Overview
Pennymac offers a competitive suite of commitment options for correspondents to sell Mortgage Loans, including Best Efforts and Bulk.
Best Efforts Commitment Option
The Best Efforts commitment option offers correspondents the ability to lock in a competitive price for a single Mortgage Loan, for a specific property and borrower(s), without incurring borrower-driven fallout risk.
Fallout occurs with respect to a Best Efforts commitment when a correspondent cancels a commitment, when the commitment delivery due date lapses prior to the delivery of the Mortgage Loan to Pennymac, or when Pennymac rejects a Mortgage Loan due to failure to meet Pennymac guidelines or commitment terms.
If a Mortgage Loan closes, the respective commitment becomes a mandatory-delivery commitment and is subject to the pair-off policy. Please refer to Commitment Cancellation, and Pair-Off.
Pennymac recognizes exceptional circumstances and may waive the pair-off fee, at its sole discretion. For example, if a correspondent locks a Best Efforts commitment and subsequently determines the Mortgage Loan does not meet Pennymac eligibility requirements, or Pennymac rejects a delivered loan due to a guideline violation, Pennymac may elect to waive the pair-off fee if the client has not exhibited a systematic trend of locking loans outside of guidelines.
Note: Each Best Efforts commitment (i.e., lock, and relock, if applicable) counts toward a correspondent’s fallout ratio. Pennymac actively monitors fallout and may suspend or terminate a correspondent’s selling privilege if excessive fallout occurs.
The total price for each Mortgage Loan is comprised of the base price, loan-level price adjustment(s), and servicing release premium, each as noted on the applicable rate sheet. Each Mortgage Loan is subject to applicable fees in effect as of the commitment lock date/time, or as otherwise noted in the Guide.
Mandatory Commitment Option
The Mandatory commitment option offers correspondents two different methods to optimize price and delivery of one or more Mortgage Loans. Pennymac offers, with prior approval, the following mandatory commitment types: Bulk and Bulk Assignment of Trade Bulk (Bulk AOT). Please refer to Seller Eligibility for approval criteria.
Mortgage Loans previously locked in a Best Efforts commitment may not be allocated or delivered into a Bulk or Bulk AOT commitment unless such commitment was locked greater than sixty (60) calendar days after the earlier of the Best Efforts cancellation date or most recent commitment delivery due date.
Failure to deliver into a mandatory-delivery commitment may result in a pair-off fee. Please refer to Commitment Cancellation and Pair-Off.
Bulk and Bulk AOT Commitment
Correspondents may execute Bulk or Bulk AOT commitments providing customization of product, interest rate range, and commitment period, as deemed suitable by Pennymac at commitment lock, for a specified set of Mortgage Loans that fit both the commitment terms and Pennymac’s broader Mortgage Loan guidelines as noted in the Guide.
Pennymac requires correspondents to submit a spreadsheet of loan-level attributes, as required by Pennymac, in order to model and offer strategic pricing for the pool of Mortgage Loans. Pennymac commingles the final set of Mortgage Loans into a single commitment.
The total price for each Mortgage Loan is an all-in value, comprised of base price, loan-level price adjustment(s), and service release premium (as noted by Pennymac and agreed upon by correspondent at commitment lock). Each Mortgage Loan is subject to applicable fees in effect as of the commitment lock date/time, or as otherwise noted in the Guide.
Pennymac must review and approve each trade assignment.
Each trade assignment agreement must be submitted to Pennymac, and the terms of the trade confirmed with all parties by the close of business on the second business day following the assignment date. Pennymac reserves the right to cancel any assignment for which the assigned trade’s terms cannot be confirmed within this interval.
Pennymac will not purchase any Mortgage Loan in a commitment until each trade assignment agreement associated with such commitment agreement is executed.
Pennymac may delay execution of the trade assignment agreement until at least fifty percent (50%) of a commitment, by Mortgage Loan amount balance, has been delivered.
Each trade assignment must have a minimum assigned amount greater than or equal to one million dollars ($1,000,000).
For Bulk AOT commitments, the maximum commitment period is 15 days, and the acceptable settlement dates are one month out from current month. Settlement dates for the current month are not accepted.
Note: Pennymac shall have no obligation to deliver any Mortgage Loan purchased from a correspondent to a trade assigned by such correspondent. Pennymac is free to pair off, reassign, or to make any other disposition of the assigned trade at its sole discretion.