Fannie Mae QC Vendor Boot Camp Highlights

QC Ally

On the heels of MBA’s Compliance and Risk Management Conference, QC Ally had the pleasure of joining fellow industry experts in DC at Fannie Mae’s QC Vendor Boot Camp last week. The topics covered were essential in shedding light on the direction of the quality control space and will help drive QC Ally’s focus in the year ahead. Because this was an intimate event, we wanted to take a minute to share some key topics and takeaways covered:

  • Collateral Underwriter (CU)
    • Vendors will be given access to CU by the end of 2023 so they can incorporate into each audit.
    • The top defects being seen with CU include location, inadequate comparables, failure to make property adjustments, and inaccurate reports of condition and quality.
    • Reps and warrants on a CU score of 2.5 and below are not valid if any data/information inaccuracies are made by the appraiser. Loans with lower CU scores still need to be reviewed.
  • Gross Defect Rates
    • Fannie Mae is seeing the highest gross defect rates in their QC reviews since 2015.
    • Top 2022 QC findings were around inaccurate base and self-employment income, appraisal issues, rental income calculations, and omissions of debt/monthly payments not calculated.
    • Occupancy misrepresentation is increasing in 2023. Fannie Mae suspects high LLPA’s are causing some of the issues.
    • Fannie Mae suggests having a floor defect rate for targeted audits to ensure that this type of audit is resulting in high defect rates. If defect rates are not high, the selections need to be adjusted.
    • 4506 failures is another issue showing up in Calibrations along with Defect severity ratings need to be consistent from month to month.
  • Selling Guide and Beyond the Guide Updates
    • New version of Beyond the Guide dated August 2023 is available now on Fannie Mae’s website.
    • The Selling Guide reverifications section will be updated Q1 2024 to address when new verifications will be required. 
  • Emerging Technology
    • There are lots of exciting technologies on the horizon, including machine reading of appraisal photos and technology to create the targeted sample selections for audits.

For more takeaways, read Fannie Mae’s summary here.

QC Ally is your partner in enterprise loan quality and audit services. Have questions on any of the takeaways? We’re here to help!