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At LoanLogics we’ve been talking a lot about the latest mortgage industry trends with the hopes that it pushes the industry to do something different this year to effectively deal with them. As the reverification manager for the company, I too see and experience the impact of distinct trends during Pre-Funding, Pre-Closing, Post-Closing, Early Payment Default (EPD) etc, reviews in my function.
Back in March, I discussed in a previous blog the importance of reverifications to protect against fraud, particularly in a purchase market where fraud indices were ticking upwards.
In the work performed by our audit services practice, we’ve also been seeing some trends related to an increasing amount of recent Post-Closing, as well as prior year EPD, field reviews, Those reviews are coming back with over 10% variance between the original appraisal value and the review appraisal value. In the past and anecdotally, this notable of a variance tended to only pop up once every six to eight months. Given the 2020-2021 demand for appraisers was at an all-time high, it’s possible that some of these jobs may have been rushed and subsequently ended up over-pricing the value of the home.
As these defects are identified by my team using our LoanHD® loan quality management platform, our clients are notified in real-time via our audit response center (ARC). There they can investigate each discrepancy and work to clear them.
Another trend we’re seeing is the use of desktop appraisals, which officially rooted into the fabric of origination process beginning in March. The increase in the number of clients leveraging them is dramatic. Some have even transitioned 100% of their appraisals (where applicable) to these more affordable and efficient desktop reviews. The cost savings are then passed on in the QC process, as the appraisal type is mirrored in the review. Using automation to assess the value of a home, combined with a required Collateral Risk Assessment on 100% of these loans, makes for a great change in process that should overall lower appraisal defects.
Finally, over the past two months, we’ve noticed more and more employers are sending back post-closing verifications of employment (VOE) requests, stating they are no longer responding to written/verbal inquiries and have moved to third-party digital verification services to manage their reverification responses. This comes as good news for lenders because in the end it speeds up response time, which can take up to 30 days with more manual written forms of communication, and subsequently helps close out reviews earlier in the cycle.
