Each loan is priced to a specific dollar amount, note rate and loan term for a specified number of days (5, 15, 30, 45 and 60 calendar days). These tolerances provide you with flexibility for the loan amount and the note rate; as long as you deliver the loan within the range of tolerance, you will be considered meeting the terms of your mandatory delivery commitment.
Loan Amount Tolerance
- Delivery commitment < or = $2 million is +/- 5%.
- Delivery commitment > $2 million is +/- 1%.
Example: A loan locked for $100,000 can be delivered as low as $95,000 or as high as $105,000.
- If the loan is delivered outside the range it may be subject to a pair-off (under delivery) or price adjustment fee (over delivery).
- The maximum a loan can be over delivered is $100,000; of course, the loan amount cannot exceed the program maximum loan limits and any amount over the 5% tolerance may be subject to a fee based on market movement.
Interest Rate Tolerance
- You can deliver loans anywhere in the interest rate range of +/- 25 bps from the locked interest rate.
- The tolerance rule does not allow you to select a note rate higher or lower than the note rate posted on the price sheet. Your delivery commitment confirmation will provide the interest rate range you may select from.
Example: A loan locked at 3.75% could be delivered at a note rate range from 3.50 to 4.00; you would still be considered meeting the delivery commitment. The price will change based on the note rate you deliver, based on the price sheet/schedule you originally locked in with. Your note rate range and price is provided to you on the Delivery Commitment Report.
- This tolerance may be most helpful when you find yourself needing to substitute a loan. For example, if you lock a loan for $300,000 and the loan isn’t going to close. You could substitute 3 loans at different interest rates as long as the note rates fall within the interest rate tolerances. When substituting multiple loans into a single delivery commitment, you will use the same delivery commitment number for each loan.