The biggest event of the year for the mortgage industry is days away; however not to be overlooked, the Mortgage Banking Association’s Risk Management QA & Fraud Prevention Forum, held several weeks ago brought new insights to attendees. There was an underlying message that involved rethinking approaches to audit and quality control, highlighting the evolution of process automation and data analysis. Technical improvements realized through the Uniform Appraisal Dataset (UAP), forthcoming Home Mortgage Disclosure Act (HMDA) changes, to be followed by the automated Uniform Residential Loan Application (URLA), will bring more data to the QC arena. This will obviously not alleviate the need to audit and verify the underlying information; however, we should all be prepared to have a new perspective.
Current regulatory change associated with the aforementioned areas continues to keep lenders in the precarious position of dealing with ongoing change management. Handling this aspect of the business came up in multiple conference sessions. Lenders and servicers should expect to remain nimble in this environment, paying close attention to third party partners and considering use of more than one vendor to best leverage expertise and technical innovation. Utilizing multiple vendors also assists in controlling production volatility and minimizing the risk associated with individual vendor capacity to meet industry change internally.
The benefits of having access to more data is revolutionary for the mortgage industry. Automation has made it possible for lenders and servicers to trend quality control data and to more reliably identify underlying risk issues. Additionally, data facilitates developing relational reporting between multiple data sets, which aids sampling selection, as well as improves the credibility of automated valuation and underwriting tools. These are just a few of the ways that current risk management technology can advantage your institution.
At the investor level, this expansion of access to data and innovation yields stronger credit and loan performance. This is critical as credit eases across the lending spectrum. The RMQA forum highlighted improvements in loan defect identification, taxonomy and understanding QC calibration. These improvements will assist lenders and servicers in their capacity to be more precise in identifying defects that are verifiable. Leveraging calibration involves determining a process to categorize loan defects based on severity, more importantly it entails adjusting the loan review approach. Basically, calibration recommends that the lender or servicer evaluate audit discrepancies to ensure results match investor findings, as opposed to spending time focusing on whether a discrepancy is an isolated occurrence.
It’s easy to see that improved access to data will impact the mortgage industry’s efforts to maintain change management proficiency and stay ahead of evolving risk management concerns. Data is helping to enhance mortgage lending policies, credit administration, collateral valuation and mortgage portfolio diversification by providing consistency and thoroughness to the quality control review process. Whether attending MBA Annual or not, lenders and servicers should take note of this vibrant new perspective on the benefits and uses of QC data.
This is the perfect opportunity to learn more about the value of a partnership with Quality Mortgage Services. QMS is the mortgage quality control and audit technology solutions company. With the experience to provide your organization with outsourced services or internal solutions, stay on top of the evolving QC landscape with QMS, a well-established and recognized technology vendor. QMS has remained on the forefront of intuitive audit, QC and verification automation, as evidenced in their boutique product offering, to include MARS™, Mortgage Analysis Review Software. QMS is ready to help your team benefit from the growing access to data and ensure you meet today’s risk management requirements.