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Cars, trumpets, measurement devices, and now the loan quality control process are a few of the common calibrations we need to perform to ensure high standards in execution. Starting in 4Q 2022 and rolling out more robustly next year, Fannie Mae® announced that the agency will begin calibrations with its customer base to understand the precision and accuracy of a lender’s QC effectiveness.
Unlike full-scope Mortgage Origination Risk Assessment (MORA) audits that drill down into operational risk and guideline adherence, these calibrations will be focused more on driving continuous QC improvement. Calibrations will look back at recent QC data and will take more of a “check-in” style approach rather than deep dive.
While any review can cause angst, our clients using LoanHD® can breathe easy.
For starters, the system is based on the Fannie Mae taxonomy for tests set management to help lenders meet and streamline reporting requirements. Any unique Freddie Mac requirements are also incorporated but because the two are usually aligned the “Fannie first” foundation is an effective practice.
Other key features that help with GSE QC calibration readiness and the overall process include:
The Audit Bundle reporting module which is an agency-focused reporting preparation tool that allows you to quickly take the list of loans an agency wants to review and bundle all the documents required into one PDF for each loan requested. This process takes a few minutes compared to a manual alternative that can take a few days depending on the number of loans. LoanHD uses automation to tie together all the loan-level reports, including compliance reports, their worksheets with calculations, appraisal/field reviews, rebuttal commentary, and the reverification summary.
LoanHD provides a direct link to agency guidelines right from the related tests. This allows auditors to refer to the specific guideline within a given quality control test should there be any uncertainty with the result or response.
Our Action Plan Reporting module also provides a complete picture of how effective the training programs and corrective action plans are against identified defect trends. We’ve talked a great deal about this module in previous blogs, like this one.
Lenders also have the ability to add their own custom tests to our test management module to further refine their QC controls.
LoanLogics also takes proactive steps to help clients with continuous QC process improvement that positively impacts agency check-ins of all types. First, we meet with many services clients monthly to review trends and discuss findings from both parties to stay ahead of issues and/or clear up misinterpretations of the guidelines. We also have a great feedback loop that helps guide product enhancements. As recently as this year, clients have suggested new features that would alleviate even more MORA review pain points. One example is offering the ability to add and download comments within the audit bundle reporting module. Making reverification and rebuttal comments easily accessible surfaced as a need and was added to the LoanHD release schedule.
Furthermore, LoanLogics is always ”calibrating” with the agencies themselves keeping abreast of upcoming changes, attending their industry Q&A sessions offered to vendors and making enhancements in LoanHD. This fall LoanLogics will add the results of the new Fannie Mae Collateral Underwrite checklist within our reporting module. We’ll also roll out some additional test enhancements that cover some of the latest Fannie Mae requirements and readying the system for additional ones likely to come next year.
If you’d like to discuss how LoanHD can get you ready for QC calibrations, reach out for a product introduction today.
Also, if you liked this content, peek at our related blogs that highlight how data-driven QC solutions, like LoanHD can help address not only GSE QC calibration readiness but other areas in which the GSE closely monitors:
- Part 1: Loan Quality Insights in Reporting
- Part 2: Loan Quality Insights in Reporting
- Stay the Course on this GSE Recommended QC Plan with LoanHD®
