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 Innovative Mortgage requires all loans be processed by an Independent, Company Approved, Contract Processor.  We require that the Contract Processor audit each file for Quality Control concurrently with processing the loan.  Quality Control is also completed by Innovative's internal Loss Prevention Department on each closed and funded loan prior to compensating our Originators.  Random top to bottom file audits are also completed by our Loss Prevention Department re-verifying income, assets, employment, and other data.  Innovative Mortgage Services, Inc. maintains a concrete and firm "ZERO Tolerance Fraud Policy" and will not compensate Originators or Loan Processors on fraudulent loans.  Innovative will immediately terminate business relationships with Originators and Loan Processors in the event of fraud.  Additionally, Innovative will also prosecute ALL perpetrators of fraud to the fullest extent of the law. 2 Innovative Mortgage Services, Inc.

 The Loan Processor is the primary facet of quality control for Innovative during processing. We count on the processor to alert Innovative immediately in the event that any quality control concerns arise. Such concerns are not limited to but would include:  a. Occupancy Issues  b. Documentation Issues  c. Identification Issues  d. Misinformation  e. Loan Fraud 3 Innovative Mortgage Services, Inc.

 Loan Originators are strictly prohibited from ordering/requesting, sending, delivering, and receiving ANY and ALL verifications, including but not limited to:  a. VODs  b. VOEs  c. VOMs  d. VOCs  e. VORs  f. Tax Transcripts (which are required on all files unless certified in underwriting findings as having been received and validated by the final lender)  g. Any and all other verifications  Loan Submission to Lenders  Clearing lender conditions 4 Innovative Mortgage Services, Inc.

 Processors are responsible for ordering/requesting, sending, delivering, receiving and VALIDATING ANY and ALL verifications as listed on, but not limited to, the prior slide. Validation includes but is not limited to:  a. Validating all verifications against borrower, originator, and third party supplied documentation  b. Validating documentation and 1003/application information by utilizing appropriate external sources:  i. Financial Institutions  ii. Employers and employer verifications services, i.e. Work Number  iii. Mortgage Holders  iv. Credit Sources  v. Landlords  vi. State or Federal Websites  vii. Alternative Websites (i.e. 5 Innovative Mortgage Services, Inc.

 Processors must suspend processing, loan submission and underwriting of any loans suspected of misinformation, fraud, or intentional omission of relevant data.  Processors must immediately alert Innovative Management of any suspected misinformation, fraud, or intentional omission of relevant data. 6 Innovative Mortgage Services, Inc.

 Processors must validate and cross reference valid identification with and against signatures on all loan documents (i.e. signatures on ID should match all documents).  Processors must validate and cross reference all verifications with legitimate sources (i.e. telephone, , internet, employment/work number services, credit bureaus, state and federal resources).  Processors must submit loans directly to wholesale lender. Originators are prohibited from submitting the loan to the lender. 7 Innovative Mortgage Services, Inc.

 Processors are responsible for requesting, receiving, validating and submitting all underwriting conditions to the lender.  Processors may not quote interest rates to borrowers under any circumstances. Processors may only confirm the interest locked in or floating as provided by the mortgage originator.  Processors must be fully licensed and registered with the NMLS as required by State and Federal guidelines and statutes.  Failure to comply with any and all Innovative Processing Requirements and Policies shall result in immediate suspension or revocation of Contract Processor Approval. Innovative Mortgage Services, Inc. 8

 Red Flags Report › Processor validation must confirm that the borrower(s) has an “accept” report score without an OFAC match. › Common issues that lead to a “refer”.  Confirm the borrower(s) is listed under consumer verification.  Confirm the borrower(s) address is spelled correctly  Confirm no hit to OFAC list. › Correct/add additional information to obtain accept finding. › Contact Credit bureau via to confirm our borrower is not on OFAC list. Innovative Mortgage Services, Inc. 9

 Processing invoice › Be sure to include and invoice when payment is not billed to and remitted to processor by the title company. › Absence of an invoice will signify processing fee as POC. › If an invoice is included in the file but the processing fee has or will be POC’d, be sure to clearly reflect “PAID” on the invoice. › Any time payment is in question, it should be clearly noted on the invoice that is included in the file. Please DO NOT this information. Innovative Mortgage Services, Inc. 10

 Tax transcripts › Processor must confirm that the income figures correspond to the income that has been stipulate by borrower via the 1003, actual tax returns provided, W-2s and pay stubs. › The borrowers address on the tax return should be identical to that listed on identification. If not, please supply a memo explaining any discrepancy. Innovative Mortgage Services, Inc. 11

 Identification › Processor must confirm the borrowers identification is valid. › Confirm that the identification is not expired. Expired ID is not acceptable.  Signature of borrower(s) on Identification is compared with Loan application, disclosures, AND ALL documents signed at closing.  Borrower address is consistent with loan application Innovative Mortgage Services, Inc. 12