Commitment Delivery Variance

Best Efforts Commitments

Best Efforts commitments offer a delivery variance of the lesser of plus or minus (±) ten percent (10%) or plus or minus (±) thirty-five thousand dollars ($35,000) of the original Mortgage Loan amount.

A Mortgage Loan amount change to a Mortgage Loan in a Best Efforts commitment that results in a net Mortgage Loan amount that breaches the allowed delivery variance will subject the commitment to reprice based on the following conditions and calculations:

Under-Delivery, Improving Market

Existing Final Price - [((Current Rate Sheet Date/Time Final Price – Existing Final Price) * (Commitment Amount - Delivery Variance Amount - New Loan Amount)) / New Loan Amount]

Under-Delivery, Declining Market

Existing Base Price applies to reduced Mortgage Loan amount.

Over-Delivery, Improving Market

Existing Base Price applies to existing and additional Mortgage Loan amount.

Over-Delivery, Declining Market

Existing Final Price + [((Current Rate Sheet Date/Time Final Price – Existing Final Price) * (New Loan Amount - Commitment Amount - Delivery Variance Amount)) / New Loan Amount]

PennyMac actively monitors Mortgage Loan amount changes to Best Efforts commitments. If PennyMac determines a correspondent excessively updates Mortgage Loan amounts, PennyMac may modify price based on a more punitive calculation. For example, if a correspondent delivers over the variance in a declining market, PennyMac may apply a worse-of price calculation to the entire Mortgage Loan amount, rather than just the overage.

Note: PennyMac resets the commitment delivery variance at relock.

Bulk, and Bulk AOT Commitments

Bulk, and Bulk AOT commitments offer a delivery variance of the lesser of plus or minus (±) two percent (2%) of the original commitment amount (prior to over-delivery), or one hundred thousand dollars ($100,000).

Mandatory delivery commitments with delivery stipulations offer a delivery variance of the lesser of plus or minus (±) one basis point (.01%) of the original commitment amount, or one hundred thousand dollars ($100,000).

Aggregate Mortgage Loan amount changes to Mortgage Loan(s) in a Bulk, or Bulk AOT commitment that result in a net Mortgage Loan amount that breaches the allowed delivery variance will subject the commitment to reprice based on the following conditions and calculations:

Under-Delivery Breach

An under-delivery results when the principal balance of Mortgage Loans delivered into a commitment is less than the commitment amount minus the applicable delivery variance amount, noted by the following expression when the result is a positive number:

Under-Delivery Amount = [Commitment Amount + Previously Agreed Upon Over-Delivery Amount – Delivery Variance Amount – Delivered Amount – Previous Pair-off Amount]

Failure to deliver within tolerance may result in a pair-off fee or require substitution. Please refer to Commitment Cancellation and Pair-Off and Mortgage Loan Rejection, Post Delivery Cancellation and Substitution.

Over-Delivery Breach

An over-delivery results when the principal balance of the Mortgage Loan(s) delivered into a commitment exceeds the commitment amount plus the applicable delivery variance amount, noted by the following expression when the result is a positive number:

Over-Delivery Amount = [Delivered Amount + Previous Pair-off Amount – Commitment Amount – Previous Over-Delivery Amount – Delivery Variance Amount]

Note: The delivery variance amount does not change when an over-delivery occurs.

Type of Over-Delivery

Description

Over-Delivery Date/Time

First date/time PennyMac’s Mandatory Trade Desk is open after the date/time on which the Correspondent requests allowance for an over-delivery.

Over-Delivery, Improving Market

If the Current Price is greater than or equal to the original commitment base price prior to any accumulated roll fees, the over-delivered amount will receive the original commitment price excluding accumulated roll fees.

Over-Delivery, Declining Market

If the Current Price is less than the original commitment base price prior to any accumulated roll fees, the over-delivered amount will be priced to the Current Price.

Determining Current Price

Type of Commitment

Current Price

Bulk Commitment and Bulk AOT

Current Price is the price PennyMac would bid on the over-delivery date/time for Mortgage Loans with attributes equivalent to those of the over-delivered amount and with the original commitment term.