Here at Complaince Services we offer a pretty robust Compliance Program. Part of it we call “Book Four” – a fully compliant Quality Control Manual with five different audit checklists for QM and Government Loans….including the HECM.
Many of you function as Brokers and believe that QC is something the LENDER should do; that you don’t have a duty to participate. You are wrong. You have no credibility without QC.
Those of you that function as Lenders frequently make the mistake of having a production person or an MLO involved in what you call your post-closing QC. That’s just not acceptable. It is not arms length and can encourage fraud which is what the QC rules strive to prevent. Some Lenders we speak with don’t do QC at all. Wow is all I can say. That is a really good way to end up on an annual audit list or be fined right out of existence when the regulators find the errors you could have caught.
Here are my recommendations. I have been through plenty of audits, I speak from experience.
- Start taking this requirement seriously. If you are a Broker, set your goal at 5% including declined and withdrawn files. Learn and improve. And if you are a Lender, especially one approved by FHA, VA, or the USDA – this is NOT an option. Set your goal at 10% and make sure your QC is done by a properly “firewalled” person or party.
- The NUMBER ONE problem we see in the post-closing QC we perform is a lack of a fully executed, signed, complete closing package. Your closing agents will give this to you if you demand it. You have a right to it. You need it. You are allowed to have it under RESPA and other regulations – because you need it to prove what closed was correct and complete. HOW are we going to protect you if your company is audited and you have no closing files?
- The NUMBER TWO problem we see is inconsistent management review of our reports. You must take the QC report, review it, and put your plan to comply or correct in writing. You distribute the management response to the employees involved. You attach the management response to the QC report we provide. What good are these reports if management does not use them? If you see something you disagree with, just say so in your response – but respond you must.
Finally, this has nothing to do with President Trump potentially revising Dodd-Frank. QC is here to stay. Pay attention to it.
If you would like us to give you a quote for QC services, CLICK HERE.
Thanks for reading.
Nelson A. Locke, Esq.