Mortgage Compliance & QC Services

Many investors and agencies, such as the Federal Housing Administration (FHA), Fannie Mae, and Freddie Mac, require a written QC plan. Quality control is also an industry best practice, which helps you produce high quality loans and reduce risk of default.

See HUD Handbook, FHA Single Family Housing Handbook, Fannie Mae Single Family Selling Guide D1-1-02, Freddie Mac Single-Family Seller/Servicer Guide 48.1

The general rules to follow to comply with FHA, Fannie Mae, and Freddie Mac quality control guidelines are:

• Audit 10% of your pre-fund, closed, and cancelled/denied loan files.
• Complete the audit within 90 days of closing.
• Audit 100% of early payment default (EPD) files for FHA loans.

FHA also requires, as part of the overall QC audit, that a field appraisal review be completed on 10% of the audited closed loans (or 1% of a company’s closed FHA loans).

See HUD Handbook, FHA Single Family Housing Policy Handbook, Fannie Mae Single Family Selling Guide D1-3-02, Freddie Mac Single-Family Seller/Servicer Guide 48.4

• FHA, VA & USDA: Audit monthly.
• Fannie Mae: Audit monthly.
• Freddie Mac: As a best practice, audit monthly. Every loan must have a chance of selection for audit within 90 days of the Note Date, but there is no specified frequency.

See HUD SFH Handbook 4000.1 / U.S. Department of Housing and Urban Development, Fannie Mae Guide D1-3-02, Freddie Mac Guide 48.4

Quality control audits may be performed in-house if you establish a unit solely for quality control. All QC staff members must be properly trained and cannot be involved in loan production.

However, many mortgage companies leverage third parties for mortgage QC auditing. By outsourcing audit services to a trusted partner who meets agency requirements, you can take advantage of a variable cost model by not having to maintain a duplicative resource that cannot be used in production. This helps you avoid overspending when volume is low and ensures that QC requirements are met when volumes are high.

See FHA Single Family Housing Policy Handbook, Fannie Mae Guide D1-1-03, Freddie Mac Guide 48.1-2

• HUD Handbooks
• Fannie Mae Single Family Selling Guide
• Freddie Mac Seller/Servicer Guide & Forms
• VA Handbook
• USDA HB-1-3555 SFHA Guaranteed Loan Program Technical Handbook

MetaSource has a trusted, proprietary mortgage quality control reporting platform called QLink™. It’s an easy-to-use, web-based platform that provides easy access to key QC metrics, report statuses, all QC-related communications (including documented concerns on loans), workflow processes, and final reports for all mortgage quality control services being leveraged.

1. 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, you can send us a list of your closed loans for the month or quarter, and MetaSource will randomly complete selections as defined by you for the audit. Once you receive the 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.

   The process is even simpler if you use ICE Mortgage Technology’s loan origination software (LOS), Encompass®. MetaSource’s reporting platform, QLink, is integrated through Investor Connect with Encompass, allowing you to simply select loans from your Encompass pipeline and send them to us for audit in just a few clicks.

2. Files are prepared for audit.

   Next, we upload the files into our proprietary workflow software, which enables us to move every file quickly and efficiently through the process. Before the audit begins, we prepare everything according to various agency guidelines. For instance, we re-verify income and employment, order new credit reports, and perform other optional third-party vendor verification services.

3. Auditor reviews the files.

   Upon receiving the files, an auditor conducts a comprehensive review of each loan. If any findings are applicable, they determine the audit score, defect rate, and provide individual audit-level information. MetaSource’s mortgage audit checklists are designed to comply with agency guidelines.

4. 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 team should take the necessary actions to correct any issues. During an agency audit, it is crucial to document the measures taken to ensure issues identified in QC have been addressed through your internal change management processes and these changes are reflected in your QC plan updates and reporting – whether it be through your vendor or internal reporting systems. The agency will demand written proof of all these efforts.

Each file being reviewed should include the following:

• Credit/Processing Package (with all initial disclosures & documents)
• Appraisal
• AU/Underwriting Package
• Closing Package (with all final documents, including Note, Deed, HUD’s, TIL, Right of Recession, etc.)

NOTE: For efficiency purposes, it is very important that complete file documentation is provided at submission. Partial submissions create rework for all parties involved in the QC process.

Yes, we can include a state-specific disclosure review in our post-close QC and pre-fund QC audits as requested under the Statement of Work.

The following reports are available in QLink (when applicable):

• Post-close
• Adverse
• Pre-fund
• Purchase review
• Appraisal review
• Early payment default
• Servicing

QLink also allows you to create custom QC reports based on the information that’s most important to your company. Upon logging into the platform, you will see a dashboard that provides at-a-glance insights into common findings and overall audit scores as well.

Yes, MetaSource recommends you send up to ten test files for review.

No, we do not report directly to any agency. After the audit is completed, a management report with detailed findings for each loan is provided to you, and it is the client’s responsibility to report to the agencies.

At MetaSource, we take pride in helping our clients succeed, which is why we’re always updating our processes and software, communicating with clients to ensure we’re meeting expectations, and staying up to date on agency and regulatory compliance guidelines. And unlike other partners, we don’t stop at quality control services. We offer solutions to meet lenders’, servicers’, and investors’ needs throughout the entire mortgage process:

• Mortgage QC Auditing (Post-Close, Pre-Fund, Servicing)
• MERS QA & Compliance Solutions
• Fraud Audit Services
• Whole Loan Purchase Review Service
• Trailing Document Service
• Mortgage Origination Automation
• Loan Boarding Solution
• Mortgage Lien Release & Assignment Services
• Mortgage Document Management Solution
• Digital Mailroom Solution
• Mortgage Due Diligence Services

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.