HUD requires the audit system
to review mortgage loan files at least quarterly to
evaluate the routine loan servicing functions. The
review must determine, at
a minimum, whether the following requirements have
Loan servicing records are promptly established after
loan closing and contain all
transfer notice to borrower. Borrowers are
promptly notified when the lender acquires servicing
from another servicer and servicing records are established
immediately on transfer.
Purchased loan files contain all necessary
documents, including the FHA mortgage insurance certificate.
insurance premiums (MIP). All
MIP are paid on time
and in the correct amounts. The QC audit must review
the mortgage insurance certificate to determine whether
a monthly or risk-based premium is due. This review
must include a sampling of recently purchased loans.
transfer notice to HUD.
The mortgage record change was reported to HUD on loans
sold to another servicer.
and complaints. Requests
from borrowers concerning their individual mortgage
accounts are responded to promptly and complaints are
handled promptly and effectively.
accounts. escrow account
functions are being performed properly:
- funds are maintained in an account
separate from the servicer's general operating
- borrowers are billed
the proper amounts,
- disbursements are made promptly
as the items for which the escrow
was established become due and payable,
are requested and obtained when not automatically
- excessive balances are promptly
refunded to the borrower or applied to the unpaid
principal balance if the borrower requests,
- escrow shortages are promptly
reported to the borrower and the borrower is informed
of all options to remedy the shortage.
and charges. Fees and
charges on the borrower do not exceed the amount FHA
and the provisions of the mortgage and note
adjustments. ARM adjustments
are calculated correctly and implemented timely, after
the required notice to the borrower.
Section 235 recertifications are
performed annually. Assistance payments are accurately
computed and billed using the proper formula.
assumptions were properly underwritten and a mortgage
record change is promptly reported to HUD when the
mortgage is assumed.
Interest charges in prepayments are accurate. The note
and security instrument are promptly satisfied,
the termination of FHA
insurance is properly reported
to HUD on paid-in-full
mortgages and escrow balances are promptly
refunded. Security instruments
are promptly released.
required to be retained as originals
and the remaining paper
documents or acceptable imaged or microfilmed
versions are retained
for the minimum required period.
203(k) loans. Servicing
of 203(k) loans has been performed in accordance with