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Question:

Does Fannie Mae require us to review the work of our Quality Control vendor?

Answer:

 Yes, Fannie Mae requires a mortgage lender’s Quality Control Plan to include processes for reviewing the third party QC vendor’s work to ensure that the lender’s requirements and guidelines are applied consistently and that the review results accurately reflect the quality of the lender’s loan originations. The review must be performed at least monthly on a minimum of 10% of the post-closing QC sample reviewed by the vendor to validate the accuracy and completeness of the vendor’s work. The 10% sample must include loans for which the vendor identified defects and for which no defects were identified. Further, this review must be performed by the lender itself and cannot be contracted out.

In a previous FNMA Selling Guide update with an effective date of January 1, 2020, Fannie Mae added provisions requiring a lender’s monthly QC reports to include final results of the 10% QC vendor review.  The reports must be completed within 30 days following the publication of the vendor’s final QC management report.  

Although Fannie Mae does not specify an exact format, the reports must be useful to management in evaluating and monitoring the quality of the outsourced QC service provider. The reports, at a minimum, must include:

• a description of the sample selected for review,
• concurrence rates, and
• discrepancies identified by the lender.

The management reports must focus on inaccuracies uncovered in the current month’s review, as well as broad trends revealed by the vendor QC review process, identifying specific corrective action that is needed.