Are lenders permitted to have a third-party vendor prepare second-lien documents, and will the second lien close in KHC’s name?

FAQ Content

Yes, lenders may use a third-party vendor to prepare second lien documents, and all SAM second lien documents must close in KHC’s name using the SAM Note and Mortgage language drafted by KHC and its attorneys.

KHC strongly recommends that lenders use the SAM Note and Mortgage generated directly from KHC’s system to ensure the language is current and compliant.

  • If lenders choose to use the SAM Note and Mortgage in their own LOS system, they do so at their own risk.
  • Any alteration to the language, or failure to update the language when KHC makes changes, may result in KHC declining to purchase the SAM loan.
  • To ensure accuracy and compliance with program requirements, KHC highly recommends using its system to generate all required disclosures. 

Summary: 
Lenders can use their own systems or third-party vendors but must use the exact SAM Note and Mortgage language provided by KHC. If the language is changed or not updated, the lender may be responsible for the loan, and KHC may not purchase it.