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FHA Brokers Continue to Flaunt HUD At Their Own Peril
I would guestimate that 95% of Non-Supervised Loan Correspondents (FHA Brokers) perform absolutely no post-closing audits on their closed or rejected loans as required by the HUD Handbook 4060.1.
The reason is quite simple; brokers are hoping (praying) that lenders/sponsors will be responsible for their post-closed audits.
Sorry, it's not going to happen.
Mr. David Stevens, Assistant Secretary of Housing/Federal Housing Commission (FHA), released a letter on July 20, 2010 addressing this issue.
To put it bluntly, brokers MUST perform a post-closing audit on 10% of their closed and rejected/denied loans or risk having their ability to originate FHA loans being pulled.
Very serious stuff, indeed.
Every single banker we spoke with said that, yes, they are going to require brokers to be responsible for their own post-closing audits.
You can read the entire letter HERE written from the desk of David H. Stevens Assistant Secretary for Housing/Federal Housing Commissioner. Or, the paragraph that really spells it out is the following:
"FHA's loan level review processes have been enhanced to more effectively manage risks and minimize losses arising from poorly underwritten or fraudulent loans. Processes have been modified and aligned across all Single Family offices to achieve a collaborative and comprehensive approach to evaluating loans throughout the loan lifecycle. For Post-Endorsement Technical Reviews, case selection criteria have been revised and review procedures enhanced and standardized. For lender and servicer reviews, the targeting tools and methodology have been strengthened to better target lenders and loans that pose the greatest risks to FHA. And, as FHA continues to increase our quality control efforts, we are paying close attention to areas where some may try to take unique advantage of the flexibility of FHA without the appropriate focus on quality."
If you're a broker reading this and your QC audits aren't up-to-date - CALL US NOW at (504) 342-4982 ext.101 or email us at Doug@Synergypartners.com.
So You Think Compliance Is A Big Joke?
Far, far too many brokers and lenders we talk with seem to think it's a joke to keep up with compliance and post-closing auditing.
The consequences are dire if you're not compliant. Do you think it's a joke to have your warehouse line pulled or your ability to fund FHA loans rescinded?
These two articles illustrate the growing importance for compliance.
Complance Officers Can't Keep Up!!
Compliance Officers Gain Importance!
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Here at Synergy Quality Control, we pride ourselves on having the best service and pricing in the industry. Our post-closing audits meet every standard (FHA, Conventional, VA..) and are designed to help our clients fund better loans by providing performance reports on their loans and employees.
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