Submitting Missing or Incomplete Documents for PLs in QC and Other QC Updates
March 13, 2014
We're focused on providing you with the tools, technology, and transparency to give you greater certainty that the loans you sell to Freddie Mac meet our requirements. As part of this focus, we are making the following updates to our QC file review processes:
- Providing the opportunity for you to submit missing and incomplete documents during performing loan (PL) reviews.
- Refining our targeted PL sample methodology.
Allowing Submission of Missing or Incomplete Documents for Performing Loan Reviews. Beginning April 1, 2014, you will be able to submit any missing or incomplete PL documents, including anti-predatory lending compliance loans that could impact a loan decision. Loan manufacturing process trends may surface during the reviews, enabling you to correct possible deficiencies in your documentation, collection, and transfer processes. This new process will allow Freddie Mac to make a proper loan decision and ultimately reduce the number of repurchase requests and subsequent appeals.
For this process you'll receive an email with spreadsheets attached listing the PLs under review where our underwriters identified missing or incomplete documentation, including the specific documentation we need to make the final loan decision.
We will use the same notification process we use when notifying you of missing or incomplete documents for non-performing loans (NPLs). If the individual who should receive this notification for PLs is different from your NPL contact, please notify us at QC_npl_missing_documentation@freddiemac.com.
If you do not return the requested documentation within 14 calendar days from our notification, our underwriters will make a final loan decision based on the documentation in the file.
If the loan is determined to have a material defect in addition to missing or incomplete documentation, you will only receive a repurchase request. The repurchase request will identify both the QC issue and the missing or incomplete documents.
Refining Our Targeted PL Sampling Methodology. As announced in our October, 19, 2012, Industry Letter, new technology and data-gathering tools used to analyze loan-level data – including the Uniform Loan Delivery Dataset (ULDD) and the Uniform Collateral Data Portal – have enabled us to refine our targeted PL sampling methodologies. As a result, you may notice a slight increase in targeted review numbers and a change in the types of loan files requested.
Targeted samples are selected based on several factors; including underwriting, credit, collateral, and capacity. Refining our sampling methodology will help us better understand the loans being originated in the market and delivered to us
As a reminder, you're encouraged to use our QC review findings to identify and correct possible deficiencies in your loan manufacturing process to help ensure the loans you deliver to Freddie Mac are eligible for sale. You will see more of these changes throughout 2014 as we continue to refine and adjust our PL targeted methodology.
For more information about our sampling process, we encourage you to listen to our latest TipCast featuring Pam Padgett, vice president, Single-Family Quality Control Underwriting. Pam shares insights into our QC sampling approach so you can better understand how we decide what loan files to request and when.
Using Tools and Technology. We are aware that underwriting and process deficiencies are costly and want to work with you to reduce these costs where possible. To help enhance your loan manufacturing process, you are encouraged to leverage Loan Prospector®, Loan Quality AdvisorSM, ULDD, Uniform Appraisal Dataset data, and other risk assessment tools. These resources will help you detect and correct loan deficiencies early so you can be more confident about the quality of the loans you sell to Freddie Mac.
For More Information
- Review the October 19, 2012 Industry Letter.
- Take advantage of resources on our Quality Control Web page.
- Contact your Freddie Mac QC representative.