source:
  type: guide
  id: va-m26-7-ch01-t14
  authority: VA Lenders Handbook (VA Pamphlet 26-7), Chapter 1, Topic 14 — Elements
    of a Quality Control Plan
  description: VA Lenders Handbook (VA Pamphlet 26-7), Chapter 1, Topic 14 — Elements
    of a Quality Control Plan.
  coverage_tier: operative
obligations:
- id: va-m26-7-ch01-t14-full
  canonical_id: va-m26-7-ch01-t14-full
  section: VA Lenders Handbook (VA Pamphlet 26-7), Chapter 1, Topic 14 — Elements
    of a Quality Control Plan
  type: do
  tags:
  - regulator-direct
  - va
  - va-handbook
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: VA Lenders Handbook (VA Pamphlet 26-7), Chapter 1, Topic 14 — Elements
      of a Quality Control Plan
    source_class: va-handbook
    source_url: https://www.benefits.va.gov/warms/pam26_7.asp
    snapshot_id: b4bc25cdd49513a7
    fetched_at: '2026-05-23T01:53:52Z'
    content_hash: sha256:2516e061c3a90ce65e72b43ae4022a97e784d65ec7580998c523b5dc69ba6520
    paragraph_quote: '14. Elements of a Quality Control Plan Change Date February
      1, 2019 • This chapter has been revised in its entirety. a. Purpose A quality
      control (QC) plan must be submitted with every non-supervised lender’s application
      for automatic authority. This exhibit outlines the criteria which the QC plan
      must satisfy. Although supervised lenders are not required to submit a QC plan
      with their application, VA will review the QC plan when VA performs a lender
      audit. b. Audit Program The QC plan must provide for: • a program of internal
      or external audit of the lender’s compliance with VA loan processing and underwriting
      requirements, or • independent review by management personnel knowledgeable
      of such requirements who have no direct loan processing or underwriting responsibilities.
      c. Adequate Scope The QC plan must provide: • Audits or reviews are not less
      than ten percent of all VA-guaranteed mortgages originated by the lender monthly,
      including its branches and authorized agents except that lenders making more
      than 140 VA mortgages monthly may use statistical sampling methods in lieu of
      the ten percent. • Loans processed by all loan officers and underwriters and
      a random selection which includes loans from all branch offices and authorized
      agents. • Procedures for expanding scope when fraudulent activity or patterns
      of deficiencies are identified. • For lenders participating in LAPP, that reviews
      include the QC procedures. • Procedures for validating third party verification
      data obtained through Automated Underwriting Systems (AUS). • For each branch
      office that originates VA loans, an on-site branch office review should be conducted
      at least once annually. Continued on next page VA Pamphlet 26-7, Revised Chapter
      1: Lender Approval Guidelines 1-42 14. Elements of a Quality Control Plan, continued
      d. Management Notification The QC plan must provide for written notification
      of deficiencies cited as a result of audits or reviews at least quarterly to
      the lender’s senior management. ________________________________________________________________
      e. Corrective Action by Management The QC plan must require that: • prompt and
      effective corrective action by senior management on all deficiencies identified
      by either the lender or VA. • maintenance of documentation of deficiencies and
      corrective actions taken. • Where patterns of deficiencies have been identified,
      corrective instructions be provided to all relevant employees. f. Deficiencies
      Reported to VA The QC plan must: • Require prompt reporting of any violation
      of law or regulation, false statements or program abuses by the lender, its
      employees or any other party to the transaction to the VA office of jurisdiction,
      and • Provide for furnishing audit or review findings to VA on demand. g. Current
      VA Underwriting Policies and Procedures Maintained The QC plan must ensure that:
      • The lender’s procedures are revised in a timely manner to accurately reflect
      changes in VA requirements. • Each of the lender’s offices, including its approved
      agent(s) and branches, maintains copies of all VA publications, including regulations,
      handbooks, and releases, which are relevant to the lender’s VA loan origination
      activities. They must be accessible to all employees, periodically reviewed
      with appropriate staff, and kept current. h. Only Authorized Persons Process
      Loans The QC plan must ensure that all loans submitted by the lender to VA for
      guaranty are processed by employees of the lender or its authorized agent(s).
      Continued on next page VA Pamphlet 26-7, Revised Chapter 1: Lender Approval
      Guidelines 1-43 14. Elements of a Quality Control Plan, continued i. Funding
      Fees Paid The QC plan must ensure that VA funding fees are remitted within 15
      days from the date of loan closing and late charges and interest penalties are
      promptly submitted. j. Escrow Fund Management The QC plan must ensure that escrow
      funds received from borrowers are not excessive and are not used for any purposes
      other than that for which they are received. k. Debarred Persons Not Employed
      The QC plan must ensure that the lender does not employ for VA loan origination,
      or underwriting, any individual who is debarred or suspended. l. Review of Loans
      The QC plan must provide for the following on loans selected for review: • Review
      of loans within 90 days of loan closing. • Written re-verification of borrower’s
      employment, deposits, and all sources of funds. • Reordering of a new credit
      report from another credit source. Note: Report may be a Residential Mortgage
      Credit Report (RMCR) or an in-file report which merges the records of the three
      national repositories of credit files, commonly known as a 3-file merge. • The
      reviewer determines whether underwriting conclusions and lender documentation
      are overall complete and accurate per the table below: Step Action 1 Does each
      loan file contain all required loan processing, underwriting and legal documents?
      2 Were all relevant loan documents not pre-signed in blank by the borrower or
      employee(s) of the lender, and were all corrections initialed by the borrower
      or employee(s) of the lender? 3 Were verifications of employment, verifications
      of deposit, and the credit report not handled by the borrower or any interested
      third party? 4 Do credit reports conform to RMCR standards, if used, and if
      more than one credit report was ordered, were all credit reports submitted with
      the loan package to VA? Continued on next page VA Pamphlet 26-7, Revised Chapter
      1: Lender Approval Guidelines 1-44 14. Elements of a Quality Control Plan, continued
      l. Review of Loans, continued Step Action 5 Is there a correlation of each outstanding
      liability and each asset of the borrower and co-borrower used to qualify for
      the loan to those listed on the initial loan application? Note: If discrepancies
      exist, the loan file must show they have been explained or otherwise resolved.
      6 Were any outstanding judgments appearing on the credit report listed on the
      application with an accompanying explanation and documentation? Note: When there
      is a delinquency or judgment involving debt to the Federal Government, evidence
      must be provided showing the delinquent account was brought current or satisfactory
      arrangements were made between the borrower and the Federal agency owed, or
      the judgment was paid or otherwise satisfied. 7 Does the loan file contain required
      tax returns? Note: If the borrower is self-employed, the loan file must include
      2 years of tax returns and a profit and loss statement for year-to-date since
      the end of the last fiscal year, and a current balance sheet showing all assets
      and liabilities. 8 Was the Closing Disclosure accurately prepared and properly
      certified? 9 Were fees charged to the Veteran appropriate and accurate? 10 Was
      the loan properly documented and submitted in accordance with VA standardized
      loan file set-up procedure? 11 Was the loan current at the time it was submitted
      to VA for guaranty? 12 Did the borrower transfer the property at the time of
      closing or soon after, indicating possible misuse of the Veteran’s loan entitlement?
      13 Were all conflicting information or discrepancies resolved and properly documented
      in writing prior to submission of the loan to VA for guaranty? VA Pamphlet 26-7,
      Revised Chapter 1: Lender Approval Guidelines 1-45'
  judgment: false
