Frequently Asked Questions About
POST CLOSING QUALITY CONTROL REVIEWS
Q: What is the purpose of having post closing loan file reviews?
A: The post closing loan file review is a quality control tool that helps to assure the quality of the loan transaction. HUD-FHA, VA, Fannie Mae, Freddie Mac and most other investors require that all mortgage brokers/bankers with whom they do business have quality control reviews conducted of at least 10% of their closed loan files.
Q: As a HUD-approved mortgagee/Loan Correspondent, can I conduct my own post closing loan file reviews?
A: In order for a post closing review to be acceptable for measuring the quality of the loan, most investors require that it be conducted by someone who is knowledgeable about but is NOT INVOLVED in the mortgage origination, processing or underwriting phases of the loan.
Q: Does HUD allow me to contract out for my post closing loan file reviews?
A: HUD allows approved mortgagees/Loan Correspondents to contract out to outside firms to conduct their post closing file reviews (HUD Handbook 4060.1, REV-1, 6-1 E). The approved mortgagee/Loan Correspondent is responsible to ensure that the contractor complies with the HUD quality control requirements in conducting the reviews.
Q: Doesn't the sponsor's post closing reviews of loan files satisfy any requirement that a Loan Correspondent has for conducting the reviews?
A: HUD's position is that a sponsor's quality control reviews of closed loan files is not a "substitute" for the Loan Correspondent to conduct quality control reviews (HUD Handbook 4060.1, REV-1, 6-1 D).
Q: Does HUD require stricter compliance than other regulators or investors about conducting post closing loan file reviews?
A: HUD's requirements are considered tougher because HUD has taken a more aggressive stance than most other regulators or investors in monitoring its approved mortgagees/Loan Correspondents' compliance.
Q: What is the penalty that HUD may take if an approved mortgagee/Loan Correspondent doesn't have post closing loan file reviews done?
A: HUD may make a "finding" against the approved mortgagee/Loan Correspondent which could result in referral to the Mortgagee Review Board in Washington, DC. The MRB can take sanctions against the approved mortgagee/Loan Correspondent including monetary penalties and disciplinary action up to suspension and loss of authority to originate FHA loans.
Q: Is it necessary to have written reports of the post closing loan file reviews?
A: HUD expects all post closing quality control reports to be in writing for senior management review. Also, senior management must document the corrective action taken to address all identified deficiencies (HUD Handbook 4060.1, REV-1, 6-1 G).
Q: How long does HUD require that the results of quality control reviews be maintained?
A: HUD requires that the results of quality control reviews be maintained for a period of one year. This includes the initial QC reports and all documented corrective actions taken by management to address identified deficiencies.
Q: I have been a HUD approved mortgagee/Loan Correspondent for more than 5 years, what is the likelihood that anyone will ever know that I did not do post closing loan file reviews?
A: While many investors are not monitoring the performance of its loan origination sources, HUD has quadrupled its compliance monitoring staff. During fiscal year ending September 30, 1999, there were 900 on-site HUD Quality Assurance audits conducted of approved mortgagees/Loan Correspondents nationwide and more than 250 in the Santa Ana Homeownership Center jurisdiction alone. While you may have been lucky so far, your luck may not hold much longer.
Post Closing Quality Control Services
 |
| Home |
