# Prefunding vs post-closing QC: what each agency requires

Updated September 26, 2026

Prefunding QC reviews a sample of loans before closing, or before acquisition, so defects get fixed before the loan funds. Post-closing QC reviews a random sample of closed loans with reverification and produces the defect rate the lender reports on. Fannie Mae, Freddie Mac and FHA require both, but only FHA puts a number on prefunding volume.

## Key numbers

- **10% / 90%** FHA cap on pre-closing reviews and floor on post-closing reviews (V.A.3.a.iii(C))
- **90 days** for Fannie's full post-closing cycle, counted from the month of disbursement
- **60 days** from the end of the closing month to complete FHA post-closing reviews (V.A.3.a.i(B))

## What each review does

These reviews answer different questions. Fannie Mae defines prefunding QC as "an evaluation of a sample of loans prior to closing or, in the case of loans acquired from third parties, prior to acquisition" (D1-1-01). Its job is to catch calculation errors, inaccurate data or missing documents "prior to closing or acquiring the loan," so that ineligible loans are not sold.

Freddie Mac describes the goal of preclosing review as preventing "the closing of Mortgages with deficiencies such as fraud, inaccurate data and insufficient documentation" (3402.2(e)). Post-closing QC works after the fact: it re-underwrites a sample of closed loans and reverifies what was used at origination. At Fannie Mae, the random post-closing sample "serves as the basis for calculating the lender's defect rate."

## You need both

All three agencies require both, and a prefunding program doesn't let you skip post-closing.

- Fannie Mae: the lender keeps a written prefunding QC plan covering review timing, loan selection, and verification of data and documents (D1-2-01), alongside its post-closing program.
- Freddie Mac: the program must include "both preclosing quality control reviews, and post-closing quality control reviews," though the seller "may use any combination of preclosing or post-closing quality control reviews based on its specific operations and needs" (3402.1(a)). It must have a process for reviewing "a sampling of its Mortgages prior to closing" (3402.2(e)).
- FHA: the QC plan "must provide for a combination of both pre-closing and post-closing reviews" (V.A.3.a.iii).

## How many loans, and how fast

| | Prefunding sample | Post-closing sample | Post-closing deadline |
|---|---|---|---|
| Fannie Mae | Lender sets it from its risk assessment; Fannie may impose minimums (D1-2-01) | 10% of monthly production, or a 95%/2% statistical sample (D1-3-01) | Full cycle within 90 days from the month of disbursement |
| Freddie Mac | "A sampling." No number (3402.2(e)) | 10% of annual production, or a statistical sample for sellers above 5,000 loans a year (3402.2(a)(i)) | Report within 90 days of selection (3402.3(b)(i)) |
| FHA | 10% or less of the FHA QC sample (V.A.3.a.iii(C)) | 90% or more of the FHA QC sample (V.A.3.a.iii(C)) | Review within 60 days from the end of the closing month (V.A.3.a.i(B)) |

Fannie's prefunding selection is monthly and must include loans from every production channel. You size it from the risks in your origination processes, business sources, channels, volume and product mix, and you should revisit that risk assessment regularly. Fannie "reserves the right to require the lender to make adjustments or impose minimum sampling requirements" (D1-2-01).

Freddie's prefunding sample should represent the full product line and production process, targeted as needed at new branches, employees, third-party originators and new products, or when fraud is suspected (3402.2(e)(ii)).

FHA's cap works from the other side. Pre-closing reviews can't exceed 10% of the required sample, but a mortgagee that closed nine or fewer loans in the prior month must still select at least one loan for pre-closing review in the current month (V.A.3.a.iii(C)–(D)).

On the post-closing side, each agency adds samples on top of the random one. Fannie adds discretionary selections and gives random-sample loans full-file reviews. Freddie adds targeted early-payment-default and discretionary samples and requires every loan to be eligible for selection within 90 days of the Note Date. FHA reviews early payment defaults in addition, subject to the major-disaster exception, and above 3,500 FHA loans a year it allows a stratified random sample at 95% confidence with a confidence interval no greater than 2% (V.A.3.a.iii–iv).

## Timing a prefunding review

Fannie wants reviews "early enough in the origination process" to select loans, complete the review and tell production staff in time to correct the loan before closing, once the file has enough documentation to support it (D1-2-01).

Freddie's procedures should ensure "timing permits reviews to be completed prior to closing." If the review finds deficiencies, or can't be finished before the scheduled settlement, settlement should be cancelled or postponed (3402.2(e)(i)).

FHA puts the review after the Direct Endorsement underwriter approves the loan and before closing (V.A.3.a.i(A)).

## What each review looks at

A Fannie Mae full-file prefunding review assesses the data entered into automated underwriting, Social Security numbers, income calculations and documentation, employment (including the verbal verification of employment), assets to close and reserves, the appraisal (including reconciling Collateral Underwriter flags), mortgage insurance coverage, and occupancy. Lenders may add component reviews that look at only one element (D1-2-01).

Freddie's list is nearly the same: Loan Product Advisor data, SSN, income documentation and calculation, employment, assets, property valuation, the mortgage insurance commitment, and whether new credit was granted when the credit report shows inquiries in the prior 90 days (3402.2(e)(iii)). FHA's pre-closing review covers most of its case binder checklist but doesn't require a new credit report or reverification.

Post-closing is where independent reverification comes in:

- Fannie: income and employment, tax transcripts, assets, a new tri-merge credit report, a collateral risk assessment, and occupancy (D1-3-03).
- Freddie: employment, income and funds, an IRS Form 4506-C request, SSN validation, credit, owner-occupancy, and an appraisal desk review (3402.2(b)).
- FHA: a new credit report in the original form, and written or electronic reverification of employment, income, assets, gifts, source of funds and housing payments (V.A.3.c.ii).

## Who can do it

Fannie wants prefunding QC independent of production "if practical," and at a minimum the reviewers must have had no part in originating, processing or underwriting the loan under review (D1-2-01). Freddie says preclosing QC "should operate independently" of origination and underwriting "when operationally possible." FHA requires all QC employees to be independent of every loan administration process in the QC plan.

## A worked month

The numbers here are illustrative. A lender closes 150 FHA loans a month (1,800 a year) and 200 conventional loans a month sold to Fannie Mae.

On the FHA side, the 10% sample is 15 loans a month. At most 1 can be pre-closing (1 of 15 is about 7%), so at least 14 are post-closing. February closings are reviewed within 60 days of February 28, and non-exempt EPDs are reviewed on top. ML 2026-09 exempts an EPD only when the property is in a Presidentially-Declared Major Disaster Area, the loan closed before the FEMA incident-period start, and it became an EPD after that start.

On the Fannie side, 20 random post-closing loans a month get full-file reviews, and the cycle for February loans must finish within 90 days from February. The prefunding sample is the lender's choice. It might run 10 full-file and 15 component reviews a month across its retail and correspondent channels, sized by its risk assessment. The Guide sets no number.

The QC plan, the sampling and the reporting to the agencies stay with the lender.

## FAQ

**What percentage of FHA QC reviews can be pre-closing?**
10% or less of the required FHA QC sample. At least 90% must be post-closing.

**Does prefunding QC require reverification?**
FHA does not require reverification for pre-closing reviews. Fannie and Freddie require prefunding reviewers to verify listed data and documents, such as a verbal verification of employment.

**How long does a lender have to finish post-closing QC?**
Fannie: 90 days from the month of disbursement for the full cycle. Freddie: results reported within 90 days of selection. FHA: reviewed within 60 days from the end of the closing month.

**Can prefunding reviews replace post-closing reviews?**
No. Fannie, Freddie and FHA all require post-closing reviews in addition to prefunding.

## Sources

- HUD Mortgagee Letter 2026-09, permanent major-disaster EPD exception (effective June 23, 2026): https://www.hud.gov/sites/default/files/hudclips/documents/2026-09hsgml.pdf

- Fannie Mae Selling Guide (published September 2, 2026): https://selling-guide.fanniemae.com/
- D1-1-01, Lender Quality Control Programs, Plans, and Processes (04/01/2026): https://selling-guide.fanniemae.com/sel/d1-1-01/lender-quality-control-programs-plans-and-processes
- D1-2-01, Lender Prefunding Quality Control Review Process (04/01/2026): https://selling-guide.fanniemae.com/sel/d1-2-01/lender-prefunding-quality-control-review-process
- D1-3-01, Lender Post-Closing Quality Control Review Process (04/01/2026): https://selling-guide.fanniemae.com/sel/d1-3-01/lender-post-closing-quality-control-review-process
- D1-3-03, Lender Post-Closing Quality Control Reverifications (04/01/2026): https://selling-guide.fanniemae.com/sel/d1-3-03/lender-post-closing-quality-control-review-data-integrity
- Freddie Mac Seller/Servicer Guide Section 3402.1, Quality control program structure (effective 05/06/2026): https://guide.freddiemac.com/app/guide/section/3402.1
- Freddie Mac Seller/Servicer Guide Section 3402.2, Quality control processes (effective 09/02/2026): https://guide.freddiemac.com/app/guide/section/3402.2
- Freddie Mac Seller/Servicer Guide Section 3402.3, Documenting and reporting (effective 05/06/2026): https://guide.freddiemac.com/app/guide/section/3402.3
- HUD Handbook 4000.1 (issued August 12, 2026), Section V.A: https://www.hud.gov/sites/default/files/Housing/documents/40001-hsgh-Update-18.pdf

This guide summarizes agency requirements as of the date above. It is not legal advice.