D1-1-03, Lender Quality Control Reporting (06/04/2025)

Although Fannie Mae does not specify an exact format for reports, the lender must design reports that are useful to management for evaluating and monitoring the quality of the lender's loan production.

The lender must provide Fannie Mae with a copy of its QC reports upon request.

At a minimum, the lender's reporting must

• be in writing and shared with management each month,
• summarize results into a comprehensive, summary report of all QC findings,
• communicate defects to responsible parties (that is, lender departments or business units), and
• use consistent methodology and terminology, including defect categories, defect subcategories, and severity levels.

Prefunding and prepurchase reports must, at a minimum, include:

• the date the report was published;
• a description of each sample selection, including the sample criteria, number of loans reviewed, and percentage of total eligible loans reviewed;
• the rationale for each discretionary and each component review;
• summaries of the results of all random, discretionary, and component reviews;
• summaries of monthly third-party originations, including random, discretionary, and component reviews, if applicable;
• defect trending for all defect severity levels;
• the initial (gross) defect rate for, at minimum, the highest severity level resulting from each sample for at least the last three months;
• defect trending by category and subcategory for at least the last three months;
• the calculation used to determine the sample size of the population(s) reviewed;
• the resolution of specific defects; and
• corrective action plans to address defect trends.

Post-closing reports must, at a minimum, include:

• the date the report was published;
• a description of each sample selection, including the sampling criteria, number of loans reviewed, and percentage of total eligible loans reviewed;
• the rationale for each discretionary and each component review;
• summaries of the results of all random, discretionary, and component reviews;
• summaries of monthly third-party originations, including random, discretionary, and component reviews, if applicable;
• defect trending for all defect severity levels;
• the defect rate for, at minimum, the highest severity level resulting from each sample for at least the last three months;
• defect trending by category and subcategory for at least the last three months;
• the resolution of specific defects; and
• corrective action plans to address defect trends.

In addition, post-closing reports must

• distinguish between defects related to compliance with applicable law and underwriting and eligibility defects,
• include reverification success rates by reverification type per D1-3-03, Lender Post-Closing Quality Control ReverificationsD1-3-03, Lender Post-Closing Quality Control Reverifications,
• include the final results of the 10% QC vendor review described in D1-1-02, Lender Quality Control Staffing and Outsourcing of the Quality Control ProcessD1-1-02, Lender Quality Control Staffing and Outsourcing of the Quality Control Process, if applicable, and
• identify loans required for investor self-reporting.