Posts Tagged ‘fha quality control’

Mar
13
2012

HUD Provides Enhancements To FHA Short Refinance Program

Mar. 13 - HUD provides enhancements to FHA Short Refinance program. HUD.gov

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Feb
23
2011

Answers to Questions from Our Webinar “Essentials of a Compliant QC Plan”

We want to thank everyone who attended our webinar “Essentials of a Compliant QC Plan.” As promised, below you will find answers to the questions asked during the webinar. You can also download the slides below.



Our experts look forward to serving all your compliance needs. Call 877-250-5243 or email info@mortgagecomplianceadvisors.com.


Have more questions? Submit a question or comment in the comment box at the bottom.
You can also sign up to receive invitations to our webinars and monthly compliance updates.


Question 1 – How do you go about verifying assets?

  • Answer – You would attempt to get the company to verify the information you have in your file is correct, via new VOD or phone conversation. You will want to assure that the asset documentation has not been forged or altered in any way.




Question 2 – We are a broker and most of our lenders will require a quarterly audit of our FHA loans.  You mentioned the detailed QC Plan reviews are trickling downhill.  Do you foresee lenders requiring their approved brokers to do more than the 10% of FHA loans being audited?  The FHA loans are all we’re auditing at this time.  Do we need to include all of our other loan types?

  • Answer – I do not anticipate any lenders requiring more than the FHA required 10% selection. We are certainly seeing a bigger focus on Quality Control from all lenders and agencies.  You are only required to audit files if your investors or licensing agencies require it.  However, I would recommend you QC at least 10% of all your loans. This will give you a good baseline of the quality and risk level of all the loans you originate.



Question 3 - What is acceptable to meet occupancy certification requirements?

  • Answer – There is not guidance on this topic. However, if audited, you will need to justify that a satisfactory attempt to verify occupancy was conducted.



Question 4 – Are these reviews [discretionary reviews] required if you’re a broker and not the lender?

  • Answer – If you are a broker, then you are only required to conduct QC reviews if your investors or licensing authorities require you to do so. If those entities do not require discretionary reviews, then you are not required to perform them. However, it’s good business practice to know the quality of the product you are selling.



Question 5 – Adverse Action Reviews. Can they be done in house, with processing staff the same as the prefunding reviews, or do they need to be done using the same process as QC of closed files, in our case, outsourced?

  • Answer – I am not aware of any rules stating Adverse Action reviews must be done independently. However, I have also not read where they are allowed to be outside of the independent QC department.  This will need to be a company decision.



Question 6 – If we use a 3rd party servicer, who performs the audits?

  • Answer – The 3rd party typically performs the audits.



Question 7 - To be in compliance with ECOA (Reg B) if we have pulled credit on a file as a pre-qual example TBD – are we still required to send a notice of action if we are unable to approve this loan due to excessive ratios or something along those lines, we would have pulled credit. These files would be either TBD loans or incomplete applications. These loans would not be subject to HMDA correct if they are a TBD property.

  • Answer – ECOA’s definition of application is much more broad and vague than the RESPA definition of application. I would recommend in this example to meet your ECOA regulations–you either issue an approval or adverse action (denial) within 30 days. If your TBD meets the definition of Pre-Approval, you are required to report this transaction to HMDA.



Question 8 - Since your presentation is focused for the large lenders where agencies are performing audits–perhaps you can comment on the differences on QC level for the smaller brokers, ie is just having a company like MCA auditing our loan files enough?

  • Answer – QC is about risk management, so I would I would suggest you complete as many of the steps as possible that I mentioned in the presentation. Obviously, you will not be reviewing as many details as the lender would. If you are outsourcing, your QC your vendor should be auditing your files according to your business type. When MCA audits a file, they only hold the broker accountable for items they have control over.



Question 9 – Will you please repeat the calculation for the defect rate?

  • Answer – Fannie Mae defines Defect Rate as: The number of loans, expressed as a percentage, reflecting the total loans with defects discovered in the loan review process divided by the total loans reviewed.



Question 10 - It was mentioned that these webinars are available monthly. What do we need to do to be able to join every month?



Mortgage Compliance Advisors offers a free webinar every month. Visit www.MortgageComplianceAdvisors.com to register for next month’s webinar or to learn more about how MCA can serve all your compliance needs.

(MCA makes reasonable efforts to ensure the accuracy of the answers. MCA makes no express or implied warranty of any kind respecting the information presented and assumes no responsibility for errors or omissions. This Q&A is not legal advice and should not be used as a substitute for proper professional or legal advice.)

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Jan
06
2011

MCA Monthly Compliance Update – January 2011

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Mountain picture

MCA Monthly Compliance Update

January 2011

In This Issue
Coming in 2011
HUD/FHA Update
Fannie Mae Update
Freddie Mac Update
VA Update
Our Services

Lending Manuals

Stay Updated
Connect with us:
View our profile on LinkedIn Follow us on Twitter Find us on Facebook
Join Our Mailing List!
Welcome to the MCA Monthly Compliance Update. To help you stay compliant and up-to-date, our newsletters contain compliance tips and updates. We hope that you find the content informative and useful. As always, your feedback is appreciated.


Join our free monthly webinar “Common Compliance Findings of 2010 & How to Prevent Them.”


Jan 2010 webinar

Learn about common audit findings and tips to prevent them.


Join our free webinar on Thursday, January 20 at 12:00 p.m. MST.


Reserve your webinar seat now at:


Register Now



https://www1.gotomeeting.com/register/638319816

Join us for a free webinar on January 20, where we will look at all our quality control audit findings from all companies in the year 2010 and break it down into useful information for your company. We’ll see what the common trends were and alert you to negative trends we are seeing in the marketplace. We will also share helpful tips on how you can reduce the number of findings in your next quality control audit. We encourage you to submit questions for our panelists in the box below and also during the Q&A session at the end of the webinar.


  • Common findings from all companies’ QC audits in 2010
  • Negative trends in the marketplace
  • Tips to reduce your findings
  • Q&A session

(*You will receive a link to the SLIDES in a reminder email sent ONE HOUR before the webinar starts.)


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For real time compliance news, you can now follow us on

Twitter and Facebook.



www.MortgageComplianceAdvisors.com

Coming in 2011

Coming in 2011 to MCA and its Clients

To further help our current clients, we will be adding and improving various services in the upcoming year. You can look forward to these changes in the coming months.


  • Roundtable discussions for clients
    • We will be hosting online Round Table Discussions with our clients to open dialogue and discussion about common compliance issues.
  • Enhanced state compliance
    • We are enhancing our state compliance service to be more effective for our clients.
  • Trend tracking reports on all findings reports
    • Trend tracking reports will be included in each new Findings Report issued. This will allow our clients to track company and underwriter performance over an extended period of time.
  • Updated website
    • We will be updating our website to include a fresh look and to contain more resources for your compliance needs.
HUD/FHA Update

ML 2010-41: Construction Specifications Institute (CSI), MasterFormat Editions


- For Multifamily Mortgagees: The construction specifications template for FHA new construction and substantial rehabilitation projects has changed… Entire letter on HUD.gov


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ML 2010-42: Federal Home Loan Bank – Affordable Housing Program, Homeownership Set-Aside Grant Program


- Provides guidance on FHLB AHP Homeownership Set-Aside Program in conjunction with FHA financing. Entire letter on HUD.gov


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- Announces that FHA now requires flood zone determination on all properties
- Prohibits FHA Mortgage Insurance for properties in designated coastal barriers


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- Provides loss mitigation guidance for HECMs that are delinquent due to unpaid property charges… Entire letter on HUD.gov


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- Clarifies FHA’s quality control requirements in light of changes to lender eligibility criteria:

  • All FHA-approved mortgagees must perform quality control reviews of their Sponsored Third Party Originators
  • Mortgagees can determine the appropriate sample amount of loans for those reviews (such as 10% of all loans)
  • All Early Payment Defaults (EPDs) still need to be reviewed
    • Must be reviewed within 45 days from the end of the month the loan is reported as 60 days past due
  • Rejected applications still need to be reviewed
    • Must be reviewed within 90 days from the end of the month in which the decision was made


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To view all HUD Mortgagee Letters for the year, visit HUD’s website.

Fannie Mae Update


- Updates state-specific requirements for co-op share loans, such as which documents must be delivered to document custodian. Updates Connecticut requirements and adds Alaska, Indiana, and Washington. Announcement on eFannieMae.com


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- Gives overview of:

  • Uniform Appraisal Dataset requirements

  • Uniform Collateral Data Portal

  • Future updates to Fannie Mae policies


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- Reminds servicers of duty to ensure security, integrity, and confidentiality of borrower, property, and other information related to loan. Announcement on eFannieMae.com


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- Notifies servicers of four new Broker Price Opinion (BPO) providers

- Clarifies that, effective February 1, 2011, servicers must diversify referrals among two or more BPO providers

- Announces new reimbursement rates


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- Amends servicing requirements regarding technology usage and electronic invoice submission charges to attorneys and trustees and foreclosure and bankruptcy referrals. Announcement on eFannieMae.com


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- Summarizes the updated and new loan-level price adjustments (LLPAs) Announcement on eFannieMae.com


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To view all Fannie Mae Announcements and Letters for the year, visit


Freddie Mac Update



- Provides requirements for the Uniform Appraisal Dataset (UAD) and Uniform Collateral Data Portal (UCDP). Bulletin on FreddieMac.com



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- Extends service member foreclosure protection to 12/31/11. Bulletin on FreddieMac.com



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To view Recent Freddie Mac Bulletins/Industry Letters, visit Freddie Mac’s website.

VA Update

- Provides guidance on processing Specially Adapted Housing (SAH) cases under new rules. Entire circular on VA.gov


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To view VA Circular/News for 2010, visit the VA website.

Feel free to call us with any questions at 877-226-3216 or reply to this email.

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Dec
06
2010

Free Mortgage Compliance Webinar: “Common Compliance Findings of 2010 & How to Prevent Them”

MCA Logo
Common Compliance Findings of 2010 &
How to Prevent Them


Join us for a free Webinar on
January 20

Register Now
Space is limited.
Reserve your Webinar Seat Now at:
https://www1.gotomeeting.com/register/638319816

Webinar

Join us for a free webinar on January 20, where we will look at all our quality control audit findings from all companies in the year 2010 and break it down into useful information for your company. We’ll see what the common trends were and alert you to negative trends we are seeing in the marketplace. We will also share helpful tips on how you can reduce the number of findings in your next quality control audit. We encourage you to submit questions for our panelists in the comment box during registration and also during the Q&A session at the end of the webinar.

- Common findings from all companies’ QC audits in 2010
- Negative trends in the marketplace
- Tips to reduce your findings
- Q&A session

(*You will receive a link to the SLIDES in a reminder email sent ONE HOUR before the webinar starts.)

www.MortgageComplianceAdvisors.com


Title: Common Compliance Findings of 2010 & How to Prevent Them

Date: Thursday, January 20, 2011
Time:
12:00 PM – 1:00 PM MST

After registering, you will receive a confirmation email containing information about joining the Webinar.

System Requirements
PC-based attendees
Required: Windows® 7, Vista, XP or 2003 Server

Macintosh®-based attendees
Required: Mac OS® X 10.4.11 (Tiger®) or newer


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Nov
16
2009

Quality Control Guidelines Summarized for Fannie Mae, Freddie Mac, and FHA

Many investors and agencies, such as Fannie Mae, Freddie Mac, and FHA, require its lenders to have an active quality control plan in place. We wanted to help make the regulations more understandable for you, so we published an article summarizing basic quality control guidelines for Fannie Mae, Freddie Mac, and FHA. We hope you find the information useful — and we are always happy to answer your questions.

Read the full article summarizing QC guidelines for Fannie Mae, Freddi Mac, and FHA.

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Oct
01
2009

The Effects of HUD's Announcement from September 18, 2009

On September 18, 2009, HUD published a press release announcing numerous changes that are either proposed or already implemented, which affect FHA lenders and FHA loans. The most sweeping proposed change is that HUD/FHA will approve only Sponsor (investor, full eagle) lenders. FHA will then have the Sponsors approve the FHA brokers with whom they are willing to do business. Within one year, HUD intends to require an increase in the Sponsor’s net worth of $1,000,000 (increased from the present $250,000).

While the final rules are not yet in effect, it appears they will be implemented after a “notice and comment period.” Although these changes raise many questions which will require upcoming information from HUD/FHA, the following reflects our views on how this will affect lenders and brokers.

It is clear from the language of the press release that HUD is trying to make it easier for brokers to do FHA business, while at the same time putting more responsibility and accountability on both the broker and the Sponsor to make justified loans. HUD stated in the press release that “these lenders must have skin in the game,” which seems a clear indication that brokers and Sponsors will be held more accountable for loans produced than in the past.

Given the apparent intent of this new rule, it seems that the Sponsor will now be responsible to see that brokers are in compliance with the Quality Control expected by FHA, and presumably desired by the Sponsor. These Quality Control programs help ensure loans that comply with all regulations and laws, as well as minimize losses from bad loans. It is likely that even though the net worth requirements for brokers will be reduced or eliminated, Sponsors will continue to require Quality Control Plans and Quality Control audits in order to do business with them.

As HUD/FHA comes out with further announcements, we will keep you updated through our newsletter and social networks. Visit HUD’s website to read the entire press release from September 18, 2009.

Keeping up with changing regulations can be a daunting task. Mortgage Compliance Advisors offers lending manuals for FHA, VA, and HECM that are easy to use and updated quarterly. For more information, visit www.MortgageComplianceAdvisors.com or call 877-226-3152.

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Jul
13
2009

FHA Guidelines: How to Become FHA Approved

An easy to understand summary of FHA approval requirements for lenders.

FHA has grown rapidly in the past few years, fueled largely by tightening credit. In fact, over 20% of new home purchases are currently through FHA. As the volume of FHA loans increases, more lenders across the country are becoming FHA approved. However, the FHA approval process and paperwork can appear overwhelming, especially to smaller companies. To help lenders understand the guidelines, below is a brief summary of FHA’s approval requirements. (For a detailed list of all requirements, visit www.hud.gov.)

Organization Requirements

In order to reduce risk, FHA limits its approval to experienced, well-established organizations; the officer in charge of an organization’s FHA operation must have at least three years of mortgage experience. Furthermore, to be considered for FHA approval, an organization cannot be a sole proprietorship. Corporations, partnerships, LLC’s, chartered financial institutions, and government agencies are acceptable. Along the same lines, FHA approved organizations must have at least two full time employees and a commercial office location (not a home office).

Paperwork

Each prospective FHA lender must fill out the HUD 11701 application. FHA also requires certain letters and other documents, depending on the desired type of FHA approval (non-supervised loan correspondent, investing lender, etc.). For example, brokers wanting to become FHA approved must submit a sponsor/funding letter, whereas lenders need a funding program. For a list of all required documents by FHA approval type, see FHA Lender Approval Requirements.

Finances

Excluding “Government Mortgagee,” the application fee for all FHA approval types is $1,000. Additionally, lenders must submit audited financial statements with the application. The lender’s financial statements need to show at least $63,000 net worth with 20% liquid assets.

Quality Control Plan

Finally, FHA approval requires organizations to submit a quality control plan, in order to mitigate fraud and errors. Organizations can create a quality control plan themselves, or purchase one from a third party. As part of the quality control plan, lenders must audit 10% of the FHA loans they originate. These audits need to be performed regularly—within 90 days of the end of the month in which the loan closed.

Quality control audits may be performed in-house, if the lender properly trains and establishes a unit solely for quality control. The staff must not be involved in loan production. Alternatively, lenders may have a third party, such as Mortgage Compliance Advisors, LLC, perform the quality control function, as long as it meets HUD’s requirements.

For more information on FHA approval services or quality control audits, visit www.MortgageComplianceAdvisors.com or call 877-226-3217.

About Mortgage Compliance Advisors (MCA):

MCA has grown to help clients across the country through the FHA approval process, and continues to help them stay compliant with regulations after approval. MCA’s principals have a combined sixty years of experience in the mortgage industry, including thirteen years at the Salt Lake City HUD/FHA office. As a former FHA branch chief, MCA’s principal Bob Warnock can advise clients through every step of the FHA approval process.

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Jul
07
2009

MCA Quoted in American Banker

On July 2, 2009, Mortgage Compliance Advisors was mentioned in the national publication American Banker, in the article FHA Enforces Fine Print as Its Volume Swells. The article discusses how FHA is more strictly enforcing regulations, because of its rapid growth.

“The Department of Housing and Urban Development, which runs FHA, has stepped up …enforcement actions in the last year. And with FHA now guaranteeing roughly 30% of all originations, raising the agency’s public profile and its risk, many in the industry expect a further, and dramatic, increase.”

The article cites specific examples of FHA enforcement actions, and quotes MCA’s principals Bob Warnock and Craig Christensen regarding FHA quality control and a few necessary actions to comply with FHA. To read the full article, click here (Note: American Banker requires a login to view full articles).

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