Internal Control Questionnaires and Verification Procedures

Management and Supervision

1. Have management and the board of directors established general operating policies and procedures as well as defined responsibilities for the mortgage banking operation?

2. Have management and the board defined permissible business activities?

3. Have management and the board communicated performance goals to the mortgage banking unit?

4. Have management and the board implemented a risk management program for the mortgage banking unit?

5. Is mortgage banking integrated into the bank’s overall asset/liability management strategies and risk limits?

6. Does each mortgage banking function have adequate independence and segregated reporting lines?

7. Are comprehensive management information systems in place?

8. Do key officers throughout the mortgage company possess the skills and experience necessary to supervise mortgage banking activities?

9. Does management track and evaluate the mortgage banking unit’s financial performance as a separate line of business?

10. Does management award bonuses to mortgage banking employees based on qualitative factors rather than just production volume?

11. Are comprehensive procedures in place that ensure compliance with laws and regulations?

12. Are there sufficient internal controls to ensure that assets are safeguarded?

13. Are there sufficient procedures to ensure accounting is accurate?

14. Has management established a system to ensure the mortgage company maintains adequate capital?

15. Has management established procedures to monitor that the bank has met the capital requirements of the different agencies (GSEs) with which it has relationships?

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