Counting down the defects…. Here are the top 3 areas for defects from 2021
Sometimes the theme is overwhelming, and in this case the lean towards defects in these three areas has been double and triple the number of quality control findings in other areas. As the New Year is upon us, originations and resource availability continue to ebb and flow, making it important to pay attention to defect trending. Quality control is often our best line of defense in this area. However, without the corresponding analysis and follow up, the benefits of QC are often minimalized, and critical trends overlooked.
Quality Mortgage Services has built their business on understanding the importance of timely and accurate QC, as well as reporting, analysis, and evaluation of current trends. Taking your QC efforts to this additional level of operational analysis will help prepare your organization for agency and investor audits, in addition to preventing errors, misrepresentation and fraud. So, as you and your team kick of the New Year, be sure to turn your focus to defect trending, especially in these three areas:
#1 Loan Submission Package
Probably the single most important element of any QC process is assembling the loan submission package. Errors in this area delay delivery, impact investor purchase, and can create an entirely incorrect picture of a loan file. Start by ensuring your submission includes all of the checklist items associated with the investor, and is in the appropriate order. This may seem simple but is an area where accuracy and thoroughness often take a back seat to timeliness. If you’re not quite certain in this area, Fannie Mae’s checklist is a solid default, and can be found at Fannie Mae Post-Closing Loan File Document Checklist
#2 Income & Employment Verification
A common area for industry concern, income and employment verification processes have been riddled with fraud and misrepresentation for almost as long as we can remember. Automation in this area offers tremendous benefit, although without a thorough approach, can leave gaps as fraudsters continue to target this important element of the mortgage process. Progressive approaches to reverification during QC can prevent and uncover activities prone to verification risk. Refer to our blog and Fannie Mae’s Quality Insider publication from earlier this year to fully grasp the benefits of data and event tracking as a part of income and employment reverification.
#3 Legal & Regulatory Compliance
Keeping up with industry regulation and investor requirements has been a challenge for the past decade but the onset of the pandemic added an entirely new level of complexity. As regulations have changed repeatedly amidst foreclosure bans and expanded default solutions, including forbearance, payment deferral, and relaxed modification requirements, keeping up with the rules has often been untenable. This last defect area is also one of the most difficult to track as requirements must be aligned with date of origination and delivery. It can however be the easiest to combat with a diligent QC partner. Third-party QC affords the checks and balances needed in an environment where even your best efforts can be error prone.
As you implement your strategic roadmap for 2022, consider how effectively you utilize the results of your QC reports and your partner provider. The pandemic has taught our industry many lessons and exuberates our resiliency. It is however imperative not to lose focus on what’s trending in the industry as well as in your business. Start the New Year with a partner that understands what’s important to help you succeed, no matter what the situation. QMS has evolved from a pre-financial crisis due diligence firm to an innovative provider of sophisticated QC, auditing and verification technology solutions.
As a dedicated member of the Mortgage Bankers Association, we remain committed to the industry, and more importantly to our customers. Find out how to safeguard your organization, secure operational efficiency, prepare for audits, and minimize defects with QMS. Visit us at www.qcmortgage.com to see how our team can assist you and your teams in navigating whatever is in store for our industry in 2022.