The mortgage industry is shifting focus to the loan manufacturing process, emphasizing the importance of data quality and verifying loan data upfront.
Investing in quality is an essential part of the mortgage business today.
Rather than focusing on the “cost of quality,” lender executives should keep their eye on achieving a “return on quality” in the form of reduced risk.
Fannie Mae expects lenders to have strong loan quality practices throughout the mortgage loan life cycle.
Attendees of a breakout session at CUNA’s Lending Compliance School, June 14-18 in Las Vegas, learned more about Fannie Mae’s quality control requirements for lenders and how they can help credit unions manage risk.
Attendees also learned about new loan defect reports and other resources that Fannie Mae offers to help lenders meet regulatory requirements and manage loan risk.
According to the session, “Investing in Loan Quality to Manage Risk” with Tom O'Neill, Fannie Mae’s credit risk manager for loan quality, credit unions should have documented quality control plans that:
1. Outline requirements for validating that loans originate in accordance with established policies and procedures.
The loans must comply with applicable federal, state, and local laws and regulations as well as the Fannie Mae Selling Guide.
2. Have loan file reviews that are conducted before the loans are funded (pre-funding requirements) as well as after loan closing (post-closing reviews).
3. Contain pre-funding, post-closing, and discretionary review information, and final defect rate and resolutions.
4. Are useful and concise.