Problem

When processing simultaneous 1st and 2nd mortgage loans, the loan origination system may show a reserve shortfall because it only uses the Cash to Close figure from the Closing Disclosure to calculate post-close reserves. This calculation does not account for the proceeds from the 2nd mortgage loan, resulting in an inaccurate reserve shortage.

Solution

To resolve the reserve shortfall and move the file to Clear to Close (CTC):

1. Navigate to the URLA (Uniform Residential Loan Application)
2. Locate the "Other Assets" section
3. Add a new asset entry with the following details:
   • Asset Type: "Proceeds from Secured Loan"
   • Amount: Enter the net proceeds from the 2nd mortgage (loan amount minus closing costs)

This addition will properly account for the 2nd mortgage proceeds in the reserve calculation and resolve the apparent shortfall.