Wednesday, July 14, 2010

Fannie Mae: Loan Quality Initiative Summary


Since the introduction of Fannie Mae's Loan Quality Initiative on February 26, 2010 (LQI), several important updates and announcements have been issued.

On June 28, 2010, Fannie updated its matrix, entitled Loan Quality Initiative (LQI) Summary and Additional Information (Summary), which summarizes enhancements, and provides key calendar date, tools, and resources.

The Loan Quality Initiative has focused on several areas, including:

  • policies that confirm the identity and occupancy of the borrower, validation of qualified parties to the transaction, and policies that address the borrower's credit profile;
  • updated quality control requirements for lenders and an improved feedback loop;
  • the delivery of additional information about the property and the appraisal;
  • loan delivery enhancements, including,
  1. validation of loan eligibility at delivery,
  2. a new capability that enables lender validation of data before, during and immediately after loan delivery, and,
  3. collection of additional loan data at delivery and transition to an XML format;
  • reporting and validation of mortgage insurance coverage data.

Inasmuch as revisions and implementation dates related to the above-mentioned areas are also incorporated by reference into Fannie's Selling Guide, the Summary is an important information resource and guide.

At this time, the Summary contains columns for:

  • Change or Enhancement: policy or procedure subject to revision
  • Communications: references and citations
  • Key Dates: effective dates for compliance implementation
  • Tools and Resources: information and outreach facilities

The Summary also contains a conversion matrix for the Calendar of Key Dates, chronologically outlined, with correlating Loan Delivery descriptions, and areas affected (i.e., Communications, DU, and Other).
Monitoring Fannie's LQI is central to mortgage compliance implementation and should be regularly reviewed by all compliance personnel.

If you have any questions about this matter or would like assistance with mortgage compliance, please contact Jonathan Foxx, Managing Director or call 516-442-3456 x 100.

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Loan Quality Initiative (LQI) Summary and Additional Information
Revised 6/28/10
Fannie Mae