Fannie Mae requires its servicers to maintain adequate internal audit and management control systems. This includes a delinquent servicing QC system.


Components of control system. The lender that fails to maintain adequate quality control measures will be in breach of
its Fannie Mae mortgage selling and servicing contract. The servicer's internal audit and management control system must:

  • assure that the mortgages are serviced in accordance with sound mortgage banking and accounting principles,
  • guard against dishonest, fraudulent, or negligent acts, and
  • guard against errors and omissions by officers, employees, or other authorized persons.

Loan servicing quality control measures. The servicer must design its audit and control systems to assure that its staff complies with Fannie Mae's requirements, with the legal requirements of each jurisdiction it operates in and with the requirements of any other party that may have an interest in the way the mortgage is serviced.


Fannie Mae does not specify the particular types of audit and control systems a servicer must have but requires the servicer to develop a well-documented control system for those areas that represent the greatest risk exposure and potential for losses. These include at a minimum providing a:

  • delinquent loan servicing system,
  • system to control and monitor bankruptcy proceedings and
  • foreclosure monitoring system.

Corrective action. If these systems identify a problem area, the servicer must promptly take appropriate corrective action.


Record keeping. The servicer must keep a record of any activity under these internal systems. If Fannie Mae requests, the servicer must make these records available for its review.