The "Meaning" of Quality Control

States are Requiring Quality Control Process for New and Existing Broker/Lender Licenses

As the dust from the credit crisis continues to fly, many states are placing higher barriers to entry for lender or broker approval.  The primary issue is control of employees - brokers and lenders must have written policies in place to show that employees understand ethical, correct practices in place.  Our Broker, Lender or Wholesaler packages provide this.

• Arizona - Policies and Procedures

• California (DFI) - Policies and Procedures

• Georgia - Lender Quality Control Policies and Procedures

• Illinois - Quality Control Plan

• Massachusetts - Policies and Procedures, Information Security/Red Flag

• Maryland - Origination/Quality Control (Higher Cost)

• Michigan - Quality Control Plan

• Nevada - Complete Operation Policies and Procedures (Quality Control Plan)

• New York - Policies and Procedures

• Oregon - Responsible Person

• Pennsylvania - Employee Supervision - (Mortgage Act) and Origination/Underwriting (Repayment Ability)

• Texas - Best Practices/Compliance Policies and Procedures

• Utah - Principal Lending Manager/Reasonable Supervision

• Washington - Written Supervisory Plan

State Audit/Examination Focus

Obviously, a lender or broker with a lot of complaints will face a stiff examination process.  Examination preparation is only part of the problem.  Auditors are now looking at marketing practices, and whether the lender or broker encourages Hybrid or Sub-Prime Applications. 

You must have procedures in place to document marketing, counteroffer and complaint resolution issues, among hundreds of others.  Our Origination Module details compliance with State Audit Guidelines.

Audit Requirements for Sub-Prime/Hybrid Loan Guidance - 40 State Regulators Adopt Drastically Stringent Procedures and Audit Requirements

Agencies/Investors Requiring Quality Control Process

FHA

FNMA

FHLMC

VA

FDIC

OCC

NCUA

Pre- and Post-Closing Quality Control

Most investors are referring to the Fraud/Audit and Compliance Module when they are asking for a quality control plan - a non-rigorous review of a document that shows the broker or lender knows what a post-closing quality control review is.

Production Quality Control Plan

Some States and most warehouse lenders want a complete description of an applicant's or company's operating procedures to inspect efficiency or to guard against illicit practices.  This is the broker, banker or wholesaler package.

This can be a useful learning process for both regulator or warehouse bank and the broker or lender - it is extensive documentation of business practices.