WE’RE HEARING…that post-closing quality control audits can make a difference in prices paid for mortgages sold in the secondary market.
According to Matt Woolley, vice president of sales, at the Fort Washington, Pa.-based industry vendor and analytics provider LoanLogics, lenders selling their loans are getting away from a “ship and hope” mentality, leading to better business relationships with investors and ultimately better prices.
Today, Woolley finds that quality control measures when it comes to loans sold on the secondary market are largely focused on data integrity, ensuring that information on the documents that flow through the origination process match up with each other using automation such as optical character recognition technology.
A post-closing quality control audit does take time, and time—as is often said—equals money, so it is worth considering how long processing takes when sizing up post-closing quality control services and technology, he said.
Woolley said that the industry average is about four or four-and-a-half files per day with some variation among individual vendors. He said the Pennsylvania-based company he works for can process eight to 10 files per day, and the company promises the outsourced quality control audits its specialists provide will return results on a flow basis, no later than 30 days from the receipt of source data and documents.
Technology aids the origination quality control process but does not replace a certain level of manual review necessary. Rather, it helps manage and applies analytics to the manual workflow with the aim of making it possible to execute it as efficiently as possible as well as accurately.
Compliance is driving a lot of lenders’ loan quality efforts, and Woolley said LoanLogics, which was formed when loan quality software and services provider Aklero Risk Analytics Inc. and NYLX—a provider of mortgage loan pricing, performance analytics and monitoring—merged earlier this year, is focused on ensuring it is ahead of the game and ready as new regulations like the Consumer Financial Protection Bureau’s qualified mortgage rule are rolled out.
Mergers continue to shape the technology supporting loan origination and quality control, but it need not be disruptive, according to Woolley, who said the ongoing integration between the two companies that formed LoanLogics due to their similar cultures is nearing completion.
This “shouldn’t affect current users,” although those that do their own audit work will be able to use a new interface that is designed to be an improvement on the old one, he said.
Bonnie Sinnock is managing editor of National Mortgage News and editor of Origination News. She has been covering the mortgage industry since 1995.