COVID-19 FAQs Selling - Quality Control
Last Updated: July 1, 2020
In response to the COVID-19 national emergency, Fannie Mae and Freddie Mac have provided temporary guidance to lenders on several policy areas that support selling mortgage originations. These FAQs provide additional information on the temporary policies. We will be adding more FAQs, therefore we encourage you to check in frequently for updates - refer to the "NEW" or "UPDATED" notations after the question.
If my company is not having issues performing reverifications at this time, do I have to implement these flexibilities?
No. Only implement the flexibilities offered in Lender Letter LL-2020-03, Impact of COVID-19 on Originations if needed by your firm.
In lieu of a field review, how should the QC reviewer evaluate the appraisal?
In conjunction with this relief, Fannie Mae has developed a checklist to help your QC reviewer appropriately evaluate this population of appraisals.
Am I required to use the checklist developed by Fannie Mae to evaluate the appraisal in lieu of a field review?
Use of the checklist is not mandatory but provides recommended areas to focus your QC reverification review of the appraisal.
By completing the checklist in lieu of a field review, do we receive relief from representations and warranties?
No, this process is designed as an alternative to the post close QC field review and as such does not provide any new or additional relief from representations and warranties
What if I cannot obtain tax transcripts that are required as part of my post-closing QC process?
If verbal or electronic reverifications cannot be completed, lenders can complete the file review without the reverification. However, lenders must:
- internally track all loans that did not have a successful reverification attempt during this time, and
- conduct a special discretionary sample of such mortgages and perform the required reverifications on the sample population upon the expiration of the flexibilities contained in Lender Letter LL-2020-03, Impact of COVID-19 on Originations
As a reminder, the reporting requirements of D1-3-06, Lender Post-Closing Quality Control Reporting, Record Retention, and Audit continue to apply with respect to this special discretionary sample(s).
Reminder: Lenders should prioritize execution of IRS Form 4506-T in the special discretionary sample(s) based on the expiration date of the IRS Form 4506-T.
Lender Letter LL-2020-03, Impact of COVID-19 on Originations requires a special discretionary selection if we utilize the reverification flexibilities. Is there a required sample size?
This sample should take into consideration the lender’s assessment of the risks, business source and volume. Ensure the sample size selected is meaningful relative to the risk evaluation. As a reminder, reverifications are a critical element of the post close QC process in assessing the factualness of information that was replied upon in making the lending decision.
Do the flexibilities provided in Lender Letter LL-2020-03, Impact of COVID-19 on Originations apply to QC Vendors?
QC Vendors act as agents for lenders and should only adopt these flexibilities based on guidance from their lender customer.
Will a loan entering early payment default status result in an automatic repurchase request?
No, we will follow existing QC practices to review any sampled loan against the requirements of the Selling Guide and any other agreements in place at the time of delivery to us. Remedies for any identified defects will be issued in accordance with the Guide.
- When should a lender take advantage of the temporary reverification flexibility announced in Lender Letter LL2020-03, Impact of COVID-19 on Originations?
This flexibility is offered for lenders that may not have the ability to mail manual reverifications or the electronic service they utilize is not available for processing during the coronavirus pandemic. In such case, a lender can complete the file review without attempting the reverification, provided the lender meets the tracking and sampling requirements set forth in LL-2020-03.
- Are IRS Form 4506-T requests included in the temporary flexibility announced in Lender Letter LL-2020-03, Impact of COVID-19 on Originations for reverifications that are typically mailed?
Yes, Form 4506-T requests are included.
- How should lenders treat IRS Form 4506-T requests that are “in process” but have been delayed?
An IRS Form 4506-T that has been delayed should be treated as a reverification flexibility; however, when the IRS resumes operations and the tax transcript is obtained, a lender may remove the loan from the special discretionary sample selection required for reverification flexibilities.