QUESTION:
What department and/or functions
are subject to review from regulators or investors?
ANSWER:
As the world of mortgage compliance
continues to evolve and grow, virtually every department/function is subject to
review.
More specifically, Fannie’s
Mortgage Origination Risk Assessment guide outlines areas that are subject to
review, which include:
- Organizational Structure and Governance
- Origination Channels – Retail (as applicable) and Correspondent (as applicable)
- Underwriting and Approval
- Closing/Post-Closing/Funding
- Pre-Funding and Post-Closing Quality Control
- Compliance/Internal Audit
- Secondary Marketing
- Technology
- Business Continuity and Disaster Recovery
While Quality Control, as it
relates to timely and proper execution of documents, seems to gather much of
the attention in the press, it has become increasingly important to ensure that
all of the departments/functions noted above are prepared to answer the bell
when your investor or regulator comes knocking.
It is critical to not only have
your policies and procedures in place but also that you have demonstrated you
are acting in accordance with your policies and procedures.
In addition, you should be
prepared to provide evidence that your senior management team and/or Board of
Directors has approved the policies and procedures that provide the blueprint
for your mortgage banking functions.
From a Risk Management and
Secondary Marketing perspective it is important to identify, monitor and adhere
to specific risk tolerance metrics that are used to manage the interest rate
risk associated with your pipeline. An internal audit and/or review by an
independent third party can help you identify your areas of strength and
weakness.
Dan Duggan
Director/Secondary & Capital Markets
Lenders Compliance Group
