A.2.1.1.8 QC Reviews

A. The QC reviewing official(s) must document all positive and negative findings in writing and present its QC Review at the Lender’s next designated senior management committee meeting.

1. The senior management committee must meet on a semiannual basis to hear the findings and recommendations of the QC Review, or more frequently if serious quality control issues are present.

2. Committee members must receive written notification of any deficiencies found as a result of a QC Review before the meeting.

3. At the meeting, the committee must carefully review and analyze the findings of the QC Review and undertake corrective actions as necessary, including:

   • Prompt initiation of corrective actions to address all deficiencies, including any procedural problems identified.

• Formal documentation of the corrective actions taken by citing each deficiency, identifying the cause of the deficiency and providing management's response or actions taken.

• Notification, in writing, of affected third party contractor(s), employees and departments of such findings and the corrective actions taken to assure senior management that repeated or recurring actions will not reoccur.

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Appendix 2 Quality Control Plans and Identity of Interest A.2.1 Lender Quality Control Plans and Identity of Interest Examples

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• Prompt distribution to all MAP loan origination, underwriting, closing and construction loan administration personnel and/or servicing personnel, as applicable, including contractor(s), of the corrective instructions for the identified deficiencies.

• Promptly implement training for the prevention of such activities in the future.

  • Review all remedial actions for compliance at the next regularly scheduled committee meeting.

4. The MAP Lender must report the results of its QC Reviews to COB, including the corresponding corrective action plans, and must provide assurance that the information being reported is accurate, complete and has been reported promptly. The MAP Lender must also report to COB the minutes of the senior management committee meeting that reviewed the QC Review and of any follow up meetings.

The MAP Lender must promptly notify COB of any violation of law or regulation, false statements or program violations by the Lender, its employees, its contractors or any other party to the transaction that was found during the QC Review. A MAP Lender’s QC Plan must ensure that findings discovered by employees during the normal course of business and by the QC staff during reviews/audits of MAP loans are reported to COB within 60 days of their initial discovery. If there is a finding of fraud or other serious violation, the finding must be submitted in writing to COB. If HUD staff is suspected of involvement, the Lender should refer the matter to the Office of Inspector General, Department of Housing and Urban Development, 451 7th Street, SW, Room 8256, Washington, DC 20410.

5. The MAP Lender must retain any QC Reviews and follow-ups, including the review findings, corrective actions taken and procedural information about the review (such as the percentage of loans reviewed, the basis for the selected loans and who performed the review) for a period of 7 years and must be made available to HUD on request. The MAP Lender must retain a copy of the entire case file pertaining to each MAP loan origination, underwriting and/or construction loan administration, for at least 7 years from the Final Endorsement date, either in hard copy or in a generally accepted electronic storage format.