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A Guide to Preparing for Fannie Mae MORA Reviews

Mortgage lenders undergoing a Fannie Mae Mortgage Origination Risk Assessment (MORA) audit need to have their docs in a row – especially during a period of heightened regulatory focus.

In the Federal Housing Finance Agency’s (FHFA) strategic plan for 2022-2026, the agency listed “secure the regulated entities’ safety and soundness” as its first goal for the next 4 years, with “identify risks to the regulated entities” as the first objective within the goal. That said, it’s likely that the GSEs will increase their focus on risk assessments. For Fannie Mae, this translates to placing greater emphasis on MORA reviews.

As a lender, you need to adequately prepare for this type of review in order to ensure compliance. Here’s your guide to doing just that…

What Is a MORA Review?

Fannie Mae’s MORA review was designed to evaluate how well a mortgage company meets the agency’s guidelines and to gauge operational risks.

The process begins with the Fannie Mae team reaching out to your Fannie Mae customer account team to review any changes in your organization or your contract, as well as any issues outstanding from a previous review. Fannie Mae reviewers will collaborate with a main contact on your team to manage the submission of documents and ongoing communications during the review process.

Once the actual review is scheduled, Fannie Mae will send out a list of the required documents approximately 80 days in advance. This list includes:

  • Copies of policies
  • Written procedures
  • Various reports
  • Selected loan files

Due dates for these materials will be included. Fannie Mae typically sets them for about 4 weeks from the date of the request. However, documentation related to Investor Reporting and Cash Management will be due in 2 weeks.

Mind Your Due Dates

The due dates are not suggestions: “It is critical that requested documents are provided by the due date,” the agency writes in a 2021 guide to managing selling and servicing compliance and performance reviews. “Failure to provide all applicable documents by the due date can adversely affect the final assessment.”

The main contact within your organization is expected to read the entire document request thoroughly, understand the required file submission format, and follow the requirements provided in the request in order to submit the documents on time.

The documentation due dates ensure that the next sequence of events can proceed smoothly, beginning with a process evaluation of policies, procedures, operational capabilities, and file-level testing, followed by a 2-day review.

Prepare for the Interviews

The review includes a series of interviews between the MORA review team and the primary contacts in your organization. The review team will let you know the topics to be covered in advance.

Make sure all the appropriate members of your team are available and on time. And as the agency writes in its guide, be prepared for the possibility that the agency may request the participation of additional members of your team if necessary “to fully understand your day-to-day operations.”

Following the interviews, Fannie Mae will issue a final assessment report with your findings, recommendations and “applicable corrective actions” in addition to process area ratings.

Address Any Findings

The last step in the process is for you to address and remediate any findings and corrective actions in the final report. An Action Plan template is provided for you to document the steps you will take to do so. It must be submitted to Fannie Mae’s remediation team within 30 days from the date the final report was issued. Fannie Mae recommends submitting a draft of your remediation plan to your assigned Remediation Associate in advance of the due date.

Best Practices for MORA Review Success

MORA review success is a function of the right people, processes, and due diligence. A few best practices for preparing for an audit include:

  • Choose a person who is deeply familiar with your processes to act as the main contact between your organization and Fannie Mae’s review team. For best results, this role should not be assigned to a clerical person without knowledge of your processes.
  • Request that all of your participating team members block off time in their schedules to ensure availability for interviews or other participation as needed.
  • Partner with a third-party vendor with extensive experience in guiding lenders through MORA reviews. In addition to auditor experience, look for a mortgage QC partner who employs licensed appraisers to audit for collateral risk, as opposed to the QC audit staff. Licensed appraisers will have the level of knowledge required to effectively perform this portion of the QC audit. Conduct a subset audit on your mortgage QC vendor to ensure concurrence at every level of your processes. As Fannie Mae cautions in a its newest edition of Beyond the Guide, “outsourcing does not relieve the lender of responsibilities required by the Selling Guide.”

Let MetaSource Help

MetaSource has deep experience assisting lenders in navigating their MORA reviews based on over 15 years of mortgage quality control experience. Our QC process and collateral risk assessment are built around decades of expertise. Among other differentiators, MetaSource uses licensed appraisers instead of underwriters to conduct collateral risk assessments.

Our mortgage quality control solutions include an array of services and technology that can help make the process of agency audits no-stress events. In an era of increasing regulatory scrutiny of the mortgage industry, don’t risk findings that can leave your organization with time-consuming remediation issues or worse – threaten your good standing with Fannie Mae.

Contact MetaSource’s mortgage compliance experts to learn more about our quality control solutions.

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