Prefunding/Preclosing Quality Control Review – Freddie Mac
Freddie Mac requires that a Lender establish a pre-funding (pre-closing) quality control loan review process that contains a sample selection and provides enough time for reviews to be completed before closing. There must be procedures established to report deficiencies to senior management and to take the appropriate corrective measures. The pre-funding (pre-closing) quality control loan review process must also document the resolution of any defects and should establish procedures for canceling/postponing a closing when the review reveals deficiencies or when the review cannot be completed before closing.
The pre-funding (pre-closing) quality control loan review should include loans that reflect the full scope of the Lender’s products. When selecting loans for review the Lender should make sure to target certain loan samples in order to review the work of new employees, confirm that a new product is being originated in accordance with policies, and to evaluate the work of a particular employee when fraud is suspected. The method in which the Lender chooses their samples should be examined regularly so as to ensure its effectiveness.
For the validation and re-verification process, Freddie Mac requires that the pre-funding (pre-closing) quality control loan review include validation or re-verification of: data entered into Loan Product Advisor; Social Security numbers (unless validated during the loan origination process); income documentation and its calculation; employment; assets required to close or meet reserve requirements; property valuation documentation; adequate mortgage insurance; and whether additional credit was granted and considered when the credit report reveals inquiries within the previous 120 days.
Regulatory Solutions is available to assist you. Just visit our pre-funding/pre-closing quality control reviews page. Regulatory Solutions will provide you with the independent solution you need to ensure your prefunding files are reviewed in accordance with agency guidelines.
Pre-Funding/Pre-Closing Quality Control Review – Fannie Mae
According to the Fannie Mae Selling Guide, the Lender should establish a process for selecting loans for pre-funding quality control loan reviews and that those who are performing the review must be completely separate from the loan origination process. When establishing pre-funding quality control loan reviews, the Lender should take into account the risks inherent in its established origination process, volume of loans, and product mixes. The Lender should make sure to include loans that have been identified as having a higher risk for errors or fraud. These could include loans with complex income calculations, that have properties located in an area with a high delinquency rate, and those that were originated or processed by a new loan officer. The method used for the sample loan selection should be regularly reviewed by management so as to ensure its effectiveness.
The pre-funding quality control loan process has to include a review of certain data points and documents for accuracy and completeness. Fannie Mae has stated that a Lender must review: the data entered into an AUS; Social Security Number(s); income calculations and any supporting documentation; employment documentation (this does include verbal verifications); assets needed to close; the appraisal (if one was ordered); and documentation of adequate mortgage insurance coverage. This is just the minimum that Fannie Mae requires to be reviewed and it is up to the Lender to perform a more expansive review if necessary. Fannie Mae has made a few caveats to this process. If income or assets were validated by DU, then the Lender is not required to perform any recalculations as part of their pre-funding quality control loan review. Also, it is up to the Lender to ensure that all of the information entered into DU is appropriate and the Lender should investigate any inconsistencies that appear in the loan file.
For reporting the pre-funding quality control loan reviews, the Lender should establish a process to report any defects that were found. This has to include: monthly reporting to senior management; communicating with parties that could resolve these defects; and documenting any resolution of the defects. The reports must have more than just a summary report of all of the findings. They must also contain a description of the sample selection along with any defect trending information.
Regulatory Solutions is available to assist you. Just visit our pre-funding/pre-closing quality control reviews page. Regulatory Solutions will provide you with the independent solution you need to ensure your prefunding files are reviewed in accordance with agency guidelines.
Regulatory Solutions Acquires Assets of Culp QC, Inc.
Birmingham, Ala. – Regulatory Solutions LLC is pleased to announce that it has acquired the assets of Culp QC, Inc., a provider of quality control, post closing audit services to the mortgage industry. This transaction will significantly increase Regulatory Solutions’ business as well as its presence throughout the United States. Culp QC will continue to operate as a separate division of Regulatory Solutions under the Culp QC name with offices in Owensboro, Kentucky. Terms are undisclosed.
“We are excited to welcome Culp QC’s employees and clients to our growing company,” said Betsy Reynolds, president and founder of Regulatory Solutions. “Culp QC is a great fit as we both share a common approach in providing quality products and services to the mortgage industry.”
Bruce Culp has grown Culp QC over the last 22 years and is retiring after 45 years in the mortgage business. “I feel confident that Culp QC will be in great hands,” he said. “Regulatory Solutions has the same unwavering focus on customer service as we do and an unmatched attention to detail. Their innovative technologies in providing quality control services will give Culp QC the ability to grow its business and provide exciting new services to clients.”
According to Reynolds, in 2011 she set out to provide practical real world regulatory compliance assistance to financial institutions and mortgage companies. “We now serve clients all over the Southeast and expect our growth to continue nationwide,” she said. “It is an exciting time for us as we continue to serve our expanding client base with quality regulatory solutions.” Last year, the company acquired the assets of Outsource Mortgage Consultants, Inc., in Lexington, Kentucky.
Regulatory Solutions: Regulatory Solutions, a certified Women’s Business Enterprise, is located in Birmingham, Alabama, and provides regulatory and compliance consulting services to banks, mortgage companies, credit unions and investors on a nationwide basis. The company specializes in post closing, pre-funding and servicing quality control reviews for the mortgage industry.
Culp QC, Inc.: Culp QC, Inc. located in Owensboro, Kentucky was founded in 1995 by Bruce Culp, is a leading provider of quality control services nationwide. Bruce Culp, its founder will be retiring after 45 years in the mortgage business.
Regulatory Solutions Expands With The Acquisition Of Outsource Mortgage Consultants
Our latest acquisition means we now serve clients all over the Southeast. In July 2016, Regulatory Solutions LLC acquired the assets of Outsource Mortgage Consultants, Inc., located in Lexington Kentucky, a provider of quality control post closing audit services to the mortgage industry for the past twenty-two years. Outsource Mortgage Consultants operates as a separate business unit of Regulatory Solutions under the Outsource Mortgage Consultants name. With this acquisition, the company increased its presence in the States of Kentucky, Indiana and North Dakota.
“Five years ago we started as two industry veterans who set out to provide practical real world regulatory compliance assistance to financial institutions and mortgage companies,” said Betsy Reynolds, president of Regulatory Solutions. “We now serve clients all over the Southeast and expect our growth to continue nationwide. It is an exciting time for us as we continue to serve our clients with quality regulatory solutions.”