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Department and Function Reviews

Dan Duggan
Sep 16, 2016

Question: What department and/or functions are subject to review from regulators or investors?

As the world of mortgage compliance continues to evolve and grow, virtually every department/function is subject to review.

More specifically, Fannie’s Mortgage Origination Risk Assessment guide outlines areas that are subject to review, which include:

►Organizational Structure and Governance
Origination Channels – Retail (as applicable) and Correspondent (as applicable)
Underwriting and Approval
Pre-Funding and Post-Closing Quality Control
Compliance/Internal Audit
Secondary Marketing
Business Continuity and Disaster Recovery 

While Quality Control, as it relates to timely and proper execution of documents, seems to gather much of the attention in the press, it has become increasingly important to ensure that all of the departments/functions noted above are prepared to answer the bell when your investor or regulator comes knocking.

It is critical to not only have your policies and procedures in place but also that you have demonstrated you are acting in accordance with your policies and procedures.

In addition, you should be prepared to provide evidence that your senior management team and/or Board of Directors has approved the policies and procedures that provide the blueprint for your mortgage banking functions.

From a Risk Management and Secondary Marketing perspective it is important to identify, monitor and adhere to specific risk tolerance metrics that are used to manage the interest rate risk associated with your pipeline. An internal audit and/or review by an independent third party can help you identify your areas of strength and weakness.

Dan Duggan is director of Secondary & Capital Markets for Lenders Compliance Group.

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