Post the financial crisis and the whole mortgage-backed securities debacle, lenders had been seeing more and more regulations being introduced requiring even more compliance efforts. Lenders were finding it undoubtedly hard to fight off the mounting costs brought on to enhance quality and regulatory checks and improve loan quality. With regulations around TRID, HMDA, class action lawsuits like the False Claim Act, and the GSEs, OCC, CFPB increasingly active, loan quality was scrutinized at every level.
With all this focus on compliance and regulations for over a decade, banks and lenders have been wary of regulatory bodies and focused on meeting at least the minimum compliance requirements. However, this has caused us to give less importance to another very important entity. Today, originators and servicers must take notice of their own consumers – the investors. The GSEs may be the major investors today, the number of deals with private investors is also growing after a large gap in time.
Secondary market partners and investors today really don’t want to be left holding the bag if the loans the companies create end up having a further quality or compliance issues. Originators (and servicers), therefore, need to be focused on both the regulators and also the secondary markets they are selling into when it comes to compliance. And this focus is needed in all parts of the production process, and the post-closing, shipping and delivery phases. In other words, it needs to be prevalent right through and at a granular, loan level.
When originators look at loans as they are produced, in a step-by-step approach, they can identify issues and quickly resolve them. More and more mortgage companies are realizing this as they turn to new technology, coupled with process efficiency techniques and analytics to resolve their inherent issues. From the very point of inception to creating a loan package, the combination of these 3 can come into play and make things super easy and efficient. Basically put, lenders just don’t have the luxury or time to go back and fix every process of a bad loan once the loans have already reached closure. Today’s loans must be done right and scrutinized throughout the entire production process. But that seems like a lot of cost and effort added on to the process. That’s where the integrated play of technology, optimum services driving process efficiency and analytics can play a key role.
Most originators will find this much easier to accomplish with a viable QA/QC solution that not just detects the issues but proactively gives feedback to remove defects from the production process itself. Our experience in developing and deploying such solutions points us to some basic, but critical areas that must be included. From our perspective, such a platform must include a ZERO defect target stance that utilizes a three-step process
In our case, we've built an innovative QC solution that improves process efficiency and enhances loan quality across the mortgage lifecycle by delivering actionable insights from QC/ audit checks. We help lenders:
We have bench-marked the results that such a platform can provide and our customers have found:
For further information on how technology solutions can help your organization with loan quality control excellence, please visit Coforge BPS at https://www.coforge.com/bps/.