National Mortgage News - Automate Quality Control, Elevate Loan Quality
The Qualified Mortgage rule, as well as increased scrutiny and more frequent auditing by regulatory ...
Published on: Mar 3, 2016
Transcripts - National Mortgage News - Automate Quality Control, Elevate Loan Quality
National Mortgage News - Automate Quality Control, Elevate
The Qualified Mortgage rule, as well as increased scrutiny and more frequent auditing by regulatory
agencies, has required lenders to embrace quality control to a far greater degree.
Lenders can stay competitive and keep pace with changing regulations by implementing an
automated quality control and loan audit review process. Automating through a quality control
platform can significantly reduce cost, and -- just as importantly -- improve overall loan quality,
illuminate business advantages and increase profitability.
The downside to a mandatory commitment to quality is that lenders are required to spend more to
ensure loan quality and compliance, and with loan volumes being what they are, that increased cost
can be hard to swallow.
Many quality control professionals in particular are feeling overwhelmed and unsure of changing
regulations, as well as frustrated with the limitations current QC processes present.
Manually auditing loan files to ensure compliance with state and Federal regulations program
guidelines -- not to mention proprietary requirements specific to the organization -- is laborious, to
say the least. Furthermore, ensuring that QC personnel are always working with the most current
information is a full-time job in itself.
QC managers can streamline this process and keep staff informed of all regulatory changes through
automation, which facilitates better inter-organizational and third-party communication. In a manual
quality control or loan audit review process, exceptions typically aren't addressed until the end of
the month when management reviews the results.
When loan auditors and areas of responsibility are able to communicate in real time, the net effect is
that critical exceptions can be discovered and relayed immediately.
An automated QC or loan audit platform also enables the lender to continually track the execution of
rebuttal processes and report deficiencies as they occur. Thus, the lender can continually recalibrate
their internal process to improve loan quality on an ongoing basis.
Automation can enhance your reporting capabilities. No two lenders are built alike, and as such,
there are no two QC processes that are alike. Therefore, it makes sense that QC or loan audit
reports should be designed according to the needs of the organization and its executives.
One of the many great things about an automated quality control platform is the ability to create
customized reports, with the support of advanced visualization tools, by importing data directly from
its system of record.
When it comes to importing data, automated QC enables integration with and connectivity between
third-party systems and service providers.
Executing requests for credit information, field in-depth reviews or borrower re-verifications can all
be streamlined through integrations with an automated QC system.
Additionally, the ability to convert data from any format and to have data transfer continuously
between systems maintains the integrity of the loan data and keeps turn times to between 24 and 48
hours, which is critical for prefunding.
When evaluating quality control systems, do not underestimate the benefits of a web-based system
that is hosted and maintained by a vendor.
This type of system is a mission-critical tool for many lenders, and the ability to access the system
remotely can make a huge difference in keeping operations going from a business continuity
perspective. In addition, vendors are in a far better position to update and maintain systems on their
own servers -- not to mention eliminating the potential IT cost to the lender to host (and
troubleshoot, if necessary) the system internally.
Furthermore, lenders should be able to take advantage of their quality control software vendor's
experience across a wide range of lenders to identify areas of QC process improvement.
Benchmarking against industry peers plays a key role in a lender's ability to understand the quality
of its loans and make data-driven business decisions. The QC vendor should be able to provide
standardized and normalized results, as lender quality control reporting and classifications can vary.
Lenders are faced with multiple business pressures and quality control is one of the largest. An
automated QC platform should be able to create a flexible environment that can accommodate a
lender's proprietary requirements and preferences and enable their competitive strategies to drive
Avi Naider is chairman and chief executive officer of ACES Risk Management Corp. (ARMCO).