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Mela Capital Group Quality Control Underwriting Platform

Mela Capital Group Fnma Qc V2

Jun 17, 2015



Cindi Dixon

Mela Capital Group
Underwriting, Quality Control Review, and Third Party Originator Platform
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  • 1. Mela Capital Group
    Quality Control Underwriting

2. Table of Contents
Company overview
3. Company Overview
Mela Capital Group, founded April 2005
Principles have over 40 years of underwriting, loss mitigation and quality control management
Forensic fraud and financial auditing
Credit risk auditing
Servicing pool pre-purchase decisioning
Third party underwriting reviews
Securities fraud QC underwriting audits
Bulk investor credit risk and loss mitigation audits
Mortgage fraud forensic investigations
Expert witness testimony
Law enforcement training
Training, expert public speaker
4. Principles
Cindi Dixon, CEO
23 years executive leadership in mortgage underwriting and risk management
20 years of Agency & Wall Street mortgage backed securities firms
Underwritten/audited over $8 billion in mortgage loans
20 years underwriting management, policy development
Published author, expert speaker, law enforcement trainer
Nationally renown mortgage fraud expert
5. Principles
Scott Ramshaw, Mgt IT Security
Karl Dixon, IT Operations Manger
20+ years experience in web based applications development and creating automated cost saving custom solutions.
Security Specialist responsible for supplying security updates for confidential products and internal corporate security.
Developed SQL based Intranet/CRM, Linux product development and product line consolidation.
Created a bandwidth monitoring system to monitor over 5000 secure servers and manage team of System Administrators.
Manage all aspects of the WAN/LAN, including security, network performance, software installation, service/server hardening, server/workstation deployment, firewalls and phone systems.
Maintain system backups, network administration, tool development, user support, File, Print, and Terminal servers.
Build new systems and design to customer specifications and implement new network setups.
Work with clients to implement and design changes to improve efficiently and profitability of operation.
6. Opportunity
FNMA Loan Quality Initiative
The Case for Quality Control effective July 1, 2010
A tenet for business
An element of sustainable homeownership
Key to eliminating loan defects and improving loan quality
A gauge for competency and effectiveness
Reduction of repurchase risk
7. Opportunity
Key Dates
Announcement SEL-2010-03 released March 29, 2010
Policy effective July 1, 2010
Expectations of FNMA Lender Partners
Ownership of loan quality
Establishment of goals, metrics, and targets
Lender standards vs. Fannie Mae minimums
8. Third Party Originator Requirements
Part A, Doing Business with Fannie Mae Subpart A3, Getting Started with Fannie Mae
Requirements are now more specific and detailed
Lender must satisfy itself that a third-party originator can produce quality mortgages
Lenders written QC procedures must include copies of the TPOs QC procedures for compliance with lender standards
9. Third Party Originator Requirements
10. Third Party Originator Requirements
Part D, Ensuring Quality Control (QC) Subpart D1, Lender QC ProcessExcerpt from D1-1-02
11. Services
The Case for Quality Control
Prefunding QC Review Process
Prefunding QC is now detailed in its own Selling Guide section
It is a mandatory requirement
Lender has flexibility in applying prefunding QC
Excerpt from D1-2-01
12. Services
Discretionary Mortgage Selections
Now mandatory
Above random requirements but no specific minimums
Criteria outlined, but not limited to the list provided
Excerpt from D1-3-02
13. Services
Reverification of Social Security Number (SSN)
SSN validation mandated in Announcement SEL-2010-01
Lender must include SSN reverification in QC plan
Excerpt from D1-3-03
Use of IRS Form 4506-T in the Lenders QC Plan
4506-T requirements updated in Ann. 09-19
Lender must include 4506-T provisions in QC plan
See Note - Lender may use same docs in post-closing QC process
Excerpt from D1-3-03
14. Services
Verification of Owner-Occupancy
This is a new requirement
The methodology is up to the lenderExcerpt from D1-3-03
Reverification of Borrowers Traditional Credit History
It now includes both loans underwritten manually and through Desktop Underwriter (DU) or other automated underwriting systemsExcerpt from D1-3-03
Reverification of Borrower Income, Employment, and Asset Information
Allows verbal reverification of employment and income with written documentation of conversation
Recognizes limitations of asset verifications but outlines requirement for documentation of attemptExcerpt from D1-3-03
15. Services
QC Review of Red Flag and Alert Messages
This is a new requirement
The lenders QC process must include a review of any red flag messagesExcerpt from D1-3-04
Verification of Data Integrity for DU
16. Services
Review of DU Underwriting Recommendations
For Approve/Elig. and Expanded Approval/Elig.: qualifying income must be reverified
recognized challenges with reverifying assets
RWC IV portion is a new addition (previously omitted)
Reflects new policy from Ann. SEL-2010-01
Excerpts from D1-3-06
Home Valuation Code of Conduct (HVCC)
HVCC requirements detailed in Announcement 09-01
Lender must include HVCC provisions in QC plan
Excerpt from D1-3-05
17. Services
Audit Review of the QC Process
Lender must audit the QC function
Like QC findings, audit findings are to be provided to Senior Management
Senior Management is accountable for timely resolution of audit findings
Excerpt from D1-3-08
18. Mela Capital Group
We offer a full service platform meet all of your needs:
Quality Control Auditing,
Third Party Origination oversight,
Internal and Agency reporting,
Quality Control planning,
Issue resolution, and
Staff training
19. Technology
State of the art integrated server platform
Multi level stand-alone building
Backup UPS (N+1) and diesel generator (N+1) power systems
Highly secure, redundant IT infrastructure of our data centers protect your servers and web presence, and ensures you are running online, all of the time
NOC monitored network 24x7x365
SAS 70 Type I security certified for Managed Hosting
Independent and in-depth audit of control objectives and control activities, including controls over information technology and related processes. Microsoft Gold Certified Partner, Red Hat Advanced Hosting Partner, SafeHarbor certified, and a proud member of the Green Grid.
Guaranteed around-the-clock power, back it all up with our 100% Power SLA and 100% Network Uptime SLA
Data center is locked off and guarded and only accessed by authorized hosting personnel via military-grade pass card access and biometric finger scan units
20. Technology
Data management for distance teams is secured via Adobe LiveCycle Rights Management ES2
Product Specifications and security features include:
LiveCycleLaunchpad ES2 interface to identify files for protection. Create and set a policy that limits users' access and privileges. All actions taken on the document are recorded for audit and compliance purposes.
Proactively protect confidential data or other sensitive information from being leaked outside the organization.
Restrict confidential information internally to only certain individuals.
Enable more secure collaboration to improve supply chain communication.
Improve compliance with industry regulations or standards.
21. Staffing
MCG has a paperless, Green platform that allows us to hire the most experienced talent nationwide
All personnel background checked through Accurint/Lexis Nexis for state and federal clearance
All auditors pass rigorous underwriting and quality control evaluations for certification
Remote security fingerprints assigned and monitored
Adobe LiveCycle Rights Management ES2
15 years average experience risk management underwriting
Recertified annually
22. Reporting
New FNMA requirements
Reports must cover QC reviews
Format up to lender specifications
Still required if QC outsourced
Excerpt from D1-3-08
Reporting customized to meet client needs
Random or statistical sampling can be performed by our analytics team through independent software programs
Secure systems interface can be created to work virtually through our customers platforms
23. Reporting, continued

  • QC results must be reported to Senior Management within 30 days of completion

24. Lender must have procedures to address response and resolution to identified defects 25. Lender must notify FNMA of any breaches or misrepresentation within 30 days