Home lenders that work with
Mortgage companies got the heads up about new prefunding tasks and shorter post-close review timeline earlier this year, but the requirements have been optional. The changes become mandatory starting Sept. 1.
"I think for mortgage lenders, the biggest thing that they have to weigh is how operational ready are they to implement this and what are the costs? Do I do this myself, or do I outsource it?" Jenevieve Impavido, vice president, audit services, at LoanLogics said in an interview.
The changes on a net basis effectively shift the emphasis of the reviews away from post-closing and more toward prefunding in what appears to be an effort by Fannie to
"It's a huge change for a lot of lenders that are looking at
"I think they were probably seeing a rise in fraud as well as a rise in errors due to the market changing from a refinance to a purchase market," she speculated, when asked why Fannie officials made the changes. "They're trying to cut off that risk by implementing these prefunding reviews to help lenders identify where the risk might already exist, so they can remedy that before the loan closes."
During prefunding, Fannie Mae lenders will need to complete reviews on 750 loans or 10% of the previous month's production, with August being the reference period for mortgages processed between Sept. 1 and 30. The minimum number or percentage of loans reviewed is based on the lesser of the two categories.
"That can be mixed between a full file review where you're reviewing every component, every loan attribute and every underwriting attribute. Or you can do a mix of component reviews which focus on certain underwriting elements like income employment, or credit assets," Impavido said.
The post-closing requirement takes effect for the review period starting Sept. 1 and ending Nov. 30.
