Don’t Mess Around
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Compliance
Prepare your company for HUD reviews and avoid
costly underwriting errors
Early this year, HUD issued Mortgagee Letter No. 2011-02 (
sctsm.in/
ML2011-02), which emphasized what
lenders can expect from HUD going
forward. Though the letter addresses
FHA-approved lenders (aka mortgagees), HUD’s intent seems clear: to audit mortgage professionals, including
mortgage brokers who fall under the
scope and responsibility of approved
mortgage lenders.
The letter states that all FHA-approved mortgagees must implement
a quality-control plan that requires the
review of loans originated or underwritten. When mortgagees sponsor third-party originators, their plan must review those originations, as well.
operational errors. The best plans also
will require submitting monthly reports
to senior management for review and
response. Competent managers should
be able to identify areas of risk and any
violations of FHA guidelines.
Mortgagee Letter No. 2011-02 goes
on to state that mortgagees using
third-party originators must determine
the appropriate loan-review sample
size; document their review methodology, results and corrective actions;
and make their records available upon
HUD’s request for two years after loan
origination.
Whether you’re a mortgage broker or lender, an au- dit by the U.S. Department
of Housing and Urban Development
(HUD) could shake your world if you’re
not prepared. Repurchase requests
from investors could create similar effects. By preparing a robust quality-control plan, however, you can protect
your company on both fronts.
Nothing is guaranteed, but a good
plan can help you survive many
threats, including those related to
Federal Housing Administration (FHA)
loan production.
continued on page 44 »
At the start of this year, HUD
changed the face of FHA lending
by placing brokers under the over-
sight of lenders, ending HUD’s prac-
tice of directly approving FHA loan
correspondents.
“Nothing is guaranteed,
but a good plan can help
you survive many threats.”
Lenders’ quality-control plans represent the best way for HUD to determine whether a company is policing
itself and correcting underwriting and
George H. Marentis is president and CEO of
Mortgage Compliance Consultants LLC. MCC
provides the mortgage-lending industry a
wide range of compliance-related services,
including due diligence and quality-control
reviews, policy reviews and creation, and state
and national licensing services. Marentis has a
law degree and more than 18 years’ mortgage-lending experience, ranging from frontline
operations and originations to regulatory and
legislative compliance. For more information,
visit www.mortgagecomplianceconsutlants.
com, call (303) 859-8550 or e-mail gmarentis@
mortgagecomplianceconsultants.com.
