- 14 -
greater spread or less of a discount from UPB) of selecting an
alternate required net yield in lieu of the higher maximum
required net yield as stated in the prior approval purchase
contract.12
If an originator selected an alternate required net yield,
it was required to give notice of this selection no later than
the date of conversion to mandatory delivery. If an originator
failed to give notice of conversion to a mandatory commitment
within 5 business days of selecting an alternate required net
yield, the prior approval purchase contract would be terminated,
and petitioner would retain the entire 2-percent commitment fee.
Nondelivery generally occurred when the borrower repudiated
or defaulted on its arrangement with the originator so that the
originator did not have the mortgage to deliver.13 Unlike
originators who entered into an immediate delivery purchase
program, when an originator participating in the prior approval
program failed to deliver a mortgage, it was not disqualified or
suspended as an eligible seller of mortgages to petitioner.
12 If petitioner’s required net yield on the day of delivery
election was lower than the maximum required net yield, an
originator holding a higher than current market-rate mortgage
would normally obtain a spread greater than the minimum servicing
spread specified in sec. 2603 of petitioner’s Sellers’ and
Servicers’ Guide.
13 An originator finding a more attractive opportunity for
disposing of a mortgage had to consider the forfeiture of the
1.5-percent refundable portion of the commitment fee.
Page: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 NextLast modified: May 25, 2011