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b. Loan Sample Risk Assessment (09/14/2015)
i. Definition
A Loan Sample Risk Assessment is a method of evaluating loans selected for QC on the basis of the severity of the violations found during QC reviews.
ii. Standard
Mortgagees must establish a Loan Sample Risk Assessment methodology. At a minimum, the methodology must include the categories of risk described below.
The Mortgagee must compare one month’s QC sample to previous QC samples in order to conduct trend analysis.
iii. Risk Categories
(A) Low Risk
No issues or minor variances were identified with the origination, underwriting, or servicing of the Mortgage.
(B) Moderate Risk
The records contained unresolved questions or missing documentation. Issues were identified pertaining to processing, documentation, or decisions made during Loan Administration, but none were material. Failure to resolve these issues created a moderate risk to the Mortgagee and to FHA.
(C) Material Risk
The issues identified during the review contained Material Findings which represent an unacceptable level of risk.
iv. Required Documentation
The Mortgagee must document the methodology used to establish the loan sample risk assessment system and conduct trend analysis.
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V. QUALITY CONTROL, OVERSIGHT, AND COMPLIANCE A. Quality Control of Lenders and Mortgagees
3. Loan Level Quality Control Program Requirements