pre-closing audit worksheet

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Revision date: 4/20/2015 © Donnashi Enterprises Inc.www.donnashi.com Distributed Free of Charge, Not for Sale

PRE-CLOSING AUDIT WORKSHEET

Performed by: _____________________ Date: __________

BORROWER LOAN# LOAN TYPE TRANSACTION TYPE ORIGINATION DATE

STAGE LOAN IS IN

LOAN ORIGINATOR PROCESSOR UNDERWRITER

Loan Officer Rating: ☐Acceptable ☐Minor Deficiencies ☐Unacceptable

Processor Rating: ☐Acceptable ☐ Minor Deficiencies ☐Unacceptable

Underwriter Rating: ☐Acceptable ☐ Minor Deficiencies ☐Unacceptable

☐This loan was reviewed through an AUS system: ☐LP ☐DU Key #

AUS Date:

☐This loan was manually underwritten with an AUS of: ☐Caution ☐Refer

☐This loan is a manual underwrite-no AUS ☐FHA Streamline ☐VA IRRRL ☐Other

SECTION 1: SEARCHES

☐Searches performed manually ☐Fraud Software searches from: __________________

LDP/GSA on all parties connected with this transaction OFAC on all borrowers SSN validation, third-party Owner-occupancy supported (refinance) MERS check Case Query check Business license check (self-employed) Business phone #/Directory check Professional license check Other:

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MERS / Clearance

MERS # CLEARED OPEN MATCHES INFORMATION IN FILE

Case Clearance (FHA)

CASE QUERY STREAMLINE OTHER INFORMATION ON CASES

Additional Open Case Numbers Exist, per Case Query. File to be Referred to:

Comments:

Search Results Transferred to Pre-Closing Audit Report

☐Insignificant

☐None

☐Significant Resolved (Gross Defect Ratio)

☐Significant Unresolved (Net and Gross Defect Ratio)

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SECTION 2 LOAN APPLICATION

Loan application is complete, signed and dated. Occupancy status matches AUS findings. Borrower executed top of URLA, if non-purchasing spouse or another is on the loan request. Borrower’s current residence matches address on credit report. Borrower’s employment represents at least 2 years. RED FLAG: Address for employer on the loan application does not match: ☐paystub or ☐VOE

☐W-2 ☐Directory Search Borrower’s employment is logical based on borrower’s age. Borrower’s place of business is within a reasonable distance to his/her residence. If borrower is self-employed, box is checked and business information matches tax returns. All assets disclosed on URLA match assets documented in the loan file and match AUS Findings. List of property/properties owned matches/match fraud software, MERS, as well as other

documentation in loan file. US Citizen box is checked and, if not, documentation to support program eligibility is provided. FHA: Addendum A all four pages ☐properly executed by LO and Borrower with certification boxes

completed. If loan has been underwritten, ☐page 3 of Addendum A has been completed by Underwriter.

VA: Addendum to URLA ☐Page 1 and 2, executed with proper certification boxes completed. FHA/VA Case Number appears on loan application and applicable addendums.

Comments: Referred issues to:

Application Results Transferred to Pre-closing Audit Report

☐Insignificant

☐None



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SECTION 3: INCOME

INCOME DOCUMENTS REVIEWED

Borrower #1 Total Income Reported to AUS: $

Length of Employment: Length in Same Field: Primary Type of Income:

☐Paystub(s) dated: Paystubs are computer-generated. Direct deposit (if applicable) matches paystub. YTD totals consistent with gross pay amount, appearing on tax returns, W-2s, VOE’s.

☐W-2’s for the year(s): IRS W-2 printout matches W-2’s

☐VOE covering (time frame)

☐Previous VOE covering (time frame)

☐IRS Tax Returns for the year(s)

☐IRS Transcripts for the year(s)

☐Business Tax Returns for the year(s)

☐Business IRS Transcripts for the year(s)

☐FHA: Current P&L for self-employed borrowers

Rental Income

All properties owned in a tax year appear on the borrower’s Schedule E. Income calculations underwriter used include ☐Leases - % - PITI or: ☐Schedule E

Other Income

Other income source: $_____________________ Other income source: $_____________________ Other income source: $_____________________ Other income source: $_____________________


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☐FHA: Current P&L for self-employed borrowers Rental Income

All properties owned in a tax year appear on the borrower’s Schedule E Income calculations underwriter used include ☐Leases - % - PITI or: ☐Schedule E

Other Income



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Other Income



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Other Income



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SUMMARY OF INCOME FINDINGS

AUS income matches documentation in the file: ☐Yes ☐No If No, state which documents are incorrect: Borrower 1:☐Correct ☐Incorrect

Borrower 2:☐Correct ☐Incorrect



Documents that are incorrect include: (State borrower 1, document source)

Corrections to income are as follows: Borrower #1 Total Income: $

Base $ O/T $ Bonus $ Commission $ Rental $ Retirement $ Other (Amount/Defined Source) $

Borrower #2 Total Income: $






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INCOME CONCLUSION AND CORRECTIONS

Required if AUS and income documents do not match

☐Re-ran AUS income; now matches ☐Re-ran AUS; now refer/caution underwriter to re-review

☐ AUS to be re-run by:


Income Findings Transferred to Pre-Closing Audit Report

☐Insignificant

☐None



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SECTION 4: ASSETS

L/P, DU, Total Scorecard, GUS: Minimum amount of assets to be verified, per AUS $

AUS confirmation of assets stated to the system $

SUMMARY OF ASSETS STATED TO THE AUS SYSTEM

Liquid Assets $ ☐Matches documents

Retirement (401K) VESTED x60/70% $ ☐Matches documents

Retirement (Other) x60/70% $ ☐Matches documents

Stocks (Agency’s Net Allowable %) $ ☐Matches documents

Net Equity (Sale of Real Estate) $ ☐Matches documents

Net Equity (Another Property/HELOC) $ ☐Matches documents

Gift Funds (Money) $ ☐Matches documents

Gift Funds (Equity) $ ☐Matches documents

Other Source: $ ☐Matches documents



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Assets provided to AUS:

Source Document Amount $

☐Assets provided to AUS, but not needed to be verified to close/reserves☐matches documentation in

the loan file ☐does not match documentation in the loan file.

☐All assets provided have been properly documented and have a history in compliance with agency

standards.

The following assets do not meet agency documentation standards and must be corrected:

Reason for non-compliance and documentation to resolve:

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RESERVE REQUIREMENTS

☐AUS does not require reserves on this loan request.

☐AUS required reserves $ ☐Amount has been verified ☐AUS-required reserves has not

been met. Shortage Amount: $

INVESTMENT AND SECOND HOME RESERVE REQUIREMENTS (Freddie Mac/Fannie

Mae)

☐6 mos. PITI on subject property ☐2 mos. PITI all other rental/2nd home properties

MANUALLY UNDERWRITTEN LOANS

Fannie Mae: ☐Complies with Eligibility Matrix Standards

https://www.fanniemae.com/content/eligibility_information/eligibility-matrix.pdf

Freddie Mac: ☐Complies with FHLMC Reserve Requirements

http://www.freddiemac.com/learn/pdfs/uw/docmatrix.pdf

FHA

☐Subject property is a 3-4 unit property and at least 3 months PITI is in reserves.

☐Reserve source is not from a gift but from borrower’s own funds.

VA

☐Subject property is a multi-unit building and the cash reserves of 6 months PITI is available.

☐For other rental properties: 3 months PITI cash reserves, per rental.

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ASSET CONCLUSION AND CORRECTION

☐Based on current documentation in file, application and/or AUS, the loan is short:

$

☐Re-run AUS, once all asset documentation has been provided.


Asset Findings Transferred to Pre-Closing Audit Report

☐Insignificant

☐None



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SECTION 5: PRELIMINARY TITLE REPORT

Date of Title Report: Issued By: /

Closing Audit Agent/Attorney:

Owner of record matches appraisal and, if applicable, ☐purchase contract.

☐If Seller of Record doesn’t match, determine if this is a probate, and affidavit of death is required. All taxes are current (refinance). If there is a HOA Assessment lien and this is a condominium, verify the amount does not exceed

agency requirements for payoff on an REO/Purchase transaction. Subject property type matches AUS and Appraisal. Survey/Plat Map is provided. Open liens, outstanding judgements do not belong to our borrower(s). All mortgages on title (refinance) match payoff information. If a loan will be remaining, a subordination agreement has been ordered or is in the loan file. Sub-standard dwelling notification(s) by the city or county have been identified. ☐Request for documentation related to sub-standard dwelling has been ordered and loan is suspended until review has occurred. Land is Fee Simple: If property is not fee simple, the master/ land lease complies with investor

leasehold land standards. Reconveyances, in past 24 months, are checked and acceptable. Transfers within the past 24 months have been reviewed and match information on the appraisal. If the transfer was to an LLC, documentation has been forwarded to title for review. Negative issues, related to title, will be resolved at loan closing audit (purchases). Legal Description was provided. Property’s physical address provided match URLA, insurance policy, etc. Deed restrictions (Condominiums and PUDs) have been identified and are ☐acceptable to agency

standards.


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Preliminary Title Report Findings Transferred to Pre-Closing Audit Report

☐Insignificant

☐None



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SECTION 6: REQUIRED INFORMATION BASED ON PROPERTY TYPE

CONDOMINIUMS:

☐HOA Cert is in loan file and is not identified as ineligible based on the answers provided

FHA: ☐Condominium is on HUD’s Approved Condominium List in FHA Connection

If project is not approved or expired, do not proceed unless this is a FHA Streamline or HUD REO

Freddie Mac / Fannie Mae:

☐Streamline (FHLMC) Limited Review (FNMA)

☐Full Review (FNMA)

☐Project is new construction, or additional phasing will occur.

If project requires Fannie Mae approval, documents have been submitted to the ☐investor ☐FNMA CPM

MANUFACTURED HOUSING:

Property is: ☐Single-Wide ☐Double-Wide ☐Located in a Condo Project

☐Manufactured home is affixed to the land and in compliance with agency standards.

☐Structural Engineer’s Report has been ordered/ provided.

☐Property meets agency standards.

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HUD 3-4 UNIT SELF-SUFFICIENCY TEST (DEBT SERVICE RATIO)

Rental value of all units (including owners) is: $ minus vacancy/expense factor: %

= Net Rental Income to be included in Sufficiency Test (A): $

New PITI on subject property: (B) $

☐Sufficiency test passed. ☐Sufficiency test failed.

☐If test failed, PITI must be reduced to: $


Property Type Findings Transferred to Pre-Closing Audit Report

☐Insignificant

☐None



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SECTION 7: MORTGAGE INSURANCE

CONVENTIONAL

☐MI is not required

☐Conventional Loan LTV > 80% AUS Coverage Required: %

MI ordered through: ☐Matches AUS requirements

MI not required by exception: ☐DU Refi Plus ☐Relief Refi ☐Other

☐MI was rejected by the MI company: And why:

FHA

☐FHA Loan UFMIP is: %☐Matches AUS (based on case order date)

VA

☐VA Funding Fee is: ☐Matches VA requirements

☐Veteran is exempt from VA Funding Fee ☐Proof in file


Mortgage Insurance/UFMIP/VA Funding Fee Findings Transferred

to Pre-Closing Audit Report

☐Insignificant

☐None



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SECTION 8: CREDIT REPORT

Credit report matches AUS-identified report and date. All additional credit reports remain in the loan file (i.e., FHA/VA). Business credit report was run on manually underwritten FHA loans. Discrepancies between initial and final credit reports have been reviewed. Inquiries on the credit report are explained and/or investigated. RED FLAG: Undisclosed debt, if determined, is found based on new credit report or inquiry check. Social Security number on credit report matches SSN validation. Variance appears in residence data from other file documentation. RED FLAG: Credit pattern (i.e., a lot of inquiries, or recent activity) is identified. RED FLAG: Fraud alert is to be reviewed. Contact borrower if identity theft occurred. RED FLAG Address does not match our loan file’s information.

Inquiries / Follow up

Source Contact # Open Trade? Borrower's Response

Results, per investigation, on any negative situations related to the credit report:

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Credit Report Findings Transferred to the Pre-Closing Audit Report

☐Insignificant

☐None



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SECTION 9: PURCHASE CONTRACT

Subject property is a REO. Subject property is a short sale. All sellers are identified in the sales contract and match the owner of record (per appraisal, title work,

etc.) All buyers are identified in the sales contract and match the applicants for the loan. Realtors are not the seller or buyer. All parties have executed the purchase contract. Deposit amount, stated in the purchase contract, matches the initial deposit. All seller-paid closing costs are permitted and match the appraisal and estimated HUD-1. Terms of purchase, loan type and loan amount match the terms of the loan transaction. Addendums to purchase contract are provided and part of the loan file. Sales Contract date pre-dates the Appraisal. Purchase Contract has not expired or an extension has been granted. Estimated HUD-1 reflects same realtor(s) and real estate commissions to be paid. Amendatory Clause on FHA / VA loans is in the purchase contract. The Purchase Contract states the loan type (i.e., FHA, VA). Subordinate financing is disclosed in the Purchase Contract. Terms of the new second comply with agency standards. Second mortgage is disclosed to the AUS. Terms of the second match information in the AUS, loan application and purchase contract. Occupancy stated in the Purchase Contract matches occupancy status in our loan file.

Short Sale

Short sale documents are in the file. Short sale has been approved. Terms of the short sale, in the purchase contract, match the short-sale documents. POA from seller (i.e., bank) to firm executing documents. Evidence individual signing, on behalf of the seller, is on the list of approved designees for the seller,

servicer or transfer agent.


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Purchase Contract Findings to the Pre-Closing Audit Report

☐Insignificant

☐None



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SECTION 10: APPRAISAL AND COLLATERAL

Appraisal in file ☐ Yes ☐No Appraiser: ____________________________ Date Issued: _____________

Appraisal was ordered through our AMC. Appraisal has certification of compliance with AIR. The appraisal was signed and dated by the appraiser of record (AMC). Appraiser is on our approved appraisal list. Appraiser’s license is current and valid for the state the property is located in: Appraiser is not on our investor’s exclusionary list. Appraiser is not on Fannie Mae’s Exclusionary List; Appraiser is within reasonable distance of the

subject property to support knowledge of area. Appraisal was prepared on proper appraisal form. Appraiser provided UAD certification for upload. Appraiser followed field-specific UAD ratings for property quality. All addendums, photos, comps and comp locations are attached to the appraisal. Owner of record matches title policy. If the property is currently vacant, utilities were on and mechanical systems were tested. Property compliance with state law and local law has been met. Comparables are within 1.5 miles, sales within 3-6 months and adjustments are reasonable. ☐ Comps not meeting this standard; additional explanation or additional comps have been provided. FHA: Appraiser has a valid CHUMS Number at the time of the appraisal. FHA: Appraiser of record matches the appraiser in FHAC/Appraisal Logging. FHA: Appraisal, transferred and assigned to us, reflects original lender/case number. FHA: Case number on appraisal matches FHAC Case ID. FHA: DE Conditional conditions were provided and completed properly. VA: Appraisal was ordered through WebLGY. VA: Appraisal was reviewed by: ☐VA ☐ SAR VA: NOV conditions were provided. All Loans with work to be completed: Proper Notice of Completion/Property Inspection is in file. All work identified by appraiser, reviewer or underwriter ☐has been completed ☐is scheduled to be

completed.

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APPRAISAL REVIEW

AVM was pulled and supports value. ☐AVM is part of the fraud check and supports value. Outside Desk Review was performed and supports quality is good and value is supported if

underwriter or program is required. Outside Field Review was performed, on proper form, and value is supported if underwriter or

program is required.


Appraisal Findings Transferred to Pre-Closing Audit Report

☐Insignificant

☐None



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SECTION 11: OCCUPANCY

☐This is an investment or 2nd home loan request; occupancy does not apply. This section is to remain

blank.

Primary Homeowners / Refinance

☐Borrower currently lives in the property (primary occupied, refinance).

☐Documents in the loan file, such as income and asset, reflect subject property.

☐RED FLAG: Documents in the loan file, such as income and asset, DO NOT reflect borrower receives

mail at the subject property.

☐Credit report identifies borrower residing at current address ☐Not at current address

☐RED FLAG: AUS message that borrower is obtaining additional finance on another property.


Primary Homeowners /Purchase

☐This is a purchase of a primary home.

☐Borrower currently owns a property located close to the subject property.

☐Borrower’s current residence is substantially larger than subject property.

Recommend the following:

☐Proof of payment on Utilities (Refinance)

☐Physical Inspection of current residence or new residence within 65 days after close of escrow

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SECTION 12: COMPLIANCE

☐Initial loan application is completed, dated and executed by loan originator.

☐Good Faith /Truth-in-lending were issued within 3 business days of loan application.

☐Disclosure package submitted to borrower: ☐Electronically ☐In Person ☐US Mail

☐Program disclosures provided to borrower: ☐FHA ☐VA ☐ARM

☐Change of Circumstance issued on: ☐APR change higher/lower than .125%

☐New disclosure issued if APR change higher/lower than .125%

☐Borrower Acknowledgement of Intent to Proceed is in file.

☐Loan was checked through compliance software for disclosures, compliance with state, federal and

loan program fee limitations.

☐All warnings, red flags and issues on compliance sweep have been resolved.

☐QM/ATR

☐All warnings on QM/ATR reviewed and☐ cleared ☐ meet safeguard requirements.

☐Government Monitoring Section on the Loan Application is complete on face-to-face loan applications.

☐Property is not located in flood zone A or V.

☐Property is located in flood zone A or V and notification of flood zone was issued to borrower.

☐Borrower’s loan was decisioned within 30 days of application. If not; ☐the borrower was provided

with the proper ECOA Notification.


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Compliance Findings Transferred to Pre-Closing Audit Report

☐Insignificant

☐None



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SECTION 13: FHA, VA AND USDA LOANS (CASE REQUIREMENTS)

Case Assignment # ☐Matches agency’s print out

☐Case Assignment identifies subject property.

☐Case Assignment identifies all borrowers.

☐Case Assignment indicates property type. ☐Condominium is an approved project.

☐Streamline: Netting (earned/unearned UFMIP)

☐Appraisal was ordered after the Case Assignment.

☐Appraisal has the right case number on it.

☐Case Assignment and AUS have the same property type.

☐CAIVRS

☐Certificate of Eligibility


Case Findings Transferred to Pre-Closing Audit Report

☐Insignificant

☐None



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SECTION 14: UNDISCLOSED LIABILITIES

Liabilities identified as:

☐Alimony

☐Child Support ☐Child Care (VA)

☐Newly acquired mortgage

☐Newly acquired installment debt

The above information was ☐Not disclosed.

Identified on: ☐Credit Report ☐Title Report ☐Other (explain)

☐The undisclosed debt or debt not included in the borrower’s calculations

New ratios are:

☐Re-run AUS with new information, ratios should not be impacted

☐Re-run AUS with new information, ratios are impacted and loan may become a refer/caution loan. If

loan becomes refer/caution this loan must be reviewed by:


Undisclosed Liabilities Transferred to Pre-Closing Audit Report

☐Insignificant

☐None



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CHECK LIST

Item Review

Date Clear/Deficient Comments

Fraud Protection Software

Fraud Alerts Cleared

Income Matches AUS

Assets Match AUS

Income Docs Complete

Inquiries Cleared

Appraisal Fieldwork

SS Validation

MI Coverage / Certificate

All Exclusionary Lists

MERS Cleared

LO NMLS Check

Disclosures Issued Timely Pre-Closing Audit Compliance Disclosures Provided

Appraiser License Check

AMC Certification

Escrow Instructions

Title Work

Purchase Contract

Occupancy