HUD requires quality control programs
for both origination and servicing to include certain
QC plan. Every lender's quality control
program must be in writing and in effect for the entire
period of the FHA approval.
The quality control function must be kept independent
of the origination and servicing functions, either by
establishing a unit that is dedicated solely to quality
control or by using an outside source to perform the
quality control function.
QC staff and
up-to-date guidelines. The lender
must train the staff involved in quality control
and provide them with current guidelines relating to
the operations that they review.
Quality control reviews must be performed on a regular and timely basis. Depending
on the lender's production volume, origination reviews
may be performed weekly, monthly, or quarterly. Reviews
should be completed within 90
days of closing. Delinquent servicing
and loss mitigation activities should be reviewed monthly.
of loan file review.
The QC program must provide for the review
of a representative sample of the lender's
loans. The review must evaluate the accuracy and
adequacy of the information and documentation the lender
used in reaching origination
or servicing decisions.
QC reviews must evaluate the lender's origination
and servicing to determine the cause of any deficiencies.
The lender must expand the scope of the review when
fraud or patterns of deficiencies are uncovered.
Reviews must include branch offices
or sites, correspondents, authorized
agents, loan officers or originators, processors, underwriters,
appraisers, closing personnel, all FHA loan programs,
servicing personnel, loss mitigation procedures, escrow
analysis and assumptions.
review. Reviews must include the lender's offices
engaged in origination or servicing of FHA-insured loans—including
traditional and nontraditional branch offices—to determine
compliance with HUD requirements.
review. The lender must ensure that its
contractors, agents and loan correspondents are acceptable
to FHA and operate in compliance with FHA requirements.
and corrective action.
Review findings must be reported to the lender's senior
management within one month of completion of the initial
report and management must take prompt action to
deal with any material findings. The
final report or an addendum must identify actions being
taken, the timetable for their completion and any
planned follow-up activities.
to HUD. Findings
of fraud or other serious violations must be referred
in writing to the director of the quality assurance
division in the HUD homeownership center having jurisdiction.
retention. The lender must retain QC review
reports and follow-up, including review findings and
actions taken, for
two years from the date of the mortgage insurance endorsement.