Mortgage Loan Rejection, Post Delivery Cancellation and Substitution

Rejected Loans/Post Delivery Cancellations

If PennyMac rejects or the correspondent cancels a delivered Mortgage Loan allocated to a Bulk, AOT, or DT commitment, the Mortgage Loan will be automatically de-allocated from the associated commitment.

If

  • The commitment was previously filled to within the applicable delivery variance at the time of rejection/cancellation, and
  • The de-allocation will cause the commitment to be under-delivered (refer to Commitment Delivery Variance), and
  • The commitment’s current delivery due date has been rolled past the delivery due date that was in effect as of the date of delivery of the rejected/cancelled loan, or the delivery due date as of the date of delivery of the rejected/cancelled loan has lapsed


PennyMac will automatically roll the principal balance of the rejected/cancelled loan from the commitment’s delivery due date as of the delivery date of the rejected loan to the later of:

  • The date of rejection/cancellation, or
  • The commitment’s current delivery due date.

If

  • The commitment was not previously filled to within the applicable delivery variance at the time of rejection/cancellation, and
  • The commitment’s current delivery due date has been rolled past the delivery due date that was in effect as of the date of delivery of the rejected/cancelled loan.

PennyMac will automatically roll the principal balance of the rejected/cancelled loan from the commitment’s delivery due date as of the delivery date of the rejected/cancelled loan to the commitment’s current delivery due date.

 

In the event a loan is rejected or cancelled, the correspondent must request a pair-off of that portion of the commitment or the ability to substitute a suitable loan. If the correspondent chooses to substitute a loan, the commitment may be rolled again as needed to provide time to deliver a suitable substitute. The automatic roll that occurs in certain circumstances described above will not be counted in the correspondent’s roll count limit.

Standard roll charges will apply to automatic rolls (refer to Commitment Extension, Roll, and Relock).

Mortgage Loan Substitution

Correspondents are prohibited from substituting a Mortgage Loan into a Best Efforts commitment.

Correspondents may substitute a Mortgage Loan delivered into a Bulk, AOT, and DT commitment, subject to commitment terms and PennyMac’s broader Mortgage Loan guidelines as noted in the Guide.

Mortgage Loan substitutions that fit within the original commitment terms may be priced in accordance with terms agreed upon at the commitment lock date/time, plus accumulated roll fees, for an AOT, or DT commitment.

PennyMac may choose to deny a Mortgage Loan substitution in a Bulk commitment for any reason. If PennyMac accepts substitution in a Bulk commitment, the Mortgage Loan may be priced in accordance with the following:

  • PennyMac will determine the price it would bid on the rejected/cancelled loan as if it was bid in a new commitment with the number of days remaining in the rejected/cancelled loan’s commitment as of the date/time of substitution request [A].
  • PennyMac will determine the price it would bid on the substitute loan as if it was bid in a new commitment with the number of days remaining in the rejected/cancelled loan’s commitment as of that date [B].
  • The price on the substitute loan will be equal to the price of the rejected/cancelled loan as of the lock date plus any applicable roll fees on the rejected/cancelled loan minus the price computed in [A] plus the price computed in [B].