QC Review of Third-Party Originations, QC File Selections
Fannie Mae's Selling Guide Announcement (SEL-2025-04 released on June 4, 2025), introduced some significant updates to quality control (QC) requirements that impact lender QC policies, internal review processes, and sampling methodologies. We’re recapping those changes below, along with a summary of actions that should be taken in response to these changes, specifically if you are a client of SCA for Quality Control services.
Part I: Recap of Changes
When the lender sells loans originated by a third party to Fannie Mae, the lender’s QC process must include additional steps to monitor the quality of third-party originations.
The lender's QC selection process must include a Post-Closing stratified random sample of third-party originations to ensure that those loans meet the lender's standards for loan quality. The lender must select third-party originations for full-file review on at least a monthly basis at 10% a month and not less than 1 loan if less than 10 loans available.
Additionally, the lender must supplement the random sample with discretionary targeted samples focused on third-party originations with elevated risks as determined by the lender's oversight and control processes. Discretionary targeted samples may be full-file or component reviews and may be implemented in prefunding or Post-Closing, or pre-purchase for correspondent lenders.
The lender must establish a process to provide monthly reports to management of third-party originations defects and findings. For additional information on QC reporting, see D1-1-03, Lender Quality Control Reporting, and for information on managing third-party originations, see A3-3-01, Outsourcing of Mortgage Processing and Third-Party Originations.
For more information, you may also refer to our June 10th blog article outlining the changes and impact: FNMA QC Updates from SEL-2-25-04.
Part II: Action Items List for SCA QC Clients
Update your QC Policy if necessary regarding Post-Close and Pre-Funding QC Process for TPO loans, Targeted Post-Close QC, Pre-Funding QC reviews, and discretionary sample file selection criteria.
For TPO QC reviews - TPO Column will need to be added to your Production Report so SCA can identify these loans. This review would be completed on a separate monthly QC report for your originated loans.
Discretionary File Selection - This is currently being completed as a random loan file selection based on high risk factors, and included in your monthly Post-Close QC selection. However if you are updating your QC Policy, you can either A) provide us with the selected monthly discretionary file based on risk factors, or B) provide a risk rating for us to make a monthly file selection, as long as you also include that information on the production report.
If you would like your discretionary file to be a targeted review, you must identify this in your QC Policy, and communicate this with us, or we will complete a full file review. We are currently using Property Usage, LTV, and CLTV to make monthly discretionary file selections. We currently have limited information coming in on the monthly QC Production reports to make selections.
Action Plans: Written action plans must be completed monthly, and include root cause, responsible parties, and timeframe completion. This information is provided in the ACES connect site; the only part you would need to add is the action plan.
Reverification Tracking is already provided on the monthly Risk Analysis Reports, but we can also supply a separate report that will identify exactly what was sent out and the details all on the same report.
Since the reverifications do not always come back in time we can issue these after the QC report has been completed to ensure adequate time for our system to record and document this.
If you have general questions about Quality Control services SCA provides to help you achieve success with implementing these changes, please contact our Director, Bill Dolan, at wdolan@scapartnering.com or by phone at (617) 694-2617. If you are a current client of SCA’s QC services and have specific questions about the Action List above, please contact our QC Manager, Mindy Molina at mmolina@scapartnering.com.
