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Fannie Mae raises the bar on loan quality

Apr 19, 2023

Fannie Mae, one of the largest purchasers of residential mortgages in the United States, recently announced updates to its selling guide. These changes affect the post-closing and pre-funding quality control (QC) requirements and are to be implemented no later than September 1, 2023.

Fannie Mae selling guide updates

Fannie Mae will require lenders to conduct a pre-funding QC review on a minimum of 10% of loans sold to the organization — up to 750 per month. In addition, the total time of the post-closing QC cycle has been reduced from 120 days from start to finish to 90 days.

These changes ensure that loans sold to Fannie Mae meet the standards for quality and eligibility. By increasing the sample size of pre-funding QC reviews and shortening the entire QC cycle on the post-closing QC, Fannie Mae aims to reduce the risk of defects and repurchases.

Fannie Mae also announced changes to its policies regarding appraisal waivers, sweat equity and other areas.

Potential impacts

It is important for mortgage industry professionals to familiarize themselves with these changes to ensure compliance with Fannie Mae's selling guide. Mortgage industry professionals should review SEL-2023-02 as well as other selling guide updates to stay informed.

Failure to comply with Fannie Mae's requirements can result in penalties and repurchases. Lenders will likely need to adjust their QC processes and procedures to meet these new requirements.

Although Fannie Mae was the first to make these changes, when one government-sponsored enterprise makes a notable change like this, the others often follow suit. We recommend mortgage industry professionals review these changes and adjust their processes accordingly to ensure compliance with Fannie Mae's standards for loan quality and eligibility.

How Wipfli can help

Wipfli’s secondary market quality control services are performed by seasoned lending professionals who come from diverse backgrounds and areas of experience, giving them a deep understanding of this highly specialized field. Our team of QC professionals willingly share knowledge and best practices to give institutions a solid leg to stand on. With Wipfli on your side, you can be more confident in the integrity of your loans, knowing your QC review is being performed completely independently of the mortgage origination and underwriting departments.

If you prefer, we can also help you keep the process in house, by assisting you as you review existing procedures and develop new ones. Contact us to get started.

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AnneMarie E. Marchel, CMQCS
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