Mortgage

Internal Audit Insight: Servicing Quality Control

In the world of loan servicing, quality control (QC) can make or break your ability to stay compliant and keep things running smoothly. That’s why, in the latest episode of The Internal Audit Insight, we tackle Servicing QC head-on, offering practical tips to help you strengthen your processes and stay ahead of the curve.

Compliance is Key

HUD, Fannie Mae, and Freddie Mac have different requirements for Servicing QC, and it’s important to understand those nuances. While HUD mandates monthly QC reviews, the specific focus areas may vary, and Fannie Mae bases its requirements on the size and complexity of a servicer’s portfolio.

Sub-Servicers Aren’t Off the Hook

If you use a sub-servicer, don’t assume their QC process covers everything you need. Their QC is often more focused on their overall portfolio than your specific loans. That’s why working with your sub-servicer is critical to ensure their QC efforts align with your requirements.

Sampling Strategies

We discuss the importance of stratifying your QC samples. To ensure comprehensive coverage, you’ll want to select samples based on criteria like loan product type, investor, and risk level. High-risk loans, like early payment defaults and loans in natural disaster areas, should be a priority.

Reporting and Accountability

It’s not just about doing the QC; you need to document and report your findings. Make sure your reports are clear and actionable and reach senior management in your organization. Reports should identify discrepancies, analyze the root causes, and detail corrective actions.