Loan Second-Review
Independently re-verify a decisioned loan against its source documents - conditions cleared, data integrity, disclosures, income/asset/collateral - and return a severity-tiered exception log with a clear-to-fund disposition.
What it extracts
14 extraction fields
- Review Summary
- A one-look roll-up of the QC review - loan, borrower, collateral, loan type, review type, and selection basis - so a reviewer can orient before reading the detail; the loan type set here governs which regulatory rules apply.
- Loan & Decision Under Review
- The underwriter's stated conclusions and boarded terms captured as claims to be re-verified - amount, rate, term, product, LTV, qualifying ratio, decision score, decisioning method, program, and condition count.
- Borrower & Qualifying Profile
- The borrower and qualification facts the file relied on - income basis and figure, monthly debt obligations, occupancy, citizenship, OFAC screen, assets, reserves, and funds to close - captured with their stated sources for reverification.
- Collateral & Valuation
- The collateral and valuation facts - value relied on, valuation basis and date, lien position, title vesting, flood/SFHA status, and UCC security interest - that feed the LTV recompute and collateral re-verification.
- Document Completeness & Stacking
- A required-document checklist that confirms each document is present, the correct final version, executed/signed/dated, and legible - flagging every missing, expired, unsigned, or illegible file with a severity.
- Condition Clearance Log
- A re-verification that every prior-to-doc / prior-to-close / prior-to-fund approval condition was actually cleared with acceptable evidence in the file - not merely marked cleared - flagging outstanding or improperly waived conditions.
- Key-Data Re-Verification
- The core integrity check: every critical data element the decision and boarding relied on is compared back to its source document, graded Match/No/Partial with the variance shown, since the executed documents are authoritative.
- Income, Asset & Collateral Re-Verification
- A recomputation of the three qualification pillars per post-close QC practice - qualifying income re-derived from source, assets/reserves traced to statements, and collateral value/lien/UCC and occupancy reverified - each graded with severity.
- Recomputed LTV
- An independent recomputation of loan-to-value (loan amount / value relied on, using the lesser of price and appraised value on a purchase) compared against the LTV stated on the file.
- Recomputed DTI / DSCR
- An independent recomputation of the qualifying ratio the file used - back-end DTI for a consumer loan or DSCR for a business-purpose / rental loan - compared against the stated figure.
- Disclosure & Regulatory Recheck
- A loan-type-aware recheck of the applicable disclosures and regulations - TRID good-faith tolerances, ATR/QM, TILA, flood, HMDA, and ECOA for a consumer mortgage; the business-purpose Reg Z exemption plus entity authority and UCC perfection for a commercial loan.
- Exception Log
- The consolidated severity-tiered exception register that rolls up every FAIL/WARN/mismatch/outstanding finding across the review, with category, curability, remediation, and required sign-off - the deliverable the funding decision and defect-rate reporting are built on.
- Clear-to-Fund Disposition
- The single aggregated QC disposition - Clear to fund, Cleared with conditions, Kickback to underwriter, Suspend (incomplete), or Decline (ineligible as delivered) - driven by the highest-severity open exception.
- Reviewer Findings & Sign-Off Memo
- A tight reviewer-facing memo of the disposition and its drivers, the critical/significant exceptions, conditions to clear, exceptions needing sign-off, and data-integrity or fraud flags, with each driving value cited.
Where it fits
Loan quality control - second-line review (pre-fund / post-close QC)
Upstream
Underwriting and closing / boarding - a loan that has already been decisioned / approved (and, for post-close, closed and boarded) is selected for QC by random or discretionary sampling
This step
Second-line QC review / reverification
Downstream
- Funding / loan purchase
- Exception remediation and condition clearing
- Underwriting rebuttal and management sign-off
- QC defect-rate reporting and trending
What it needs
Documents
- Underwriting approval / decision (approval conditions, DU / LPA findings)
- Loan application (URLA / 1003 or commercial application)
- Executed note and security instrument
- Closing Disclosure and Loan Estimate (consumer) / settlement statement
- Appraisal or valuation and any second valuation
- Income and employment documents (paystubs, W-2s, tax returns / transcripts, leases)
- Asset / bank statements
- Credit report
- Title commitment / title policy and vesting deed
- Flood determination (SFHDF) and insurance policies
- Entity documents and UCC filings (business-purpose / commercial)
- Boarding output / servicing-system field set (post-close)
Systems
- Loan origination system (LOS)
- Servicing system of record
- Document repository / imaging
- Google Drive
Prerequisites
- Your QC plan and required-document checklist
- Your approval-condition matrix
- Your investor / agency eligibility and disclosure standards
- Your severity taxonomy and defect definitions
What it produces
A cited second-line QC review: document-completeness and condition-clearance checklists, a key-data re-verification against source, income/asset/collateral reverification, recomputed LTV and DTI/DSCR, a disclosure/regulatory recheck, a severity-tiered exception log, and a clear-to-fund disposition with a sign-off memo
Delivered to
- QC work file / QC system
- Underwriting rebuttal queue
- Funding / purchase decision
- Defect-rate reporting
Review model
A QC reviewer or QC manager confirms the flagged exceptions, severities, and cited values; Critical or ineligible exceptions route to underwriting rebuttal and management sign-off before the loan funds or is delivered.
Who uses it
Volume fit
Works best for
lenders, banks, and correspondents running a second-line QC function reviewing dozens or more loans a month across random and discretionary samples
Too small for
a shop without an established QC / second-line-of-defense function or a codified condition and document checklist
Grounded in
- Fannie Mae Selling Guide, Subpart D1-2 (Lender Prefunding QC Mortgage Review) and Subpart D1-3 (Lender Post-Closing QC Mortgage Review)verified as of 2026-07-22
- Fannie Mae Selling Guide D1-3-02 (Review of Approval Conditions, Underwriting Decisions, and Documentation) and D1-3-03 (Post-Closing QC Reverifications) - current version effective 04/01/2026verified as of 2026-07-22
- TILA-RESPA Integrated Disclosure (TRID) good-faith tolerances - Regulation Z, 12 CFR 1026.19(e)(3) and cure/reimbursement under 12 CFR 1026.19(f)(2)verified as of 2026-07-22
- Ability-to-Repay / Qualified Mortgage rule - Regulation Z, 12 CFR 1026.43verified as of 2026-07-22
- Business-purpose / commercial credit exemption - Regulation Z, 12 CFR 1026.3(a)verified as of 2026-07-22
- Flood Disaster Protection Act (FDPA), 42 USC 4012a; Standard Flood Hazard Determination Form (SFHDF, FEMA Form 086-0-32)verified as of 2026-07-22
- Home Mortgage Disclosure Act / Regulation C, 12 CFR Part 1003 (HMDA data integrity)verified as of 2026-07-22
- Equal Credit Opportunity Act / Regulation B, 12 CFR Part 1002 (adverse-action and appraisal/valuation delivery)verified as of 2026-07-22
- Uniform Commercial Code Article 9 - perfection of a security interest in personal-property collateralverified as of 2026-07-22
Changelog
- July 2026
built to industry best practice for second-line loan quality-control review (pre-fund / post-close QC)
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See Loan Second-Review on your documents
We'll run it against a file of yours and walk through every cited field.