Pre-funding/Pre-closing Quality Control Review VA and USDA
A pre-funding / pre-closing quality control loan review must include 10% of all VA-guaranteed mortgages each month. As with other quality control policies, there must be procedures in place to notify senior management of any deficiencies found in the course of the review. Also, the quality control plan must establish an effective method for senior management to address and correct these deficiencies. If a pattern emerges from the deficiencies found, then there should be corrective instructions provided to the applicable employee.
The pre-funding (pre-closing) quality control loan plan must also provide a procedure for promptly reporting any violation of a regulation or false statements to the VA. It must also contain procedures for the Lender to remain up to date with any future VA pre-funding (pre-closing) requirements. Like with FHA, the Lender must check that no one involved in the origination or underwriting process is debarred or suspended.
USDA/RHS
USDA/RHS has not established any specifics for a pre-funding quality control loan review process when dealing with RHS loans. Merely that a Lender must have an effective pre-funding review process.
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 pre-funding files are reviewed in accordance with agency guidelines.
Pre-funding/Pre-closing Quality Control Review – FHA
FHA requires that pre-funding (pre-closing) quality control loan reviews should occur each month and that the loans selected for review must have been approved by an FHA Direct Endorsement underwriter before the pre-funding (pre-closing) quality control loan review can take place. According to FHA, the review should be 10% or less of the sample size and the review staff should operate independently from the Lender’s loan production or administration process. If nine or fewer FHA loans were closed during the prior month, then at least one FHA loan must be selected for pre-funding (pre-closing) quality control loan review. FHA also requires that the Lender verify that none of the participants in the transaction are debarred or suspended under an LDP and FHA program.
The following documents must be a part of the pre-funding (pre-closing) quality control loan review: appraisal; mortgage application, eligibility, and all underwriting documents; disclosures and legal compliance; mortgage origination documents; handling of mortgage documents; credit reports (a new report does not have to be ordered); any outstanding debt obligations; verifications of employment and deposit; self-employment information; source of funds; underwriting completeness and accuracy; property flipping restrictions; prohibited restrictive covenants; QM; Loan Estimate; any discrepancies in the loan file; and verification of any condition clearance. The results of the reviews must be reported to senior management on a monthly basis. The feedback that is provided should be used to create Action Plans so as to prevent the same mistakes from happening in the future. Any conflicting information in these documents should be resolved with the underwriter and any discrepancies found have to be resolved before closing. FHA also requires that if any discoveries of fraud or material misrepresentations are found during the review, they should be reported immediately to HUD/FHA.
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 pre-funding 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 Associates Earn NAMU Certification
Four Regulatory Solutions quality control and compliance analysts recently completed the required training and passed the exam requirements to earn the National Association of Mortgage Underwriters (NAMU) certification as Certified Mortgage Quality Specialists. Ross Page, Lindsey Wood, Yvonne Price and Robin Pounders recently received the certification and all joined Regulatory Solutions last year as a part of the company’s expansion.
“Our growth since 2011 has propelled us into one of the premiere mortgage quality control service providers in the country,” said Betsy Reynolds, President of Regulatory Solutions, a Certified WBENC Women’s Business Enterprise. “To keep our clients up to speed on constantly changing laws, rules and regulations, it is important that our associates have the most advanced training and certifications available.”
Ross Page joined Regulatory Solutions in June 2016 and serves as a quality control verification analyst. Previously he was with Sterne Agee/Stifel and is a 2016 graduate of The University of Alabama. Lindsey Wood graduated from Auburn University in 2012 and Samford University’s Cumberland School of Law in 2016 and worked in the financial and legal fields before joining Regulatory Solutions as an associate and compliance analyst last year. After working several years in senior underwriting and mortgage loan officer positions, Yvonne Price joined Regulatory Solutions in 2016 as a quality control analyst.
Robin Pounders also joined Regulatory Solutions in 2016 as a quality control analyst performing pre-funding and servicing quality control loan reviews to ensure accuracy and compliance with regulatory and agency requirements. She started her career in the mortgage industry in 1998 at New South Federal Savings Bank and worked in the banking and mortgage fields in a variety of mortgage loan related roles before joining Regulatory Solutions.
Read the full article on al.com.
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.”