Mortgages Expert Witness On Residential Loans Part 3

In Basic Characteristics And “Life” of Residential Mortgage Loans mortgages expert witness J. F. “Chip” Morrow writes:

Secondary market investors are Government-Sponsored Enterprises (GSEs), private conduits, or investors who purchase mortgage-backed, long-term investment instruments made up of pooled individual residential mortgage loans.

Loan administrator/servicer is an institution servicing and acting for the benefit of ultimate investors regarding the mortgage loans. Functions include collection of payments for borrowers, customer service, advancing funds for delinquent loans, and taking defaulting properties through the foreclosure process. For example, a borrower would go to a mortgage broker who would take an application and process the loan request by collecting all the other necessary information from the borrower. Then the mortgage broker would send the application along with the information he collected from the borrower to the mortgage banker, which would then underwrite the loan utilizing the three “C”s ─ collateral, capacity, character. After a complete underwriting and approval including PMI insurance, if the LTV is greater than 80 percent, the funder (in most cases the same as the underwriter) would then fund and close the mortgage loan. At this point the mortgage banker would either retain the loan for its own portfolio or sell the loan to secondary market investors, such as Fannie Mae or Freddie Mac.