HUD requires quality control programs for both origination and servicing to include review of compliance with certain regulatory requirements beyond FHA's program requirememts:

 

Federal laws. The Quality Control Program must verify that the mortgagee's operations are in compliance with the various fair lending laws including the Fair Housing Act, the Equal Credit Opportunity Act, RESPA and the Truth in Lending Act.

 

Rejected applications. The QC program must audit a sample of rejected loans to assure that the reasons given for rejection were valid, that each rejection has been reviewed before the decision was made and that the requirements of the Equal Credit Opportunity Act are met and documented in each file.

 

Lender practices. The program reviews whether the lender is in compliance with HUD's requirements and other regulatory requirements concerning:

  • tiered pricing,
  • overages,
  • premium pricing,
  • setting minimum loan amounts,
  • referrals to a credit counseling agency,
  • underserved geographic areas.
  • use of fair housing logo,
  • advertising; assuring that branch offices and employees are not engaging in false or misleading advertising practices and
  • assuring that the lender is providing training regarding fair housing practices.

Home Mortgage Disclosure Act. The QC program must verify that the lender is in compliance with the Home Mortgage Disclosure Act reporting requirements and the HUD's requirements for reporting FHA-insured mortgages. The check should include confirmation that the report is made timely, the reported information is accurate and is being reported correctly.

 

Real Estate Settlement Procedures Act. The QC program must verify that the lender is in compliance with the provisions of RESPA, including:

  • distributing the special information booklet to mortgage applicants
  • providing applicants with timely good faith estimates,
  • providing applicants with Form HUD-1 settlement statement,
  • disclosing transfer of servicing,
  • disclosing business relationships with affiliated entities,
  • properly handling escrow funds and accounts and
  • following the RESPA requirements concerning transfers of servicing.

Ineligible participants. The QC program must verify that no participants in mortgage transaction, including participants in an assumption, are ineligible due to being debarred or suspended or restricted under a limited denial of participation and that there are procedures to assure that the mortgage applicant is notineligible due to a delinquent federal debt.