A mortgage audit after Closing allows auditors to double-check paperwork and look for signs of non-compliance. It entails document review, third-party verification, credit risk analysis, underwriting evaluation, tax calculations, and much more. After that, every document is processed. Completion of documents and adherence to investor rules is of paramount importance. After ensuring that all necessary signatures appear on the loan paperwork, it is forwarded to the appropriate service providers. Errors are revealed and mitigated through quality control procedures. Documents and notice of loan sale are provided to the borrower. Let’s read on to find out more about the post-closing audit.
Importance of Mortgage Post-closing Audit
Important tasks, including reviewing files, re-verifying information with third parties, analyzing credit risk, re-evaluating underwriting, paying any outstanding taxes and insurance, etc., are all part of the mortgage post-closing process. At this point, all the paperwork left behind has been collected and processed. All SEC and other investor regulations are strictly adhered to. Every step is meticulously inspected and double-checked to guarantee accuracy and conformity.
What Occurs During the Post-closing Audit of a Mortgage?
When the audit authorities say to remove the shortcomings and highlight the plus points, it means to perform an interim audit. A post closing mortgage audit performed after the loan’s closing looks much like that. However, auditors check for flaws throughout the mortgage process.
Let’s delve more deeply into the post-closing audit procedure now.
An Examination of the Data’s Quality Following Closing
“Mortgage processing” is a broad category that includes several distinct procedures. Different borrower information is used in each of these procedures. The underwriting phase is a nice illustration of this principle in action.
Completion of Paperwork
The term “document tracking” can also describe this method. The auditor maintains a database of vital documents such as tax returns, liens, trust deeds, uniform commercial code filings, and more. The auditor is responsible for ensuring the mentioned paperwork is comprehensive and accurate because it will influence the lender’s decision.
Mortgage Closing Documents Assembling
In the aftermath of a loan closing, all parties involved must assemble the post-closing loan package. Documents such as a signed HUD-1 and trust deeds with riders are part of the bundle. This procedure is crucial since it can be used to safeguard the loan from fraud.
Inspections of Financial Assets, Reserves, and Insurance Policies
It is the responsibility of the auditor to ensure compliance with all tax regulations. Reserves and insurance policies are also subject to assessment in addition to tax returns.
How to Lessen the Likelihood of an Audit Failure?
Everything from application paperwork to inspection fees could be for naught if the audit fails. The risk associated with a post-closing audit can be mitigated or even avoided altogether.
If you outsource to a mortgage closing support services agency, they can compile all the data you need and make sure your documents are legal.
Review During the Post-closing Process
The following points are important to include in the review of the post-closing audit:
- Evaluating the correctness and precision of the loan application in its entirety
- Validating, re-verifying, and authenticating all the underwriting documents while keeping sensitive information secure
- Verification of the underwriter’s favorable decision to grant the requested loan.
- The mortgage insurance papers, appraisal, and eligibility of the property or project must all be verified.
- An exhaustive review for conformity with all applicable national, state, and municipal rules and regulations
In addition to the steps outlined in the above mortgage post-closing guide, remember that once the closing is complete, the post-closing process begins and you must send the recording package to the land records office for the final recording. After submitting the documents the lender has one calendar month to process them.
Analyzing the Report
Within 30 days after the end of the month when the QC review is finished, the team of Audit must compile all of its findings and report them to the highest level of management for final assessment. For the final report to be useful, it must include thorough explanations of every loan’s audit results. The Quality check report generated post-closing should distinguish between underwriting and compliance problems, and contain the error ratio for the concerning duration.
Examining the Evidence
In Examining the Evidence, the initial appraiser’s report is analyzed and re-evaluated by a second appraiser. The reviewer doesn’t have to be an appraiser, but they should have the market knowledge to comment on the reliability of the data presented, the validity of the comparable mortgaged assets, and whether or not the appraiser’s results have collaterals assisted with evidence and accuracy.
Conclusion Post-closing mortgage inspections aim to catch any problems before the loan is sold on the secondary market. Through this securitization, financial institutions can free up funds from maturing loans and reinvest those funds into new lending opportunities. Mortgage Post Closing is done to ensure the loan is good for the lender and borrower and that the lender will have no issues with securitization.