Loan Quality Connect Job Aids

 

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Responding to a Loan Quality Defect Notice

What is a Loan Quality Defect Notice?

When Fannie Mae cites a significant defect after a full loan review, Loan Quality Connect triggers a Loan Quality Defect Notice (LQDN). The LQDN initiates a “pre-demand” opportunity that does two things:

  • Allows you to correct Significant Defect(s) and Findings

  • If defect(s) are corrected, the need to issue a Resolution Request is eliminated

Note: Not all file reviews generate a LQDN. Loan Quality Defect Notices are not triggered for servicing violations, voluntary repurchases, or any life of loan related issues.

How does it work?

When a LQDN is issued, you will receive an email from LQCRequest_NoReply@fanniemae.com alerting you to the notice. You will find the notice in your Resolution Queue in the LQDN Issued BI card. (See Updating Email Notification Contacts.)

Once the LQDN is issued, you have 15 calendar days to make your case to correct the defect by submitting additional information and/or documentation. If what is submitted corrects the defect, Fannie Mae closes the loan review.

There are three options for addressing identified defect(s) :

  • If you are unable or do not submit documentation needed to correct the defect, the remediation time line provided for in the Fannie Mae Selling Guide will begin with the issuance of a Resolution Request when the LQDN expires or upon your request prior to that date.

  • Add comments to the loan review in Loan Quality Connect, explaining any existing or new information/documentation being provided to remedy the defect; and/or

  • Upload new documents and/or link documents already in Loan Quality Connect that support your explanation.

On the 16th day after issuance of the LQDN, a Resolution Request will be issued if you do not provide sufficient documentation to correct or agree with ALL significant defects. This is the formal start of the remediation time line per the Selling Guide.

Follow these steps to respond to a LQDN after logging in to Loan Quality Connect:

  1. Click the LQDN Issued BI card. The loans with LQDNs populate the search results area below the BI cards.

Note: When Loan Quality Connect opens, it defaults to the Resolution Queue screen and displays the business intelligence (BI) cards at the top.



From the Resolution Queue, Click the LQDN Issued BI Card

  1. Click the loan of your choice, and then click View – or simply double click the loan – to open the Loan Details page and perform further actions on that loan.

    LQDN - issued loans display

    The Loan Details page opens, defaulting to the Remedy Status screen.

    Cure Status Screen

  1. Open the LQDN letter using one of the following two options.

Note: Opening the LQDN letter provides the capability you need to submit your response.

  1. Click the icon under Defect Notice on the progress bar at the top of the page to view additional information about the defect notice, and then click View Defect Notice to open the LQDN letter.

    Defect Notice Information Icon

  2. Scroll down the Loan Details page and click View Loan Quality Defect Notice to open the defect notice letter.

    View Loan Quality Defect Notice

    The Loan Quality Defect Notice letter opens.

    Loan Quality Defect Notice Letter

Note: Clicking Download PDF at the top right of the Loan Quality Defect Notice letter saves it to your local hard drive. Loan Quality Defect Notice Letter

Adding a Comment

Follow these steps to add a comment in response to the LQDN:

  1. Scroll down the LQDN letter to the summary of significant defect(s) and then click View Comments. Do this for each defect cited.

    Select View Comment for Each Defect
    The Defect Comment window opens.

  2. Click Add Comment. The Add Defect Comment window opens.

    Defect Comments Window

  3. Enter information into the text box, and then click Save.

    Add Defect Comment and Save


    Your comment displays on the Defect Comments widow with the date and time it was submitted. When you add additional comments, they will append below in the order that they were added.

    Defect Comment Displays with Time Stamp

  4. Click Close to return to the LQDN letter.

Note: When you close and submit a comment, it is transmitted to Fannie Mae real time.

Linking a Documentation

Follow these steps to link a document in response to the LQDN:

Note: See Responding to a Loan Quality Defect Notice for instructions on responding to the LQDN.

  1. Open the LQDN letter using one of the following two options.

    1. Click the icon under Defect Notice on the progress bar at the top of the page to view additional information about the defect notice, and then click View Defect Notice to open the LQDN letter.

    1. Scroll down the Loan Details page and click View Loan Quality Defect Notice to open the defect notice letter.

  1. The Loan Quality Defect Notice letter opens. Scroll drown and click Link Documents.

  1. The Link Existing Document page opens. Select a document and click Link.

  1. The selected document appears in the Linked Documents section. Click Save.

Linked documents are listed on the Remedy Status tab. If a document is uploaded before it is linked to the Loan Quality Defect Notice, it is listed on the Documents tab. See Linking ad Uploading Supporting Documentation for instructions on uploading a new document.

 

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