Correspondent Purchase Advice Form

Use the Correspondent Purchase Advice Form to calculate the details of the purchase amount when you are buying a loan from an lender. Use the form to enter the impounds and principal amounts from the lender, and to calculate the amounts that you will include in the purchase advice statement that you send to the lender.

A custom output form, (Correspondent Operations Purchase Advice), is available for download. This form can be used as the purchase advice statement that you send to the lender. To download this document to your computer, click here.

Purchase Advice Tab

Basic Loan Information

Enter basic information about the loan purchase at the top of the form.

Open a loan file, click the Tools tab, and then click Correspondent Purchase Advice Form.
Type or select the Purchase Date and the Wire Date. Typically these are the same date, but not always.

For Encompass 17.2 and later, the value entered in this field will automatically populate the Purchase Date on the Correspondent Loan Status tool.
Type the Lender Name or click the Address Book icon to select a lender form your business contacts.
Enter the Lender Loan Number if not already populated.
The Loan First Payment Date and Loan Amount are populated from the loan file.
In the Paid to Date field, enter the date on which the last loan payment was collected.

Starting with the 23.2 release, the Paid to Date can be set to any day of the month as long as it does not violate the following validations:
The day of the month must match the day of the month entered for the Loan First Payment Date.
If an invalid day of the month is entered, an error message “Paid to Date must be on the same day of the month as the Loan First Payment Date.” is displayed and the date is cleared from the field.
The day of the month must match the day of the month entered for the Loan First Payment Date.
If an invalid date is entered, an error message “Paid to Date must not be earlier than one month before the Loan First Payment Date.” is displayed and the date is cleared from the field.

In the First Payment Date, enter the date when you will receive the first payment for the loan.

Typically this is the date when the next payment is due. However, there are circumstances where the next payment might go to the lender, for example, if the loan is purchased close to the payment date and the statement has already been sent to the borrower.

Starting with the 23.2 release, the First Payment Date can be set to any day of the month as long as it does not violate the following validations:
The day of the month must match the day of the month entered for the Loan First Payment Date.
If an invalid day of the month is entered, an error message “First Payment Date must be on the same day of the month as the Loan First Payment Date.” is displayed and the date is cleared from the field.
The date must be on or after the Loan First Payment Date.
If an invalid date is entered, an error message “First Payment Date must be on or after the Loan First Payment Date.” is displayed and the date is cleared from the field.
The date must be on or after the Paid to Date.
If an invalid date is entered,an error message “First Payment Date must be on or after the Paid to Date.” is displayed and the date is cleared from the field.

Enter the amounts for the Current Impounds and Current Principal provided by the lender.

TPO ID, Org ID, Master Commitment #, Commitment #, and Commitment Type fields are read-only and populated from elsewhere in the application.

Commitment Type is available for Encompass 17.3 and later.

TPO ID and Org ID fields are automatically populated when the correspondent loan is submitted from a Third Party Originator WebCenter website. The TPO ID is the 10-digit unique identifier for the TPO company submitting the loan. Org ID is the organization code of the TPO company.
The Master Commitment # and Commitment # fields are automatically populated from the Correspondent Buy Side Lock and Pricing Summary panel of the Secondary Lock tool after a loan is locked and its rate is confirmed.
The Commitment Type field is automatically populated from the Correspondent Loan Status tool.

Warehouse Bank

Use the Warehouse Bank section to enter information on the warehouse bank on the wire. For Encompass 17.3 and later, a Wire Confirmation # can be entered.

Click the Lookup (magnifying glass) icon next to the Bank Name field. The Warehouse Bank Selector is displayed. The available warehouse banks include warehouse banks associated with TPO Extensions or TPO branches, as well as those defined to the parent TPO "company".

The list of available banks is populated from the Company Details Warehouse tab under External Company Setup. In Encompass 17.3.0.2 Server Patch 2 and later, the list of banks only include those that are “Approved”.

Highlight the bank you want to use and then click Select.
- Alternatively, you can double-click on the Bank Name.
The Bank Name, Account #, and ABA # are copied to the appropriate fields.
- If a different warehouse bank is selected in the Warehouse Bank Selector, the Bank Name, Account #, and ABA # are updated accordingly.
- If a different warehouse bank is selected in the Warehouse Bank Selector, the Wire Instructions Received and Bailee Letter Received fields are blanked out.

Pricing Reconciliation

Use the Pricing Reconciliation section to enter information use to calculate the final buy price.

In the Locked Buy Price field, enter the base buy price plus any price adjusters.
Use the Additional Adjusters fields to enter descriptions and percentages for any additional price adjustments.

A positive value represents amounts due to the lender. A negative amount represents an amount due to the investor.

The Final Buy Price will calculate based on the Lock Buy Price and Additional Adjuster entries.
Type the SRP Percentage for the loan.
In the Reconciliation Comments field, type comments related to the pricing reconciliation process.

Purchase Details

Use the Purchase Details section to enter additional payouts to the lender and calculate the total payment amount for the loan.

The first five rows in this section are calculated based on the entries made in the upper sections of the form. Click the Lock icons to edit the field values.
On the Interest row, click the Edit icon to change the interest calculations by adjusting the Number of Days or Per Diem Interest Rounding.
For Encompass 17.3 or later, the Total Buy Amount calculation is triggered if the Final Buy Price or SRP Amount changes.
- Total Buy Amount = Final Buy Price + SRP Amount
Enter the Remaining Buydown Amount if any.
If you are using Encompass 20.1.0.6 or later, the Escrow Holdback field enables the entry of the escrow holdback amount to make reporting easier for this amount.

Previously Encompass users entered the escrow holdback amount in one of the free-entry fee line items.

The amount entered in the Escrow Holdback field is deducted from the calculated value for the Wire Amount.

On the Late Fee row, click the Edit icon to view the Late Fee Details window. Here the late fees being charged for loans in the Correspondent origination channel are provided. (These fees are configured using the External Company Setup TPO Fees setting). Click the blue Lock icons corresponding to the field that you want to update, type the data, and then click OK.
Use the 14 blank fields to enter details of payouts made to the lender. For each payout, type a description. Then enter the expected value for the amounts paid to the lender.

The fees are populated automatically based on the fees configured in the TPO Fees setting in Encompass after the pricing has been locked or by clicking the Update Fees button.
Fees can be overwritten by entering descriptions manually or selecting options from the dropdown lists, which are populated based on the configuration in the Purchase Advice Form setting.

For Encompass 17.3 or later, the Total Fees calculation is triggered if any “fees” change.

Total Fees = sum of Late Fee + all Itemized Fees + Additional Fees

In the Date field, type or select the date when the form was completed.
In the Completed By field, type the name of the person who completed the Correspondent Purchase Advice form.
To update the Purchase Details data, click the Update Balance button.
- For Encompass 17.3 or later, key fields on the Purchase Advice tab will be populated from the Payment History and Escrow Details tabs when the Enable Payment History Tab and calculations setting is enabled.
Both the Payment History (if enabled) and the Escrow Details (if enabled) tabs should be viewed or processed just prior to clicking the Update Balance button to ensure that all on-screen calculations have occurred prior to posting the results to the Purchase Advice tab.
- When Update Balance is clicked and the Calculated Purchased Principal on the Payment History tab is not populated, none of the key fields on the Purchase Advice tab are updated from the Payment History tab.
- When Update Balance is clicked and the Calculated Purchased Principal on the Payment History tab is populated, the following key fields on the Purchase Advice tab are updated from the Payment History tab.
- 1st Payment Due from Borrower populates Loan First Payment Date if 1st Payment Due from Borrower is entered.
- 1st Payment Due to Investor populates First Payment Due.
- Calculated Purchased Principal populates Current Principal.
- Calculated Purchased Principal populates Purchased Principal.
- When the Enable Escrow Details tab and calculations setting is enabled, the Update Balances is clicked,and the Calculated Purchased Principal on the Payment History tab is entered, the following key fields on the Purchase Advice tab are updated from the Escrow Details tab.
- Total Escrow net Funded by Investor populates Current Impounds.
- Total Escrow net Funded by Investor populates Impounds.
- Calculated Purchased Principal populates Current Principal .
- Calculated Purchased Principal populates Purchased Principal.

Fees

To clearly indicate the fees associated with the loan, fees are automatically populated based on the rules defined for each loan and TPO.

Locked and Confirmed Loans

When locked and confirmed, the (non late fee) fees from the Fees tab of the correspondent loan is populated into the form using the TPO Fee settings if the following criteria is met:

Channel Type is Correspondent.
Lock date is within the start and end date period of the fee.
Channel in the TPO Fees Settings is either Correspondent or All.
Conditional in the TPO Fees Settings is either Correspondent or All.

The fee code, name, and fee amount are copied as a positive number (e.g., 100 - Funding Fee 100.00). The wire amount will be calculated after the fees are updated on the Correspondent Purchase Advice Form.

If there are existing fees on the Correspondent Purchase Advice Form, no fees are automatically populated when Lock and Confirm is clicked. Users will need to use the Update Fees button to populate the fees from the TPO Fees settings and override the existing fees.

When the button is clicked, a warning message stating All fees except late fees will be cleared. Would you like to continue? is displayed.

Not Locked and Confirmed Loans

Loans are not considered locked if the lock date and lock expiration date fields are blank. The fees, however, still populate the Correspondent Purchase Advice Form when the conditions for the loan are met.

If there is no start and end dates, there are no restrictions and the fee is always added.
If there is an end date, but no start date, the fee is added until the end date is reached.
If there is a start date, but no end date, the fee is added after the start date and continues to be added until an end date is entered.

This applies both when the fees are automatically populated and when the Update Fees button is clicked.

Payment History Tab

Use the Payment History tab to calculate the unpaid principal balance, determine the payment breakdown based on the Seller’s payment history, and determine first payment due to investor.

This tab is only displayed if the Enable Payment History tab and calculations setting is selected on the new Correspondent Purchase Advice setting under Secondary Setup.

Principal Balance Calculator

The Note Date can be populated from the Note Date on the Correspondent Loan Status tool or manually entered.
The 1st Payment Due from Borrower can be populated from the 1st Payment Date from the RegZ - CD or manually entered.
The Reduction prior to 1st Payment Due Date is manually entered.
When a principal reduction amount is entered, it will affect the Payment Amortization Table by reducing the starting Beginning Balance by the amount of the principal reduction.
The Anticipated Purchase Date is manually entered.
Both Note Date and 1st Payment Due from Borrower must be entered before this field can be completed.
This field cannot be prior to the Note Date.
This field cannot be more than 1 month in the future.
The 1st Payment Due to Investor is a calculated date.
The entry of the Anticipated Purchase Date triggers the calculation for this field.
If the Anticipated Purchase Date is before the Cutoff Calendar Date (Correspondent Purchase Advice setting), then this field is equal to the 1st day of the month, a month after the Anticipated Purchase Date.
If the Anticipated Purchase Date is on or after the Cutoff Calendar Date (Correspondent Purchase Advice setting), then this field is equal to the 1st day of the month, two months after the Anticipated Purchase Date.
The Calculated Purchased Principal is populated from the Payment Amortization Table.

Extra Principal Payments

When changes are made to this section, the Payment Amortization Table is reamortized.

To Add Extra Principal Payments:

Click the Add icon (up to 11 entries).
Enter a Payment Date.

The Payment Date cannot be outside of the month/year range of the Payment Amortization Table.
The Payment Date cannot be before the 1st Payment Due from Borrower.
The Payment Date cannot be on or after the 1st Payment Due Investor.

Enter an Additional Principal.

To Delete Extra Principal Payments:

Highlight the entries you want to delete.
Click the Delete icon.
Click Yes when prompted to confirm your action.

Payment Amortization Table

Once the Original Loan Amount, Annual Interest Rate, Loan Period in Months, 1st Payment Due from Borrower, and 1st Payment Due to Investor are completed, the table is generated.
The number of rows (months) displayed is determined by the Number of Months – Payment Amortization to display (Correspondent Purchase Advice setting).
The starting Payment Date is determined by the 1st Payment Due from Borrower.
The starting Beginning Balance is determined by the Original Loan Amount (minus the Reduction prior to 1st Payment Due Date).
The Scheduled Payment is determined based on the amortization calculation (using starting Beginning Balance, Annual Interest Rate, and Loan Period in Months).
The Extra Principal will reflect any manual Extra Principal Payments entries associated with that payment date.
The Total Payment will equal the Scheduled Payment + Extra Principal.
The Principal will be part of the amortization calculation + any Extra Principal.
The Interest is part of the amortization calculation.
The UPB Balance is equal to the Beginning Balance – Principal.

Escrow Details Tab

Use the Escrow Details tab to determine the total escrow to be net-funded. The tab will be auto-populated based on the 2015 Itemization form, 1000 series section.

This tab is only displayed if the Enable Escrow Details tab and calculations setting is selected on the new Correspondent Purchase Advice setting.

Final CD – Reserves Deposited with Lender

Additional Escrow – Payments Collected

All fields up to Number of Payments can be manually entered.
Number of Payments equals 1st Payment Due Investor - 1st Payment Due from Borrower.
Sum of Payments equals sum of all fields above Number of Payments * Number of Payments.
MI/MIP is determined by the calculations below but can edited.
When the Anticipated Purchase Date is first populated and the Mortgage Insurance (line 1003 of the 2015 Itemization form) is greater than zero, then the calculation is triggered.
If 1st Payment Due to Investor (Payment History tab) = 1st Payment Due from Borrower (Payment History tab), then this field equals zero or blank.
If 1st Payment Due to Investor > 1st Payment Due from Borrower and Anticipated Purchase Date (day) is prior to Cutoff Calendar Day (Correspondent Purchase Advice setting), and Anticipated Purchase Date(day) is not = 1, then this field equals zero or blank.
If 1st Payment Due to Investor > 1st Payment Due from Borrower and Anticipated Purchase Date is 1st of the month, then this field equals Mortgage Insurance (line 1003 of the 2015 Itemization form).
If 1st Payment Due to Investor > 1st Payment Due from Borrower and Anticipated Purchase Date(day) is on or after Cutoff Calendar Day (Correspondent Purchase Advice setting), then this field equals Mortgage Insurance (line 1003 of the 2015 Itemization form).
Additional Escrow equals Sum of Payments + MI/MIP.

Escrow Disbursements

All fields up to Escrows to be Paid by Seller can be manually entered.
Escrows to be Paid by Seller equals the sum of all the fields above it.
Total Escrow Net funded by Investor equals Reserves Calculated at Closing + Additional Escrow + Escrows to be Paid by Seller.

Warehouse Bank Details Tab

Use the Warehouse Bank Details tab to enter additional information on the Warehouse Bank on the wire such as loan specific warehouse bank information, business information about the warehouse bank (e.g., address,), warehouse bank contact information, and notes.

The procedure to select a bank in the Loan Specific section is identical to selecting a warehouse bank on the Purchase Advice tab.

The list of available banks is populated from the Company Details Warehouse tab. In Encompass 17.3.0.2 Server Patch 2 and later, the list of banks only include those that are “Approved” via the Company Details Warehouse tab.
The Business Information section is populated based on the information entered for the selected bank in the Loan Specific section.
If Use Default Contact is selected in the Contact Information section, that section is populated based on the information entered for the selected bank in the Loan Specific section.
The Use Default Contact checkbox is automatically selected in the Contact Information section when the Bank Name is entered.
All fields in this section will become read-only.
All fields in this section are populated from the Company Details Warehouse tab.

To edit this section, deselect the Use Default Contact checkbox.

The Notes section allows you to manually enter notes.