An IDEA Who’s Time Has Come

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Everyone is familiar with Ford’s advertising campaign – “Quality is Job 1.” Lenders learned since the crash of 2008 that in mortgage lending loan quality and compliance is as important as is product and pricing. A poor quality loan can be as costly as one that is priced incorrectly, sometimes more.

Here are some questions to consider regarding the quality and compliance of the loans you originate:

• Are you getting the most out of your audits?
• Do you have complete confidence that your employees are perfect and make no mistakes?
• Do you trust that no one takes short cuts, miscalculates, or worse, is out to commit fraud for their benefit?
• Are you sure that all information submitted to an AUS and used for loan qualification, approval, and closing is 100% accurate and complete?

If so, then why bother to perform any audits. Your loans are perfect.

Although we’d like to think that is true, that is not reality. We are human and we do make mistakes. However, Lenders must have confidence in the loans they originate. To do so, they need to review the complete loan process from stem to stern, leaving no stone unturned (I know I mixed metaphors). How do you do that?

You do that by comparing your LOS data to the source data and documents that were used to create it!

It’s not enough to review just the LOS info, you must look at the entire picture. This can be done through a process we at LoanLogics call “IDEA”, Intelligent Data Extraction & Automation. Something we can do in hours, not days.

Through this process, a lender can extract and compare key loan data elements against their LOS data as well against other source documents. For instance:

• Are the borrower names or property address the same across all documentation?
• Is the income used to qualify accurately reflected in the systems and calculated correctly?

Only by making use of this technology for accurate comparisons can a lender be truly and quickly confident that their systems and people are working together to create quality loans. Otherwise, you’re just groping around in the dark, and wasting a whole lot of money.

It may be time to take a more aggressive approach to ensuring loan quality. Stop worrying about the cost and think of the benefit that an investment in loan quality will return.

Save money by identifying problems and defects so you can make adjustments, reducing delays and time wasted on correcting problems. Provide your customers with better service and your investors with better loans. Both will return big benefits.

So take the IDEA and run with it. You may find it helps to put you out in front of the pack.

Just click for a better IDEA

About the Author

Michael Vitali

Michael L. Vitali – Independent Consultant to the Mortgage Industry Mike Vitali is an independent consultant to the mortgage industry on matters concerning compliance and mortgage lending. He most recently served as the Senior Vice President and Chief Compliance Officer for LoanLogics, monitoring regulatory developments and their practical implications for the mortgage lending industry. His duties included research, interpretation, and analysis of existing and proposed legislation related to the industry in support of recommendations for policy and/or procedure changes to maintain continued quality and compliance with all applicable laws, rules and regulations, investor requirements, and standard mortgage practices. In his more than 40 years in the mortgage industry, in senior level management, he has gained experience in all areas of mortgage lending, risk management, and compliance. Mike is a past President of the MBA of Greater Philadelphia, is a charter member and was the second Chairman of the MBA of Pennsylvania, and a past board member and Legislative Chair of both associations. He is a recipient of the 1998 Mortgage Banker of the Year Award from the MBA of Greater Philadelphia, and the 2003 Chairman's Award from the MBA of PA, and currently serves on several compliance related task forces for MBA.