In reviewing several recent HUD Audit Reports as well as Fannie Mae MORA reviews, a common underwriting deficiency cited by the Auditors is unverified faxed documents.
In this regard, underwriters need to be reminded of their responsibility todetermine the authenticity of faxed documents contained in the loan file. For example, Bank Statements, Gift Letters, etc. that are forwarded to the lender via fax should be carefully reviewed with emphasis given to the information included at the top or banner portion of the fax.
Income, employment or asset documentation (including Gift Letters) sent to the lender via fax should clearly identify the name of the employer or Bank and the source of the information. Ideally, the name & phone number of the staff person responsible for transmitting the fax and is the most knowledgeable for verifying the accuracy of the data should be provided.
This frequent audit finding is low hanging fruit for an Auditor. Many times faxed documents contain only the date and time that the fax was transmitted and the source is not identified. As a result, the Auditor will simply state “Bank Statements from unknown source” or “Gift Letter from unknown source”.
Lenders can save themselves a lot of post-closing “agita” (or heartburn) by reminding their Loan Processors and Underwriters to make sure that any faxed documents properly identify the source of the fax.
The game has changed – play differently and get the “Fax” right the first time!