| ID | Status | Date | Public/Private | Industry | AHACPA Contact |
|---|---|---|---|---|---|
| #7857 | Closed | public | FHA Lender |
|
I attended your FHA Lender updates webinar earlier this month and I think we covered this but I cannot recall or find the answer. Please see below question we received from one of our clients who is a title II lender and started servicing FHA loans in the past year. “Now that our portfolio of FHA loans we service is growing, our sample sizes are expanding each month. This last month, it was 23 loans. I just want to confirm that our monthly review sample size should be 10% of the population we serve. Or is that an annual sample size of 10%? Just seems excessive that we are reviewing 23 loans this month for escrow, etc.” I know they are required to QC 10% of their loans originated but wasn’t sure if this is also applicable for servicing? |
|
|
From Mike Olsen: According to the new 4000.1 Handbook, servicing reviews are to be done on a monthly basis. For the sample size, it says that if you have 3,500 or fewer FHA-Insured Mortgages per year, you must review a minimum of 10% of FHA-insured mortgages serviced. For origination’s, you are going to select a sample of 10% of loans originated during the month. However, for servicing there is no other discussion, other than you must do reviews on a monthly basis and you must review 10%. Therefore, in my opinion, you are required to sample 10% of the loans serviced on an annual basis. However, you must perform reviews on a monthly basis. Therefore, depending on the number of loans serviced, you may review more that 10% for the year. If your total servicing portfolio is 50 loans, you would be required to sample 5 loans for the year, however, since you must do reviews on a monthly basis, you are going to have to do at least 1 loan a month, which means you would sample 12 loans for the year, which is more than 10%. |