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A Guide to Mortgage Quality Control

by Byrne Anderson
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If there is one thing all financial institutions must remain constantly aware of—it’s compliance. This is especially true for mortgage lenders and the ever-changing rules and regulations that govern them.

This is where mortgage quality control comes into play.

These in-depth audits are required by law, designed to locate delays and inaccuracies that can affect the delivery of loans. This can ultimately affecting profit margins and business efficiency.

Additionally, the mortgage originator must follow various fraud prevention, detection, and reporting measures within its quality control program.

It’s important to recognize that quality control should begin even before an application is started—and continues throughout the entire process. Luckily, you are not in it alone!

For a quick rundown on the importance of mortgage quality control and how you can improve this within your own organization, read on below.

Why Is Mortgage Quality Control Important?

The purpose of quality control in this context is to review and track the integrity of the mortgage origination progress. These audits focus on verifying the accuracy and validity of the information used to inform mortgage lending decisions.

A quality control program must provide for the organization’s standard operating procedures. These are to be followed by all employees involved in the origination process.

These reviews must also be done both pre-closing and post-closing, with a sample selection of mortgage loan files taken. Depending on the operations and needs of the specific seller, the use of pre-closing and post-closing quality control reviews may vary.

The review’s findings must then be reported to senior management on time.

Each mortgage quality control process will vary by organization—though, generally speaking, it focuses on specific qualities of the originator.

Examples of these include:

  • The size, structure, and geographic operating areas of the organization
  • Staff skills and experience
  • Branch structure
  • Sources used during origination
  • Controls in place to ensure the integrity of internal policies and procedures

These are just a handful of factors. This helps provide feedback on the organization, and how it conducts its originations. In turn, this feedback is used to adjust and improve the process from start to finish.

In particular, post-close quality control audits typically cover reviewing and reverifying:

    • Underwriting decision conditions
    • Desktop Underwriter findings and conditions (when DUs are used)
    • Borrower income
    • Borrower employment
    • Borrower assets
    • Borrower credit history
  • Owner-occupancy

Luckily, it does not have to be a guessing game—there is mortgage help for quality control. Quality assurance audits cover everything from pre-funding to post-closing—ensuring you are aligned with all applicable regulatory guidelines.

How Can My Organization Improve Mortgage Quality Control?

With compliance issues constantly threatening to rear their ugly heads to lenders, it’s important to stay up-to-date on all applicable origination standards and regulations.

With careful and honest mortgage quality control reviews, this can be accomplished to the benefit of the organization and future loan applicants.

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