Question: What is the time frame requirement with regard to post-closing quality control (QC) audits? In short, when must they be completed?
Answer: HUD and VA require that FHA and VA loans be reviewed within 90 days of closing. For example, loans originated in October 2013 must be audited by Jan. 29, 2014.
Freddie Mac says the “the results of quality control reviews must be reported in writing to the Sellers’ senior management within 90 days of selection of the mortgage files for review” (Freddie Mac Single Family Seller/ Servicer Guide, Section 48.10). For example, the results of the audit of loans originated in October 2013 must be reported to senior management by the end of January 2014.
Fannie Mae, with their release of SEL-2013-05 on July 30, 2013, requires that the entire post closing quality process be completed within 120 days from the month of loan closing, with the following breakdown: Loans must be selected for audit within 30 days, the QC review and rebuttal must be completed within 60 days, and the results of the audits must be reported to senior management within 30 days. For example, for loans originated in the month of October 2013, the file selection must be made by the end of November 2013, the quality control audit and rebuttal must be completed by the end of January 2014, and the reporting of the results to senior management must be completed by the end of February 2014.
At Lenders Compliance Group, we provide our clients with a Preliminary Quality Control Audit Report in no later than 50 days from the date we received the selected files and then we release the Final Quality Control Audit Report in no later than 60 days from the date we received the selected loan files. This ensures that our clients are always in compliance with respect to the quality control time frame requirements.
Bruce Culp is director of loan analytics and quality control for Lenders Compliance Group.