MBA Best Practices

Sterling Eagle Mortgage Investment Company, LLC (“SEMIC”) has endorsed MBA Best Practices as recommended by the Mortgage Bankers Association of America. A copy of the MBA Best Practices can be found at: http://www.mbaa.org/industry/docs/01/mba_bestpractice.html


The measures recommended by the Mortgage Bankers Association of America are meant to serve as guidelines by which SEMIC can meet its business objectives, while providing fair and equitable treatment to borrowers. In addition to the MBA Best Practices, SEMIC has adopted the following additional safeguards to ensure fair and equitable treatment of consumers:

Borrowers Should Not Be Steered to Inappropriate Products. Borrowers should be offered the best available products for which the borrower would qualify based on his/her creditworthiness. SEMIC's automated underwriting system, as reflected in SEMICDirect.com, automatically seeks the highest credit grade available for each borrower and prices a loan accordingly.

Lenders Should Determine That All Borrowers Have the Ability to Repay Their Loans. A lender's credit decision should be based primarily on the repayment ability of the borrower. SEMIC has established a policy which restricts the origination of a loan solely on the basis of the borrower's equity, without regard to proper underwriting. SEMIC underwriting utilizes, among other things, income, assets, as well as mortgage and credit histories. SEMIC requires that all borrowers meet prescribed debt-to-income ratios as specified in SEMIC's underwriting guidelines. Currently, the maximum debt-to-income ratio is 55% (lower for certain products). SEMIC qualifies ARM loans at a rate of 1% above the start rate on all 6 month and 1 year ARM's.

Lenders Should Not "Flip" Customers. "Flipping" refers to the practice where a lender refinances a loan with a larger loan where the additional proceeds are largely used for fees and charges, and resulting in the borrower's equity being stripped from the property. SEMIC requires a 12-month listing history as well as the sales history that must be validated by the appraisal department to detect artificially inflated values. SEMIC also requires a 12-month chain of title on all transactions. Loan transactions for properties with multiple refinances in the last 24 months must also demonstrate an economic value to the borrower.

All Borrowers Should Be Fully Informed of All Loan Terms and Conditions, Including the Risks and Benefits of the Loan Transaction. Applicable disclosures should comply with legal requirements and should provide adequate explanation of all pertinent loan terms and conditions, including any yield-spread or service-release premium. In addition, marketing practices and materials should not be deceptive or exploitative. SEMIC discloses yield spread premium on the following documentation:
Advance Disclosures, Final Disclosures, Lenders Closing Instructions, State specific forms, Final HUD-1. In addition, SEMIC provides its own Good Faith Estimate in all brokered transactions.

Fees and Rates

Fees and rates should be representative of the associated credit risks and/or costs and services associated with the origination of the loan and properly disclosed. Loan fees must be proportionate to the costs of origination and the credit risk presented to the borrower. SEMIC has restricted first mortgage loans from exceeding the Section 32 and state-specific high cost rate and fees limitations, and yield spread premium is limited to 3% on all loans. SEMIC has a clearly defined risk to rate price sheet that is published on SEMIC Direct.

Insurance Bundling. Lump-sum insurance products, such as credit life insurance, disability insurance, home warranties, etc., should not be a condition of the loan. SEMIC does not engage in the practice of financing lump-sum or single-premium credit life insurance or similar products, and prohibits such practices in any transaction in which it is involved.

Prepayment Penalties. Prepayment penalties should be fair and fully disclosed. SEMIC's prepayment penalties follow Federal and State laws. SEMIC offers all loan programs with a no prepayment penalty option at higher rates.

Lenders Should Report Borrowers' Payment History to Credit Bureaus. Reporting such information enables consumers to improve their credit profile and have access to more favorable financing. SEMIC's sub-servicer is required to report to all major reporting agencies on a regular basis.

Benefit to the Borrower. All loans must be made based on a bonafide and documented benefit to the consumer. SEMIC requires employees to evaluate the benefit of each loan to the borrower. Examples of benefits include, without limitation, reduction of rate below borrower's current rate for a 24-month period, reduction in monthly PITI, reduction in overall monthly payments through debt consolidation, conversion of mortgage from ARM to fixed rate, conversion of a mortgage from a longer term to a shorter term, cash out/cash in hand greater than all fees connected with loan (payoff of the prepayment penalty is considered in this evaluation).

Upcharging. The assessment of extra charges above an actual third party fee. SEMIC has prohibited the collection of any excess fees above an actual third party fee. SEMIC policy requires copies of all third party invoices as a condition to close.

Anti-Predatory Lending Policy. SEMIC strongly disapproves of abusive or predatory lending practices by any of its employees or agents, and requires its employees to receive training to spot predatory lending practices in an effort to prevent them. SEMIC requires all new loan brokers and correspondents to acknowledge SEMIC's Best Practices and Anti-Predatory Lending Policy, and to adhere to practices intended to eliminate predatory lending and treat all borrowers fairly and equitably.

Fair Lending/Non-Discrimination. SEMIC is an equal housing lender and, in accordance with the Federal Equal Credit Opportunity Act, SEMIC employs business practices that promote fair lending and will not tolerate discrimination relative to borrower race, color, religion, sex, handicap, familial status, age, national origin or ancestry. SEMIC fully supports the letter and spirit of these laws and does not condone discrimination in any mortgage transaction.

Industry & Community Involvement. SEMIC is committed to involvement with trade organizations, community groups, national associations, mortgage bankers, as well as state and local associations to continually develop and implement practices and disclosures that respond to the needs of consumers, and to scan and respond to new potential legislation which creates the need for consumer disclosures and protections.

Training. All SEMIC Employees are required to undergo training on SEMIC's Best Practices and how to spot and prevent abusive or predatory lending. Brokers and correspondents submitting applications or loans to SEMIC Mortgage Corp. or using this website, by their use or submission, acknowledge and agree to abide by SEMIC's Best Practices and Anti-Predatory Lending Policy.