2022 RMQA “IMPROVING QC STRATEGIES IN TODAY’S VOLATILE LENDING MARKET” SESSION Q&A

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I’m back with Part 2 of my recap of the panel discussion “Improving QC Strategies in Today’s Volatile Lending Market” that I participated in during the MBA’s 2022 Risk Management, QA, and Fraud Prevention (RMQA). You can look back through part one here, where I covered four key questions I addressed in the session.

At the end of the discussion, each panelist tackled few audience and moderator driven questions that are summarized below.

What types of defect reporting would be best practice to drive action plans and how could these be presented and tracked for senior management or the GSEs?

It’s pretty simple.  Within your QC technology you should already be able to identify what are your top critical and moderate defects broken up by:

First       YTD top critical defects by:

Second YTD top defects by Areas of responsibilities

Once you do the training to the teams associated with a top defects, your QC software should be able to show you if the defect rates are diminishing based on the trainings/Action Plan monitoring.

In the many LoanHD® product demonstrations I perform for LoanLogics, I am always surprised by the number of prospective clients that have not yet been introduced to this strategic QC capability with existing industry vendors. 

My colleague and director of LoanHD, Jenevieve Impavido, actually addressed best practices specific to the GSEs in a two part blog series this summer.

PART 1: LOAN QUALITY INSIGHTS IN REPORTING

PART 2: LOAN QUALITY INSIGHTS IN REPORTING

Are there benefits to a single platform to monitor quality from production through secondary market sales?

YES! For me, one of the top benefits is the ability for symmetrical reporting and cross-reporting for defect trends. For example, using the same platform for pre-close, post-close and pre-funding, can give a holistic picture of defect trends that might point to systemic issues.

You can even dig into reverification success rate on the same platform.  I’ve heard stories where the Agencies want evidence of it during reviews, specifically during MORA audits.  If you manage this process consistently for the types of reviews that require it, it becomes easier to explain attempts, methods, and response rates, as well as provide documentation.

Reverifications are essential in today’s market and not discussed often enough. LoanLogics’ reverification manager spoke about current reverification trends in a blog earlier this year and in another about its role in mitigating fraud risk at a time when it’s on the rise.

Taking it one step further, LoanLogics QC platform has real-time integrations to third-party vendors who offer related solutions important to the loan quality control (QC) process. This includes “best-in-class” third-party compliance, credit, and collateral technology and services. The output of these results can then be incorporated into reporting for an even more wholistic look at quality.

A key differentiator of the LoanLogics’ solution is the integration of a robust set of mortgage related audit and document processing rules that automate the workflow of various types of audit reviews. Loan file data can be verified across system and documents to ensure confidence in findings. In addition, LoanHD, like other industry QC platforms, also allows lender to create custom tests for any audit type expanding its use case beyond mortgage.  We are even working with a new QC client now who wants to leverage our technology to audit a portfolio of consumer loans.  

A bonus benefit of a single platform is also that it simplifies managing multiple systems and vendor contracts with the organization.

If you’d like a closer look at LoanHD, request a product introduction.

About the Author

David O'Malley

David J. O’Malley is a recognized expert in quality control technology and services and holds the position of Director of Quality Solutions for LoanLogics. In his role, he helps guide the company’s quality control product roadmap and works closely with mortgage lenders to apply automated data validation prior to loan review and best practice audit workflows to their quality management procedures. With over 25 years in the financial services industry, his experience includes the establishment of two quality assurance outsourcing operations and co-founding a company that produced one of the first commercially sold quality assurance systems in the country.