# FHA quality control plan requirements Updated September 26, 2026 An FHA mortgagee needs a written QC plan covering origination through servicing, with both pre-closing and post-closing reviews. You review at least 10% of FHA loans (or a statistical sample above 3,500 loans a year), at least 90% of them post-closing, plus early payment defaults not covered by the major-disaster exception. Fraud goes to FHA immediately. ## Key numbers - **10%** of FHA loans at minimum; a statistical sample is allowed above 3,500 loans a year (V.A.3.a.iii) - **90%** or more of the sample must be post-closing reviews; pre-closing may be no more than 10% (V.A.3.a.iii) - **60 days** from the end of the closing month to complete post-closing reviews (V.A.3.a.i(B)) ## What the plan covers Handbook 4000.1 treats the QC Plan as the written element of the QC Program. It has to cover every Loan Administration function the mortgagee performs, in-house or through a contractor (V.A.1.c). ## How many loans to review Calculate the sample separately for loans you originate or underwrite and for loans you service (V.A.3.a.iii). - 3,500 or fewer FHA loans a year: at least 10%. - More than 3,500 a year: 10%, or a stratified random sample big enough for a 95% confidence level with a confidence interval of no more than 2% on an annual basis, based on recent defect rates. Stratify origination samples by product type and origination source, and servicing samples by servicing function. - Pre-closing reviews may be no more than 10% of the required sample. Post-closing reviews must be at least 90%. - If you closed nine or fewer loans last month, do at least one pre-closing review this month. The random sample gives every FHA loan an equal chance of selection, whatever its source or program. Discretionary samples target high-risk programs, participants or sources. Only random and discretionary selections count toward the sample size. Early payment defaults sit outside that count. An EPD is a loan that becomes 60 days delinquent within the first six payments, and every one gets reviewed, whichever mortgagee services it (V.A.3.a.iv). Since ML 2026-09 there is one exception: no EPD review is needed when the property is in a Presidentially-Declared Major Disaster Area, the loan closed before the incident period began, and it became an EPD after that date. An illustrative example: a mortgagee originating 2,400 FHA loans a year, about 200 a month, on the 10% method reviews about 20 loans a month (240 a year). At most 2 may be pre-closing and at least 18 must be post-closing. Every EPD it underwrote that is not covered by the major-disaster exception comes on top of the 20. ## The clock | What | Deadline | Handbook | |---|---|---| | Pre-closing review | Selected each month; reviewed after Direct Endorsement underwriter approval and before closing | V.A.3.a.i(A) | | Post-closing review | Selected monthly from the prior month's closings; reviewed within 60 days from the end of that month | V.A.3.a.i(B) | | EPD and servicing reviews | Selected monthly; reviewed within 60 days from the end of the month of selection | V.A.3.a.i(C)–(D) | | Initial findings report | Within 60 days of selection | V.A.2.c.iii(A) | | Findings to senior management | Within 30 days after the initial report | V.A.2.c.iii(A) | | Final report, with corrective actions, timetable and follow-up | Within 60 days after findings reach senior management | V.A.2.c.iii(A) | | Fraud and material misrepresentation to FHA | Immediately | V.A.2.c.iv(D) | | Other unmitigated Material Findings to FHA | No later than 90 days after the initial findings report is completed | V.A.2.c.iv(D) | | Record retention | Two years from the initial QC review or the last mitigation action, whichever is later | V.A.1.d.i | Continuing the example: March closings are selected in April and reviewed within 60 days of March 31. If a loan selected on April 5 has an unmitigated Material Finding, the initial findings report is due by early June, and the Self-Report to FHA within 90 days of that report's completion. Mitigated findings that don't involve fraud or misrepresentation need not be reported. Title II mortgagees report through the Self-Report feature of the Loan Review System (V.A.2.c.iv). ML 2026-09 removed the former "Identifying Patterns" section, so the findings section is now V.A.2.c (dated 11/10/2026 in the August 12, 2026 Handbook). ## What the loan-level review covers The table in V.A.3.c.i sets the minimum review areas. Pre- and post-closing reviews both cover the appraisal, application and underwriting documents, disclosures, credit reports, debts, verifications, source of funds, underwriting accuracy and condition clearance. Occupancy, closing documents, pre-endorsement review and timely submission for insurance are post-closing only. Post-closing reviews need a new credit report in the same form as the original, and a second full RMCR if adverse discrepancies appear. Pre-closing reviews and non-credit-qualifying Streamline Refinances are exempt (V.A.3.c.ii(A)). Post-closing reviews also reverify employment, income, assets, gift funds, source of funds, and mortgage or rent payments, in writing or electronically, with a telephone attempt if the request isn't returned. Pre-closing reviews don't require reverification, but any discrepancy they turn up must be resolved before closing (V.A.3.c.ii(B)). Except for Streamline Refinances for which a new appraisal was not required, every selected loan gets a review of the property documentation and appraisal for completeness, technical accuracy and quality, using valuation tools, AVMs, MLS and public records as appropriate. Field reviews are now optional: ML 2026-10 removed the old requirement to field review at least 10% of the sample, and the mortgagee "may obtain" one if needed (V.A.3.c.ii(C)). Sections V.A.3.d through V.A.4 add reviews of specialized programs such as 203(k), HECM and condominiums, servicing file reviews, participant eligibility checks against SAM, LDP and NMLS, and data integrity checks against AUS, TOTAL and FHA Connection data. ## Rating findings Set up a Loan Sample Risk Assessment with at least three categories (V.A.3.b): Low Risk for no issues or minor variances, Moderate Risk for unresolved questions or missing documentation that isn't material, and Material Risk for Material Findings that represent an unacceptable level of risk. A Finding is Material if disclosing it would have changed the decision to approve the loan or to seek FHA endorsement (V.A.2.c.i(B)). ## Reviews beyond the loan file V.A.2.b adds institutional reviews that the plan must provide for: - Train all staff involved in FHA loan administration and QC, and keep a list of the training given with a content summary. - At least semiannually, check employees and affiliates against the SAM Excluded Parties List, the Limited Denial of Participation list and NMLS registration. - Review affiliates the same way as your own operations, with at least a semiannual reverification of licensing and eligibility. - Each month, review a random statistical sample of denied applications for fair lending, within 90 days from the end of the month of the decision. - Confirm escrow, MIP, submission for insurance and advertising are handled correctly. - Report a Reportable Cyber Incident to HUD no later than 36 hours after determining it occurred. ## Who does the work QC employees must be independent of every loan administration process in the QC plan and sit outside any reporting chain directly connected to loan administration staff (V.A.2.a.i). You can use a contractor, but the mortgagee "assumes full responsibility" for its reviews, there must be a written contract setting out each party's role, and that contract "does not satisfy the Mortgagee's obligation to have a written QC Plan" (V.A.2.a.ii). The QC plan, the sampling and the reporting to FHA stay with the mortgagee. ## FAQ **How many pre-closing reviews does FHA require?** No more than 10% of the sample. A mortgagee that closed nine or fewer loans last month must do at least one pre-closing review this month. **Must every early payment default be reviewed?** Yes, every loan that becomes 60 days delinquent within the first six payments, except those covered by the major disaster exception. EPDs do not count toward the sample size. **Are appraisal field reviews still required on 10% of files?** No. ML 2026-10 made field reviews optional. The mortgagee still reviews property documentation and the appraisal, except for Streamline Refinances for which a new appraisal was not required (V.A.3.c.ii(C)(2)). ## Sources - HUD Handbook 4000.1, FHA Single Family Housing Policy Handbook (issued August 12, 2026; Section V.A subsections dated 09/14/2015 through 11/10/2026), Section V.A, pp. 1682–1705: https://www.hud.gov/sites/default/files/Housing/documents/40001-hsgh-Update-18.pdf - Handbook 4000.1 information page: https://www.hud.gov/hud-partners/single-family-handbook-4000-1 - Mortgagee Letter 2026-09, Eliminating Unnecessary Requirements for FHA Mortgagee Approval and Quality Control (June 23, 2026): https://www.hud.gov/sites/default/files/hudclips/documents/2026-09hsgml.pdf - Mortgagee Letter 2026-10, Updates to FHA Quality Control Requirements for Appraisal Field Reviews (June 23, 2026): https://www.hud.gov/sites/default/files/hudclips/documents/2026-10hsgml.pdf This guide summarizes agency requirements as of the date above. It is not legal advice.