Quality Control is, and has been, the cornerstone for mortgage lending when achieving consistency and minimizing risk to your organization. A key component of this process is reverification. Often associated with numerous phone calls without results, today’s reverification processes should be reinforced by data and automation Whether collected through OCR, intelligent decisioning, or data uploaded from third-party systems, automating the reverification process ensures accuracy and timeliness that is meaningful to your QC processes.
Illustrating the growing importance of this component of QC, Fannie Mae recently dedicated an entire segment of their QC Vendor Boot Camp to reverifications. Opening with a definition of reverification as a means for verifying the accuracy and integrity of information used to support the lending decision, the key reasons cited for using this process included:
· Ensuring your origination information is true and correct
· Monitoring internal quality
· Identifying potential misrepresentation
· Protecting your firm
· Meeting investor requirements for QC and eligibility
Reverification gives the lender the opportunity to ensure that the information gathered during application and processing was accurate. As we all know, errors can easily occur at any time, especially when understaffed or navigating regulation. Maximizing the utilization of reverification as a significant check and balance can make a real difference in managing your operational risk, identifying errors to help resolve issues prior to investor delivery and to minimize future occurrence.
“Reverifications are a goal; not a task.”
Perspective is everything and we couldn’t have said it better than this. As you consider your approach to reverifying information, follow Fannie Mae’s guidance on level setting the importance of this process. Reverifying critical information about your borrowers should not be an exercise in documenting the number of attempts you made as “the attempt is not the success measure.” Your goal should be to validate and report on the reasons why reverification efforts did not yield results, with the expected final outcome being success in reverifying application data, irrespective of the resulting findings.
Last but not least, reverifications are vital to minimizing fraud in multiple phases of origination, from application through post-closing, where employment, income, asset, and occupancy fraud often prevail. In each of these areas much can be accomplished by ensuring the following four areas are components of your operational processes and quality control efforts:
· Process Thoroughness – Make certain the right processes are in place but also that they are adhered to throughout the origination and delivery lifecycles.
· Timely Reverification – Promptly identify errors through reverification of employment, income, asset, and occupancy data ensuring there is time to correct a defect, before leading to repurchase due to ineligibility and/or fraud.
· Red Flag Recognition – Reverifications should be a defense against missing or second-guessing red flags, think research not checklist item, tool not task.
· Reverification Tracking – A breakdown in tracking reverifications will quickly impair the value of the reverification process, eliminating options to make additional attempts, track capture rates, and escalate issues.
Reducing your defect rate with reverification
Doing some backwards math, reverifications will initially and continually reduce your net defect rate. Originators are required to identify their target defect rate with a risk performance focus on continually reducing defects. Relevant to this ongoing process is an organization’s gross (initial) defect rate as compared to its net (final) defect rate derived after rebuttal efforts. This latter is particularly important in minimizing financial exposure through a meaningful QC process.
Evaluating gross defects in a timely and through manner helps to escalate and resolve quality issues prior to delivery and funding, and most importantly gives you time to impact your net defect rate. Reverifications can be simply executed and managed with an automated process that not only facilitates defect identification but ensures that tracking and follow up take place. This change in practice can augment your focus on high-risk areas that need a more detailed review that includes reverification. For the New Year, consider adjusting your QC plan by elevating the selection criteria used for review and reverification of employment, income, assets, and occupancy.
Introducing a new approach to reverification
Changing the reverification paradigm is simpler and less costly than expected. Historical efforts to reverify key information have been cumbersome and riddled with issues that prevent completion. QC Verify drives reverification through a unique and proprietary platform that offers multiple options for automating antiquated industry processes. Our innovative approach to reverification will assist your organization in advancing both internal and external QC processes and requirements. QC Verify truly transforms reverification from a task into a modern business process that reduces cost, helps identify defects, and minimizes operational risk.
Connect with QC Verify today and realize the difference that QC Verify has offered will enhance your QC results. Simultaneously experience the distinction that an innovative QC provider can offer when the approach is automated and personalized – sophisticated technology with a human touch.