Answers to Questions from Our Webinar “We have a Mortage QC Plan… Now what?”
We want to thank everyone who attended our webinar “We have a QC Plan… Now what?”. As promised, below you will find answers to the questions asked during the webinar. You can also download the slides from the webinar.
Question 1 – We are a lender who funds our own loans and sells them to investors after closing. Should the Pre funding audit take place PRIOR to closing and us funding the loan at the closing table or should that take place after closing prior to shipping to an investor?
- Answer – The pre-funding audit can really occur at any time in the process. However, pre-funding is the best time, as you will have all the signed final documents to review. If you were to review the file prior to closing, you would be missing critical documents to review. While there are no rules against pre-closing audits, we do not recommend it.
Question 2 – Are SSA-89 the SSN validation required by FNMA or only if there are inconsistencies and flags?
- Answer – I was incorrect in my statement regarding Fannie Mae’s requirement about SSN verification. You only need to verify with the SSA if the borrowers SSN is not validated by DU. Please reference Fannie Mae Announcement SEL-2010-01. https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2010/sel1001.pdf.
Question 3 – We utilize a Mortgage Lock in Agreement as our intent to proceed. Does this seem sufficient to you, or do you recommend some other means of intent?
- Answer – HUD/RESPA does not give specific guidance on how to comply with this rule. However, MCA recommends a separate specific disclosure to make sure there are no questions regarding your borrower’s intentions.
Question 4 – The notice to rescind includes all funds – does this include the appraisal fee, and if so, how does the appraiser get paid?
- Answer – Yes, this would include the appraisal fee. The lender or broker would be responsible to pay the borrower for the cost of the appraisal.
Question 5 – Who will be responsible for your QC after this year?
- Answer – I will assume you are referring to brokers after the FHA Sponsorship ends on December 31. If so, then brokers will only be required to do QC audits if their sponsor/investor requires it.
Question 6 – What do you consider a Cancelled file in contrast to a Denied file?
- Answer – A cancelled file is a file that did not close but was not declined. An example of this would be a borrower withdrawn file.
Question 7 – How do you handle a situation where an approval letter has been issued by underwriting, but the pre-funding QC audit discovers something that would cause that approval to change to a denial?
- Answer – A finding such as this is why pre-funding is so important. If you find something that would change the approval to a denial, then do not fund the loan. I would have a discussion with the borrower as to why they do not qualify and issue the required adverse action notice in writing.
Question 8 – How does FHA look upon home offices as branches?
- Answer – FHA does not accept an office in a residence.
Question 9 – My FHA renewal fee to HUD is required by end of September 2010. Has HUD given any guidance on the need to pay the renewal fee since the current system is coming to an end? What is the downside to not renewing to HUD for the last three months of this year? Has HUD discussed what the penalty is to not renew?
- Answer – Please refer to FHA Mortgagee Letter 2010-20, http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/10-20ml.pdf. The following is an excerpt from the letter. “Loan correspondents approved and in good standing will be permitted to retain their approval through December 31, 2010. All loan correspondents that were required to renew their FHA approval on or after March 31, 2010, and prior to May 20, 2010, and that have not yet renewed their approval, must complete their online annual certification and submit their renewal fee via FHA Connection. Failure to complete these items in accordance with existing FHA requirements (i.e., within 90 days of a loan correspondent’s fiscal year end) will result in administrative action.”
Question 10 – I just reviewed our most recent MCA audit and there was no Trend Tracking. Can you tell me how to obtain this or add to the audits?
- Answer – MCA has just implemented its loan score and loan risk numbers beginning with its August management reports. MCA will begin to integrate trend tracking as this information compiles over a period of time. If you would like trend tracking based on findings you have had in the past, please contact us.
Question 11 – How detailed do we need to be on our QC manual for Post-Closing Audits? We utilize MCA as our outsourcing. Is that all that needs to be stated, or do we need to attach MCA procedures to our QC manual?
- Answer – Your QC plan should specifically list what you will be looking for in your Post Close file audits. You can submit your QC plan to MCA and we will review your plan to ensure it meets all necessary guidelines.
Question 12 – We identified a GFE / HUD-1 variance relating to Escrow amounts. We had disclosed the escrow deposit but it was left off the HUD-1 on page 3 comparative. The page 3 table showed the initial GFE $0 and then the final amount from the HUD-1. Is this type of error considered serious and is any corrective action needed? We are outside our correction period from RESPA.
- Answer – The initial escrow deposit section of the GFE can change without the need of a changed circumstance. Therefore a change to the initial escrow amount at any time would not be considered a finding.
(Mortgage Compliance Advisors, LLC (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 online chat is not legal advice and should not be used as a substitute for proper professional or legal advice.)