VA requires quality control
programs for origination to include
QC plan. Every nonsupervised lender's quality
control program must be in writing and must be submitted
with the application for automatic authority.
The quality control plan must provide for a program
of internal or external audit of the lender’s compliance
with VA loan
processing and underwriting requirements or independent
review by management personnel knowledgeable of such
requirements who have no direct loan processing or underwriting
scope. The QC plan must provide for reviews
of not less than 10 percent of all VA-guaranteed
mortgages the lender originates monthly,
including its branches and
authorized agents, except that lenders making more
than 140 VA mortgages monthly may
use statistical sampling methods. The sample must include
loans processed by all loan officers. It must expand
the scope when fraudulent activity or patterns of
deficiencies are identified. For LAPP lenders, the
reviews must include LAPP quality
procedures. Review of each branch office that originates
VA loans must have an annual on-site review.
The plan must provide for at least quarterly written
notification to the lender’s senior management of
deficiencies cited as a result of
audits or reviews.
action by management.
The QC program must require prompt and effective
corrective action by senior management on all deficiencies
identified by either the lender or VA and maintenance
of documentation of deficiencies and corrective actions
taken. Employees must be held accountable for
performance failures or errors and the program must provide
that for patterns of deficiencies identified, management
will provide corrective instructions to
all relevant employees.
reported to VA.
The plan must require prompt reporting of any violation
of law or regulation, false statements or
program abuses by the lender, its employees or any other
party to the transaction
to the VA office of jurisdiction. It must provide
for furnishing audit or review findings to VA on demand.
QC plan and VA policies kept current.
The QC plan must ensure that the lender’s
procedures are continually revised to reflect
changes in VA requirements and that employees are informed
of the changes. Each of the lender’s offices,
including its approved agents and branches must
maintains copies of all VA publications, including regulations,
releases relevant to the lender’s
VA loan origination
review of loans.
The QC plan must provide for the review all loans in
the quality control review sample within 90 days of
The plan must require written reverification of borrower’s
employment, deposits, and all sources of
funds and reordering of a new credit report from
another credit source.
processing. The plan
must assure that all loans submitted to VA for guaranty
are processed only by employees of the lender or by its
authorized agents and that no employee performing VA
loan origination or underwriting is debarred or suspended.
review. It must require
reviewer, on each loan, to determine whether underwriting
lender documentation are overall complete and accurate.