Phase E: Loan Pricing

SIPOC Workflow Components

Market Rate Analysis

1. Access Loan File
- Open the borrower's loan file in Encompass
- Navigate to Product and Pricing section or an integrated pricing tool (e.g., Optimal Blue)
2. Input Loan Parameters
- Enter key borrower and loan details:
  - Loan amount
  - Property value
  - Loan type (FHA, VA, Conventional, etc.)
  - Credit score
  - Loan-to-Value (LTV) ratio
  - Debt-to-Income (DTI) ratio
3. Retrieve Market Rates
- Submit the details to retrieve current market rates and loan programs from the pricing engine
4. Select the Best Option
- Review available loan options and select the one that best matches the borrower's profile and preferences
5. Apply Rate to Loan File
- Save the selected rate and program details in the loan file, updating fields in the Loan Summary section

Interest Rate Calculation

1. Review Borrower Risk Factors
- Evaluate factors affecting pricing:
  - Credit score
  - LTV ratio
  - DTI ratio
  - Loan term (e.g., 15 years, 30 years)
  - Occupancy status (primary residence, investment property, etc.)
2. Input Details into Pricing Engine
- Enter risk factors in the pricing tool to calculate the interest rate for the selected program
3. Adjust for Loan Features
- Apply rate adjustments based on:
  - Rate lock duration (e.g., 15-day vs. 30-day locks)
  - Discount points (if the borrower chooses to buy down the rate)
  - Loan program-specific adjustments (e.g., higher rates for cash-out refinances)
4. Save the Calculated Rate
- Update the interest rate in the Loan Summary section of the borrower's file

Fee Determination

1. Access the Fees Worksheet
- Navigate to the Loan Estimate or Fee Worksheet section in Encompass
2. Review Program-Specific Fees
- Automatically import fees for the selected loan program (e.g., FHA UFMIP, VA funding fee)
- Add any applicable discount points or rate lock fees
3. Include Standard Fees
- Enter or verify the following fees:
  - Origination Fee: Fee charged by the lender for processing the loan
  - Appraisal Fee: Cost for property appraisal
  - Credit Report Fee: Charge for retrieving the borrower's credit report
  - Title Services: Costs for title insurance and settlement services
  - Escrow Fees: Charges for managing property tax and insurance payments
4. Confirm State/Local Fees
- Add any state or local fees, such as transfer taxes or recording fees
5. Update Fee Totals
- Ensure that all fees are accurately summed in the Loan Estimate

Regulatory Compliance

1. Run Compliance Checks
- Use Encompass's built-in Compliance Analyzer to ensure adherence to:
  - TRID (TILA-RESPA Integrated Disclosure) Rules: Confirm accuracy of disclosed fees and Loan Estimate timelines
  - Fair Lending: Verify that pricing complies with anti-discrimination laws
  - Qualified Mortgage (QM) Rules: Ensure that points and fees do not exceed the allowable threshold
2. Validate APR Accuracy
- Confirm that the Annual Percentage Rate (APR) is calculated correctly, including all finance charges
3. Check State and Local Guidelines
- Verify compliance with specific state or local regulations related to fees or pricing
4. Document Findings
- Record the results of the compliance analysis in the Loan Notes section

Borrower Communication

1. Prepare Disclosure Documents
- Generate the Loan Estimate (LE) from the Disclosure Desk in Encompass
2. Review Details Internally
- Double-check that the Loan Estimate includes:
  - Loan amount
  - Interest rate
  - Monthly payment (PITI)
  - Total closing costs and itemized fees
  - APR and cash to close
3. Deliver Disclosure to Borrower
- Use Encompass's delivery tools to send the Loan Estimate to the borrower:
  - eDisclosure: Send the LE via email for electronic acknowledgment
  - Consumer Connect Portal: Upload the LE to the borrower's secure portal
  - Print and Mail: If required, provide a physical copy
4. Communicate Details Verbally
- Call the borrower to explain the pricing details, addressing:
  - How the interest rate was calculated
  - What the fees cover
  - Cash-to-close estimate
  - Rate lock options and their implications
5. Track Borrower Acknowledgment
- Monitor acknowledgment status in Encompass:
  - Ensure the borrower electronically signs or acknowledges receipt of the Loan Estimate within the required timeline
6. Document Communication
- Record a summary of the pricing discussion in the Loan Notes section, including any borrower questions and your responses