For those of you that sell loans to FM, on your QC reviews, what are your testing procedures? The information I received is as follows, but I'm not sure this is correct after skimming the FM guidelines on originating quality mortgages.

Randomly select 10% of all loans closed during the testing peroid - then audit by:
1. Re-verifying income/employement(by contacting the employer or from the credit report?)/and assets;
2. Ordering review appraisals from a second independent appraiser on 10% of those selected;
3. Ordering a new credit report on 10% of those selected
* Plus reviewing the original credit report pulled and doing in-house appraisal reviews on the other 90% selected for testing?*

Thank you for any help and insight you can provide.

Do you have a FNMA handbook? There should be guidelines in that for quality control reviews. You can also find them on www.allregs.com, but I believe you have to register to use that service. We don't have FNMA loans, we have FHLMC, and I follow the procedures from those to resources. Good luck!

If FNMA accepted the loan, then why would you be doing so much? They wouldn't have accepted it if it had problems. From an Internal standpoint, I would review the underwriting process - make sure proper disclosures are in the file - make sure all proper documentation was obtained and signed - recalculate LTV and DTI ratios - make sure the appraiser used was board approved - look at fees that they were properly collected and applied to the appropriate gl account - make sure proceeds were properly approved - that we received the proper funds from FNMA - make sure HMDA data is accurate - make sure segregation of duites is in place - you are mostly looking to ensure that the department has proper controls and procedures in place - and this is my own opinion, but I would not get another appraisal nor would I run another credit report -

FNMA and FHLMC have certain quality control procedures that lenders must perform if they want to sell loans on the secondary market. FHA and VA also have their quality control procedures that must be followed. Quality control is very important and performing this function properly can and does very often uncover fraudulent activities by unscrupulous lenders, buyers, sellers, builders, appraisers, realtors, applicants, etc.

I have to order either a review appraisal or a new appriasal of 10% of the loans I sample for Fannie Mae. That is per their guidelines. And yes, the financial institution has to pay for it out of their pocket. I also have to reverify the employment. Those are two of the required items under Fannie Mae QC guidelines. Many other things have to be recalculated, reran, etc. If you are selling loans to Fannie Mae, you might want to read the selling guide.