Quality Control HMDA Requirements
Did you know that your HMDA data plays an important role when you are selling your loans to various agencies?
Most agencies require the lender to submit various HMDA data points as part of the purchasing process. With the new HMDA regulation that just took effect in January 2018, this means that the expanded GMI will play a key role in the purchasing process for most agencies. Freddie Mac in particular specifically requires the lender report the GMI, Rate Spread, and HOEPA information for each loan that Freddie Mac purchases.
Fannie Mae, FHA, and Rural Housing require more than just the reporting of HMDA data points. Before these agencies will consider purchasing loans from your institution, you must show that you have procedures in place and are complying with the current HMDA regulation as part of your Quality Control Program. FHA has an additional requirement that the HMDA information that is being reported be accurate.
At Regulatory Solutions we are here to help. We provide in-depth Quality Control reviews, HMDA Scrubs and other regulatory services to help you with your compliance needs.
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.