When to Use

• Post-closing audit: After the loan has closed and funding has occurred.

• Pre-audit preparation: Before submitting files for investor review, regulatory examination, or internal QC sampling.

• Remediation: To identify and correct missing or deficient documents before a finding is issued.

How to Use the Checklist

1. Open the Loan File
   Retrieve the full closed loan package from your LOS, document management system, or physical file.

2. Work Down the Checklist in Order
   Each item in the checklist represents a required or conditionally required document.

3. Understand Conditional Requirements

   • Look for notes such as “if conditioned” or “only for refinance.”

   • These indicate the item is only required under certain circumstances (e.g., specific loan programs, underwriting conditions, or product types).

4. Verify Document Completeness
   For each item:

   • Confirm the document is present.

   • Check that all signatures, dates, and required attachments are included.

   • Ensure the document matches the transaction type (purchase, refinance, ARM, non-traditional, etc.).

5. Attach Proof Where Required
   Some items require specific proof, such as:

   • Earnest Money Deposit: Copy of cleared check and/or title/escrow receipt.

   • Funding Check(s): Wire confirmation or copy of funding check.

   • Appraisal: Full copy plus order confirmation showing the appraiser was approved.

6. Mark the Checklist

   • Present & Compliant: Mark as complete.

   • Missing or Deficient: BLANK means it's not there! Flag for follow-up and document remediation efforts.

Common Conditional Items

• Ability to Repay / Sufficient Funds to Close – Only if required by underwriting conditions.

• Tangible Net Benefit Disclosure – Only for refinances.

• CHARM Booklet – Only for Adjustable Rate Mortgages.

• Homebuyer/Borrower Counseling Notice – Only for non-traditional loans.

Best Practices

• Use the checklist as a working document during the audit, not just as a final sign-off form.

• Document exceptions in the file notes, including why an item is not applicable.

• Maintain evidence for all items — regulators and investors may request proof even if the checklist is complete.

• Update the checklist version if new compliance requirements are added or forms are revised.