Mortgage Compliance Frequently Asked Questions (FAQ)
- Why do I need a mortgage compliance quality control (QC) plan?
- What am I required to audit?
- Audit 10% of your closed and cancelled/denied loan files
- Complete the audit within 90 days of closing
- Audit 100% of EPD loan files (FHA)
- How often should I perform quality control audits?
- FHA guidelines:
- Audit monthly, if closing more than 15 loans per month
- Audit quarterly, if closing 15 or fewer loans per month
- Fannie Mae guidelines:
- Audit monthly
- Freddie Mac guidelines:
- No specified time – every loan must have chance of selection for audit within 90 days of Note Date
- Who can perform quality control audits?
- Can my accountant perform quality control audits?
- Where can I find an updated list of mortgage regulations?
- What is the Red Flags Rule and how do I comply?
- How does the audit process work?
- What documents should I send for the audit?
- Credit/Processing Package (with all initial disclosures and documents)
- AU/Underwriting Package
- Closing Package (with all final documents including Note, Deed, HUD's, TIL, Right of Recession, etc.)
- What should I do with the results from my quality control audits?
- Does MetaSource Mortgage report to HUD, Fannie Mae, or Freddie Mac?
- What are your prices?
- How do I get started?
- How do I register for the next monthly webinar?
- Where can I find the slides from the last webinar?
- Who is MetaSource Mortgage?
- I'm a homeowner — Why did I get something in the mail from MCA?
- Why should I send back this request for information?
- Why is there something on my credit report from MCA?
- Do you have authority to pull a credit report?
- Why was my loan chosen for an audit review?
Many investors and agencies, such as FHA, Fannie Mae, and Freddie Mac, require a written QC plan.* Quality control is also a good business practice because it helps you produce high quality loans and reduce risk of default.
To comply with FHA, Fannie Mae, and Freddie Mac quality control guidelines, the general rules are to:
FHA also requires, as part of the overall QC auditing, that a field appraisal review be completed on 10% of the audited closed loan (or 1% of a company's closed FHA loans).
Quality control audits may be performed in-house, if you establish a unit solely for quality control. The staff must be properly trained, and not be involved in loan production. Alternatively, you may have a third party perform quality control audits, as long as you ensure it meets agency requirements.
There is often confusion about the annual financial audit and quality control file audits. They are two separate functions, and you need to do both. Generally your accountant performs the annual financial audit, whereas your compliance department or a third party performs your quality control audits. Many accountants do not have the necessary training or experience to perform quality control file audits.
We offer complete lending manuals for FHA, VA, and HECM. These guides contain quarterly updated requirements in a concise, easy to use format. You can also sign up for our free monthly newsletter, which contains underwriting tips, processing tips, and compliance updates.
The Red Flags Rule is essentially an identity theft prevention program required by the Federal Trade Commission, for financial institutions and creditors (including mortgage brokers and lenders).* To comply, you need to have a Red Flag Policy in place by December 31, 2010. You can write your own Red Flag Policy or purchase a custom one. We offer a Red Flag template that you can fill out yourself, or we can fill it out for you.
(The work done by MetaSource on your Red Flag Policy does not constitute legal advice. Our intention is provide you with a platform to build a policy specific to your organization. It is a good idea to have your legal counsel review the policy once it has been prepared. Only your attorney can tell you if your red flag policy meets the legal requirements set forth by the Federal Trade Commission.)
Drag and drop files to our secured server. After you sign up with us, we will send you a username and password to our secured server. Then simply send us a list of your closed loans for the month or quarter, and we will randomly select 10% of those loans for the audit. Once you receive our selection list for the audit, all you need to do is drag and drop the files (PDF or TIF) from your computer to our secured server, and your part is done.
Files are prepared for audit. Now we upload the files into our proprietary workflow software, which enables us to move every file quickly and efficiently through the process. This helps us maintain our 5 to 10 day turnaround from the day we receive your files. Before the audit begins, we prepare everything according to various agency guidelines, such as re-verifying income and employment, ordering a new credit report, etc.
Auditor reviews the file. Once the files are prepared, an auditor thoroughly reviews each file and makes notes of significant and insignificant findings according to agency guidelines. Our audit checklists are designed to comply with Fannie Mae, Freddie Mac, HUD, and VA guidelines. Because each of our auditors has at least 20 years of mortgage experience, you can be sure to receive accurate and useful management reports from the audits.
We send you a management report. When the audit is complete, we send you a management report with detailed findings for each loan. If items are found out of compliance, your management should take the necessary actions to correct any issues. When FHA and other agencies conduct an audit, they want to see in writing what actions you have taken to stay in compliance.
To get started or ask additional questions, contact us here or call (877) 250-5243.
Each file that you upload or ship should include the following:
When the audit is complete, we send you a management report with detailed findings for each loan. If items are found out of compliance, your management should take the necessary actions to correct any issues. When FHA and other agencies conduct an audit, they want to see in writing what actions you have taken to stay in compliance.
No, we do not report to any agency. After the audit, we send you a management report with detailed findings for each loan, and it is your responsibility to take any necessary actions.
Our prices are lower than or comparable to most of our competitors. The cost is calculated on a per file basis; we charge no set up charges, cancellation fees, or monthly fees. To request a price list or more information, contact us here or call (877) 250-5243.
Once we receive a completed client agreement and client questionnaire from you, we can start the audit process. To get started or ask additional questions, contact us here or call (877) 250-5243.
We offer a more detailed Training Series every month and a broader Free Series once or twice a quarter. After registering, you will receive a confirmation email containing information about joining the Webinar. If you are unable to join the webinar or would like to view it again, contact us.
You can find the slides from every webinar under the Resources tab. We also include a link to the most recent webinar slides in our monthly newsletter.
Questions from Homeowners
Mortgage Compliance Advisors is a third party mortgage compliance service offered by MetaSource. We are hired by mortgage companies to audit the required 10% of loans to assure compliance with regulations and discover possible fraud.
Mortgage companies are required to review 10% of their loan files to make sure the company is following procedures and that there is no fraud involved. Mortgage companies can outsource these reviews to a company like us, and as part of these reviews, we are required to re-verify certain information in the loan file.
If you received a letter from us, all that means is that your file was randomly chosen for a routine review, and we just need you to verify that the information we sent you is correct. Quality control audits such as these benefit everyone by assuring lenders are originating quality loans. They help keep lending costs down for everyone. Please mail back your response or fax it to (801) 713-5463.
Sending back the documents helps the lender meet their quality control requirements. The lender sends out verifications on 10% of all loans to assure no fraudulent activity has taken place.
As detailed in question 18, if your loan is randomly selected to be reviewed, we are required to re-verify certain pieces of information. This includes a requirement to pull a new credit report to verify that the information at the time of the loan was correct. This is a soft credit pull, so it won't affect your credit at all.
Yes, part of the loan application that was signed indicates on page 4 that information can be verified or re-verified for any legitimate business purpose.
The loans are all chosen at random.