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Looking back, It might have come as a surprise to some when in Spring of 2021 STRATMOR Group reported that somewhere between 20 and 30% of the loans sent to aggregators were not immediately purchased due to issues. No matter how you slice it – good or bad – an average of 25% is one notable percentage. Twenty-five percent chance I might win the lottery? Heck yes! Twenty-five percent chance my airplane malfunctions? Heck no!
The article went on to goad the topic further by hypothetically asking what lenders might face when the GSEs caught wind of the trend.
Fast-forward to Fall when we heard during the MBA RMQA conference that 8% of Freddie Mac reviews resulted in repurchase, a figure that has compounded 2% annually since 2019 and you get a sense that things hadn’t improved much.*
Now that we’re in a period of contracting volume there’s a “window of opportunity” to do something about it. As described by STRATMOR, 2022 is the year when lenders should have the right balance of time and capital on their hands to make investments in technology to enhance the customer experience, optimize resources, or using the scenario above, improve quality.
Efficiency and data accuracy are two major must-haves when looking to mitigate repurchase risk for all constituents in the mortgage loan life cycle.
A data and document processing solution that incorporates highly trained machine learning, sophisticated OCR, and advanced data extraction programs is one area to consider an investment. With the utmost speed and confidence, you can be provided a 360-degree view of system to document comparisons of data and accurate document classification.
Lenders can head off issues at origination by surfacing issues early during QC reviews. The LOS is not the single source of truth. Automation of document processing adds full transparency and completeness to Pre-Closing, Post-Closing, and Pre-Funding reviews that in the end meet investor quality expectations.
Similarly, Correspondent and MSR buyers can speed up the cycle time required to find and clear issues with critical document checks and data validation pre-purchase. From there, taxonomy and file output types can be standardized for easy transfer into the counterparty’s system of record.
By creating purified data, LoanLogics can help lenders more effectively verify and validate quality throughout the loan manufacturing, correspondent acquisition, and MSR transfer process. Doing it with the efficiency required to compete in a fast-paced, ever-evolving market opens the “window of opportunity” even further for the industry.
View this infographic to see our IDEA of the right foundation to achieve all that with.
*LoanLogics spoke during the session where these data points were covered. A blog recap of the session can be found here and here.
