Policies & Procedures Quality Control Training

 Monitor aged outstanding & missing documents

The 4 Ingredients of the FISH! Philosophy:
1. Play 2. Make Their Day 3. Be There 4. Choose Your Attitude

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Having fun, enjoying yourself, being spontaneous & creative!

PLAY

Being totally focused on the moment and on the person or task with which you are engaged!

Be There

Accepting full responsibility for all of our choices. A positive attitude is a decision we make, moment to moment!

Choose Your lo c Attitude re

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Make Their Day

Doing something special for your customers & coworkers!

FISH! Philosophy - Play FUN PAYS OFF:

At Southwest Airlines Co., the corporate culture makes the airline unique.
 SWA feels this fun atmosphere builds a strong sense of community.  It also counter-balances the stress of hard work and competition.  SWA recognizes how humor enhances employee management, customer service and profits.
Elizabeth Pedrick Sartain, Vice President of the “People Department”

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“There is always a d u choice about the way ra F you do your work; re u not a even if theresis lo the choiceec about r itself” o work F

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Document Custody General Training Session

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