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Fannie Mae Highlights Top Quality Control Findings for Q1 2025

October 6, 2025

Fannie Mae released its quarterly Quality Insider update summarizing the top loan manufacturing defects identified during post-purchase quality control reviews for the first quarter of 2025. The report provides valuable insights into where lenders are most commonly falling short and offers targeted recommendations to help improve file quality and reduce repurchase risk.

Fannie Mae defines a Significant Defect as a loan manufacturing error that renders a loan ineligible for delivery and requires remediation. These findings reflect ongoing challenges in underwriting accuracy, documentation completeness, and property eligibility—three areas that continue to drive post-closing quality issues across the industry.

1.Top Defects in Random Sample Reviews

The random sample review, which represents a broad cross-section of loan deliveries, revealed the ten most frequent significant defects. Leading the list were:

♦ Misrepresentation of primary occupancy
♦ Incorrect income calculations (rental income/loss, base, and self-employment)
♦ Ineligible property due to safety, soundness, or structural issues
♦ Missing documentation related to income, debts, appraisals, and gift funds
♦ Errors in monthly payment calculations

The top defect this quarter was incorrect income calculation related to rental income or loss. Fannie Mae noted that even minor errors in rental income can push debt-to-income (DTI) ratios out of tolerance. The agency recommends verifying that borrowers have adequate rental management history and double-checking calculations to ensure accuracy.

Another prominent issue was ineligible property related to physical condition. Fannie Mae urged lenders to review appraisal photos carefully for signs of roof damage, chimney deterioration, or foundation issues such as moisture penetration—common oversights that can render a property ineligible for delivery.

2.Top Defects in Discretionary Sample Reviews

The discretionary sample targets loans that are more likely to contain manufacturing quality issues. In this review category, the top ten findings included:

♦ Undisclosed liabilities
♦ Borrower not employed or unverified employment
♦ Undisclosed mortgages
♦ Appraisal issues, including inappropriate comparable selection and lack of proper adjustments
♦ Excess interested-party contributions
♦ Misrepresentation of primary occupancy

The leading defect in the discretionary category was undisclosed liabilities. Fannie Mae recommends lenders proactively discuss all financial obligations with borrowers prior to closing and monitor data from credit reporting agencies for new or updated debt information. Early identification of undisclosed obligations can help prevent costly post-purchase findings.

3.Why It Matters

These findings highlight ongoing areas of risk for lenders; particularly in income accuracy, property eligibility, and borrower liability verification. Fannie Mae’s guidance reinforces the importance of thorough documentation, consistent underwriting standards, and diligent quality control processes before and after closing.

By addressing these recurring issues, lenders can reduce the likelihood of repurchase requests and improve the overall quality of loans delivered to the GSEs.