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Every industry operates under some standard practices that can ensure quality over an extended period. For mortgage lenders to have successful operations, a sturdy and efficient quality control system must be in place. Having an established quality control program helps mortgage organizations to ensure that every aspect of their business, from application through processing, is carried out in a manner that upholds the standards of the organization. Essentially, a quality control system can help the management to keep track of the various mortgage processes within the organization. Additionally, it also helps in evaluating the integrity of the processes by providing the necessary feedback. The best practices that the guidelines suggest for the mortgage industry can be implemented with the help of a reliable mortgage quality control services provider with adequate experience.

Essentials of a Mortgage Quality Control System   

The general requirements of a QC system across organizations remain more or less the same. These basic requirements ensure that the system maintains the desired compliance to the industry regulations.

Some of the key features that the quality control system of a mortgage Quality Control company must take include are listed below:

  • The organogram of the company
  • The size of the company
  • The individual experiences of the staff
  • The overall expertise of departments and sections
  • The operational structure within departments
  • The volume of cases
  • The source of cases
  • The significance of changes in the volume or source of cases
  • Internal compliance system to ensure harmonized practices

Another essential requirement for mortgage QC companies is to have a strong documentation system in place. Every information generated or received must be captured in writing. The staff members of a mortgage QC company must follow the standard operating procedures that outline the steps for different processes. A review system must also be in place to ensure that the documented data is being competently verified. It is advised that verification of the documented data be done on a timely basis. To ensure data integrity, the quality control and mortgage quality assurance teams must work in close collaboration with each other.

Information related to mortgage processing is sensitive and hence, the quality control system must be well-equipped to detect and prevent fraudulent data entry. Mortgage data review and verification processes must, therefore, determine whether the filed data complies with the source documents. Moreover, accurate assessments of underwritten practices should be carried out regularly.

Read Also The Pre-Requisites for Mortgage Quality Assurance & the Best Practices for Quality Control

Responsibilities Pertaining to QC Execution

To execute the QC protocols as laid down by the relevant SOPs, mortgage QC services should comply with the following guidance:

  • Maintaining up-to-date information on the requirements of the organization as well as those of the mortgage insurers, relevant government regulatory authorities, and investors.
  • Ensuring that data collected by the organization is appropriately reviewed.
  • Effecting desirable changes into the program wherever necessary to bring about improvements.
  • Reporting of events relating to the quality management system.
  • Accurate impact assessment of the quality control events and recommending solutions to the problems identified within the system.
  • Training of employees to ensure compliance.
  • Reporting of quality control events to the management and regular follow-ups for a timely closing of events.

Documentation of Quality Control Activities

The ongoing activities in the quality control section ought to be documented to establish traceability. As a best practice, the mortgage quality control process must be documented throughout and the documentation should be reviewed regularly by the concerned review teams. The documentation system should be able to capture the chronology of the process by incorporating contemporaneous reporting of events.

When a mortgage quality control vendor is employed, it should document the processes relating to:

  • Post-closing sample selection-As it is not feasible to review every single mortgage filing, it’s advised that a sample set of cases be selected. By reviewing this set of samples, it’s possible to evaluate the overall quality of case filings and documentation practices followed by the organization. The types of samples selected for quality control review are random, targeted, and discretionary.
  • Random sample – When a random sample is selected, an unbiased overview of all the mortgage cases can be gauged as every case has an equal opportunity of being evaluated. The sampling procedure must also take into account that cases are selected within ninety days of their filing. Also, over the course of a year, samples must be selected from across different categories to get a full picture of all the processes being carried out in the organization.
  • Targeted samples – These are samples that are selected based on their due dates to assess the presence of fraud or information deficits of any sort.
  • Discretionary samples – These samples are selected from a specific population of cases in a non-random manner. They give access to information about these specific processes and help to understand patterns in the process. This aids in understanding processes faster than waiting on the reports of randomized samplings. These samplings are usually done to rule out suspicious cases or practices with prior knowledge of shortcomings assessed from the sources. This can also help to validate a new process with respect to an older one.
  • Document review – A review system must ensure that while documenting mortgage quality control reports, complete records for each mortgage file are maintained. Any discrepancies or deviations from protocol found in the mortgage file which can affect the eligibility of the filing must be reported, and proper justification provided for corrective actions. 
  • File documentation review – Filing of complete and accurate documents must be ensured to comply with industry regulations and guidelines. A complete review of files is hence advisable. Files selected for pre-closing or post-closing review must be maintained with complete records of the process. The file must contain relevant settlement statements that confirm that all necessary conditions have been met for the closing of mortgage filings.
  • Reverification – Verifying and cross-checking data submitted with mortgage applications, such as title searches and sales contracts, is an important QC requirement. When documents containing borrower’s information are shipped, adequate security measures must be taken to protect the information from accidental disclosure.
  • Document retention – Retention of documents for a certain period after the date of preclosing or post-closing of QC review should be practiced. The documents to be retained include QC findings, reports, corrective, and preventive actions initiated. This helps to keep track of mortgage cases well after the filings have been closed. And in cases of refinancing too, document retention practices save a lot of time and effort.

Implementation of QC Protocols

Pre-closing Mortgage Quality Control Reviews

One of the crucial services that lenders look for in a mortgage quality control company is a process to perform reviews on samplings before closing. A pre-closing review process helps lenders to monitor the origination of the loan or policy and evaluate the accuracy of the data. It also prevents the filing of mortgages with data that might be fraudulent, inaccurate, or insufficient.

  • A pre-closing sample selection process must be in place to ensure timely QC reviews to avoid delays in the regular filing procedure.
  • The sampling process should take into account the various operations running in the organization. Also, a sample set that is representative of all the critical operations should be selected.
  • Targeted samples must be selected when reviewing the work of a new branch, employee, or procedure. Also, upon finding reasons for suspicious practices, targeted evaluation is advised.
  • The pre-closing QC review should report errors and prudently correct them.
  • The corrective and preventive actions taken ought to be documented.
  • The pre-closing quality control process should also include validation and reverification of critical processes. These processes include data entry from source documents, verification of employment details, assessment of assets, appraisal of the property to be mortgaged, insurance policy details, etc.

Post-closing Mortgage Quality Control Reviews

Once mortgages have been successfully closed, the mortgage QC process is expected to provide an in-depth review of the practices followed to ensure a successful closure. This can also elaborate on the practices that should be avoided or changed to make the process more efficient. Some of the processes that should be evaluated as a part of mortgage QC solutions include, but are not limited to:

  • Evaluation of source documents – This helps to verify that the data filed with mortgages exists on record and is accurate. It also ensures that the mortgages meet the terms of the purchase document.
  • Discovery of errors – This ensures finding errors in practices, intentional or otherwise, that can be corrected with suitable training programs. The practices followed by the organization must help in minimizing errors by detecting fraudulent information at every stage of mortgage processing.
  • Compliance assessment – This is needed to ensure that mortgages filed by the company adhere to the regulatory requirements and follow guidance practices to the best of their ability.
  • Review of declined applications – An assessment of the documents that led to the declination of any mortgage application can provide insights into the practices that must be corrected to prevent future declines.
  • Data integrity review– As mentioned in the section on post-closing reviews, it is advised that the completeness and accuracy of the data filed in the mortgage application are evaluated against the source documents. A review of the data integrity practices includes checking the validity of the source document and reverification of the records. A procedure for reviewing the data integrity-related documents must be outlined and followed with diligence.

Reporting of Quality Control Events and Activities

For any mortgage QC services provider, reporting is one of the most important procedures. In the language of quality, the absence of an event or activity in the records implies that the activity was never truly performed. It is thus advised that reports include scopes for capturing the performance of activity as well as a cross-verification by reviewers. An efficient mortgage QC vendor must ensure that proper reporting of reviews is done to justify the completion of the activity. Reports relating to mortgage QC reviews must be regularly submitted to lenders as this helps them to monitor the overall quality of their operations. These reports help to take necessary decisions in response to the findings and thus, implement the steps offered by mortgage QC solutions to the lenders.

Some of the essential requirements that the reporting procedure must meet are:

  • The report must include all the pre-closing and post-closing-related QC evaluations. The activities must be well-documented and reviewed competently before reporting.
  • The QC findings should be reported within a stipulated period to provide ample time for operational changes to be made effective.
  • The reports provided by mortgage QC services are expected to provide useful information for the management to comprehensively understand the implications of the findings.
  • The reports should include necessary suggestions for corrective actions as well as impact assessment analysis of deviations from the protocols.
  • Trending of QC results must be maintained by mortgage QC companies to keep track of practices.

Record and Report Maintenance by Mortgage QC Services

Among the services provided by mortgage QC companies, the development of standard records and reports that are best suited for the lender’s needs is of prime importance. The size and volume of operations must be considered while developing standardized records and reports. A mortgage QC vendor is expected to maintain records of individual mortgage files as well as summaries of reports for individual filings. Additionally, for filing of quality control findings that affect the different operations of the organization, sufficient scope for comments, recommendations, and justifications by the concerned team members must be provided.

Reporting of Special Problems and Their Relevant Corrections

When reporting instances of fraud or misrepresentation of data, reporting to the lender organization must be done immediately. Regular reporting of QC findings to the management must continue unaffected by the reporting of problems of serious origination. Reports about special problems must state the facts of the issue and include copies of evidence that can make the matter comprehensible to decision-makers.

Who We Are and Why We Are Considered an Industry Authority

Expert Mortgage Assistance offers solutions for the whole spectrum of events that must be monitored, evaluated, and revised to meet the regulatory needs of the mortgage industry. Our highly trained team ensures that the lender’s requirements are satisfactorily met and regulatory guidelines are complied with. Our services help lenders execute their operations with better precision and accuracy, which in turn ensures higher profits in the competitive mortgage market.

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