Fannie Mae Selling Guide D1-3-01 — Lender Post-Closing Quality Control Review Process

Fannie Mae Selling Guide D1-3-01 — Lender Post-Closing Quality Control Review Process

D1-3-01, Lender Post-Closing Quality Control Review Process (04/01/2026) Introduction This topic contains information on the lender’s post-closing QC review process and selecting loans for the post- closing QC reviews, including: Timing of QC Review Process Loan Selection Process Published May 6, 2026 1049 Random Selections Discretionary Selections Timing of QC Review Process Loans must be selected for post-closing QC reviews on at least a monthly basis. The entire QC cycle (selection, review, rebuttal, and reporting) must be completed within 90 days from the month of the disbursement date (loans they originate) or acquisition date (loans they acquire). Note: If the lender's QC cycle is in arrears more than one 30-day cycle, the lender must provide written notice to its Fannie Mae customer account team or QC Specialist. Loan Selection Process The lender must establish and document a process for identifying a representative sample of loans for QC file reviews. The post-closing QC process must include both random and discretionary file selections. Random Selections The random sample is a critical measure of loan quality. It provides representative insights into the overall quality of originations during a specific period and serves as the basis for calculating the lender's defect rate. The lender has the option to implement one of two methods of random sampling: a 10% sample of all monthly loan production, or a statistically valid sample of all monthly loan production. Both sampling methods require the lender to randomly select loans. The lender must decide which sampling method is best for its organization to best allocate its QC resources. With both options, the post-closing random sample must be completed using full-file reviews. Lenders must conduct separate reviews for their retail originations (loans they originate) and their third-party originations (loans they acquire). Specifically, the lender must select a stratified sample for both channels using either methodology described below. Random Sample Types Published May 6, 2026 1050 Random - 10% Sample The lender must select for its post-closing QC review, a minimum of 10% of the loans that it originates or acquires using a random selection methodology. If 10% is less than one loan, then at least one loan must be selected. The loans selected must be representative of the lender’s overall book of business, including: • all of the different types of loans the lender offers, • loans originated by each branch office, • manually underwritten loans, and • loans that were processed through automated underwriting system(s) utilized by the lender. Random - Statistical Sample If the lender uses statistical sampling for its selection process, at a minimum, the statistical sampling model (variables) must be calculated using a 95% confidence level with a 2% precision rate and a statistical statement of six months. Discretionary Selections Discretionary sample selections supplement, but do not replace a lender's random sample. The purpose of a discretionary sample is to look for or highlight areas that may pose unique or elevated levels of risk for the lender or to confirm that a particular control or process is working as intended. To be effective, the sampling methodology for discretionary review types must be flexible enough to target loans with higher potential for risk and adjust as these risks change over time. The lender must establish a process for selecting loans for its discretionary post-closing QC. While the lender may include randomly targeted reviews, the process must target areas the lender identifies as having a higher potential for errors and loans that may have a high risk of misrepresentation or fraud, including early payment defaults, as described in A3-4-03, Preventing, Detecting, and Reporting Mortgage Fraud. The process should take into account the lender’s assessment of the risks inherent in its origination processes, business sources, production channels, volume, product mix, and loan performance. The lender should regularly review its risk assessment to ensure the sample selected, including sample size, is appropriate. Recent Related Announcements The table below provides references to recently issued Announcements that are related to this topic. Announcements Issue Date Announcement SEL-2026-03 April 01, 2026 Published May 6, 2026 1051 Announcements Issue Date Announcement SEL-2025-04 June 04, 2025 Announcement SEL-2023-02 March 01, 2023 Announcement SEL-2020-03 June 03, 2020 Announcement SEL-2019-07 August 07, 2019 Announcement SEL-2019-03 April 03, 2019 D1-3-02, Lender Post-Closing Quality Control Review of Approval Conditions, Underwriting Decisions, Data, and Documentation (04/01/2026) Introduction This topic contains information on the lender’s post-closing QC review of underwriting decisions, DU findings, approval conditions, origination and closing documents, and data integrity including: Overview Review of Underwriting Decision and Approval Conditions Review of DU Findings and Conditions Verification of Data Review of Potential Red Flag and Alert Messages Review of Social Security Numbers Review of Transaction and Closing Documents Overview The lender must verify the accuracy and integrity of the information used to support the underwriting decision for any loans selected for a QC review. Review of Underwriting Decision and Approval Conditions Published May 6, 2026 1052 The lender must confirm the loan was underwritten in accordance with Fannie Mae’s requirements and that adequate support for the underwriting decision is contained in the loan file. The post-closing file review process must include a review of the loan to assess the accuracy and integrity of the information used to support the underwriting decision, and an assessment as to whether or not the loan complies with the Selling Guide and the Lender Contract and is in all respects eligible for delivery to Fannie Mae. At a minimum, the review must include an evaluation of the: accuracy and completeness of the loan application; existence and accuracy of the underwriting documents used to support credit, income, assets, including reverifications of underwriting documents, and a data integrity review; underwriting decision to confirm it is supported; output from any third-party data analysis tools; data entered into DU, if applicable; appraisal or other eligible collateral data or documentation, if applicable; property eligibility; project eligiblity, if applicable; property insurance and flood insurance, if applicable; adequate mortgage insurance coverage as required for the loan transaction. See B7-1-02, Mortgage Insurance Coverage Requirements, for additional information; existence and accuracy of legal, transaction documentation(for example, sales contract), and closing documentation; and compliance with applicable laws, as provided in A3-2-01, Compliance With Laws. The lender must confirm that all loan approval conditions required by the underwriter were satisfied and that the information on the closing documents, including the final settlement statement, is consistent with the underwriting decision and final terms of the loan. Review of DU Findings and Conditions For loans underwritten through DU, the lender must confirm that all DU Verification Messages/Approval Conditions that appear in the DU Underwriting Findings report were satisfactorily resolved and adequately supported by appropriate documentation. If DU returned an Ineligible recommendation, the reviewer must confirm that the loan was eligible for delivery to Fannie Mae. For additional information on circumstances under which an Ineligible recommendation may be acceptable, see Chapter B3-2, Desktop Underwriter (DU). Verification of Data The lender must review the final terms of the loan to ensure they align with the data used to support the underwriting decisions. When a lender's review identifies discrepancies between the data used in underwriting and the data verified through the QC process, the lender must reassess the underwriting decision based on the newly verified information to determine whether the loan remains eligible as delivered to Fannie Mae. For loan casefiles created in DU, the lender must ensure all data submitted to DU is true, correct, and complete. The loan file must contain documentation supporting all data submitted to DU necessary to process the loan. Published May 6, 2026 1053 When there are inconsistencies between the data and/or information submitted to DU (or used for manual underwriting) and the source documents, the lender must complete the steps in the following table. Step The lender must.... 1 determine whether discrepancies are within the tolerances permitted by the Selling Guide (see B3-2-10, Accuracy of DU Data, DU Tolerances, and Errors in the Credit Report, and B3-6-02, Debt-to-Income Ratios). 2 resubmit the loan to DU with the correct data, if discrepancies are outside the DU allowed tolerances, for loans underwritten in DU. If the lender is unable to resubmit the loan to DU, the lender must manually perform a comprehensive risk assessment using the documentation required by DU, to determine if the loan meets the Selling Guide requirements for manually underwritten loans. The DU limited waiver of representations and warranties is invalidated when loans that exceed DU tolerances are not resubmitted to DU. For additional information, see B3-2-10, Accuracy of DU Data, DU Tolerances, and Errors in the Credit Report. For manually underwritten loans, if discrepancies are outside of the allowed tolerances, the lender must manually perform a comprehensive risk assessment to determine if the loan meets Selling Guide requirements. For additional information, see B3-6-02, Debt-to-Income Ratios. Note: DU-only products are not eligible for a manual comprehensive risk assessment. 3 make a determination as to whether or not the loan, with the corrected data, remains eligible as delivered to Fannie Mae, either through the receipt of a DU recommendation of Approve/Eligible, or through manually underwriting the loan, if appropriate. 4 document the underwriting file to reflect its decision when the lender determines the loan remains eligible as delivered. 5 advise Fannie Mae of these findings using the self-report functionality in Loan Quality Connect when the lender determines the loan was not eligible as delivered. For additional information, see D1-1-01, Lender Quality Control Programs, Plans, and Processes. Review of Potential Red Flag and Alert Messages The lender’s file review process must include a review of any “potential red flag” messages appearing in the DU Underwriting Findings report or alerts created by sources other than DU, such as those associated with credit reports or Social Security verification systems. The lender must ensure that any identified discrepancies have been appropriately addressed. Published May 6, 2026 1054 Review of Social Security Numbers As part of the lender's review process, it must ensure the Social Security number for all borrowers are consistent in all file documentation and that any requirements for validation of Social Security numbers were satisfied prior to closing. For additional information, see B2-2-01, General Borrower Eligibility Requirements. Review of Transaction and Closing Documents The lender must review each transaction and each closing document for completeness, accuracy, and compliance with all underwriting and eligibility requirements, and to ensure adherence to the loan transaction. The following list reflects the most common documents that must be included in the post-closing document review. This list is not intended to be all-inclusive, and the lender must exercise judgment when determining other documents to include in the review process. Uniform Residential Loan Application (Form 1003) Signed sales contract and any applicable addenda Recorded security instrument and any applicable riders or addenda Note Assignment of the loan Mortgage insurance certificate or policy Any applicable government loan insurance or loan guarantee certificates (i.e., FHA, USDA, VA) Title evidence Plat or survey, as applicable Final Truth in Lending disclosure, as applicable Final settlement statement Other closing documents, as applicable Note: If recorded documents are not available when the post-closing QC review is performed due to timing requirements for the review and the length of time the jurisdictions need for recording, the lender must review a copy of the document sent for recordation. The lender must also have a process to review the recorded documents when received to ensure accuracy and remediate any errors. If errors are discovered in the post-closing review process, lenders must determine the significance of the errors; promptly correct data or documents or obtain corrected documents from the vendor or service provider (i.e., mortgage insurer, property insurer, title insurer, or escrow/closing company); and provide corrected documents to the document custodian, if applicable. Recent Related Announcements The table below provides references to recently issued Announcements that are related to this topic. Announcements Issue Date Announcement SEL-2026-03 April 01, 2026 Published May 6, 2026 1055 Announcements Issue Date Announcement SEL-2025-04 June 04, 2025 Announcement SEL-2024-05 August 07, 2024 Announcement SEL-2023-05 June 07, 2023 Announcement SEL-2023-01 February 01, 2023 Announcement SEL-2022-09 October 05, 2022 Announcement SEL-2020-07 December 16, 2020 Announcement SEL-2019-07 August 07, 2019

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