Lender HUD-FHA Quality Control Plan for HUD and Ginnie Mae Approval
The most critical factor in creating and managing a HUD/FHA Quality Control Plan - aside from making sure it captures all of the requirements and allows you to create and relate to a defect taxonomy - is understanding who will review it.
This said, the most frequent finding in an FHA sanction remains lenders who do not maintain an acceptable quality control plan. HUD wants you to ensure you reference all 4000.1 Requirements in the QC Plan. We do NOT recommend simply creating a policy document in the format of the 4000.1 QC Plan requirements. Go through your plan, as we have, and identify where, within the plan, the required item is located.
This said, the most frequent finding in an FHA sanction remains lenders who do not maintain an acceptable quality control plan. HUD wants you to ensure you reference all 4000.1 Requirements in the QC Plan. We do NOT recommend simply creating a policy document in the format of the 4000.1 QC Plan requirements. Go through your plan, as we have, and identify where, within the plan, the required item is located.
Stage 1 - Mortgagee Approval
Although this stage your quality control plan won't be thoroughly tested. This means that, while important, this review tends to focus on more cursory elements; checking to make sure the top elements are simply addressed. Whether it actually works or not as a functional plan remains for the annual review to determine.
Stage 2- Annual Review
Annual reviews and certifications involves mortgagees submitting financial reporting, but these also focus on the independent review of your documentation by a CPA. While CPAs do not necessarily possess skills that a well versed lender would, relating to the mortgage process and the requirements of complete loan files without defects, they do have a detailed checklist (See AHCPA Quality Control Plan Checklist) which they use to determine whether the lender does, in fact, maintain a Quality Control Plan that meets FHA/HUD/Ginnie Mae Guidelines. )
This review, while extensive, isn't necessarily substantive as to whether your plan actually identifies and prevents loan defects in your delivery of FHA insured mortgages. In addition, your response to the examination isn't reviewed or criticized by HUD.
This review, while extensive, isn't necessarily substantive as to whether your plan actually identifies and prevents loan defects in your delivery of FHA insured mortgages. In addition, your response to the examination isn't reviewed or criticized by HUD.
Stage 3 - HUD Audit/FHA Review
You may have a high compare ratio, loans with multiple defects, or you may simply be a convenient target. While some lenders never get audited, FHA intends to audit a sampling of mortgagees every year. This is the review that results in suspension of your ability to originate FHA/HUD loans if it reveals substantial or even technical deficiencies. It often focuses on the Quality Control Plan, and if your plan has remained static since your mortgagee approval, you may be disappointed to note that it doesn't meet the auditor's standards.
We interact with our lender clients and learn whether, during a review, our plans or their procedures get criticized. We help address issues and then use that information to make refinements to our plans. This is why we can guarantee our plans meet guidelines; our clients have used them and passed their exams with flying colors!
We interact with our lender clients and learn whether, during a review, our plans or their procedures get criticized. We help address issues and then use that information to make refinements to our plans. This is why we can guarantee our plans meet guidelines; our clients have used them and passed their exams with flying colors!
