As the mortgage industry tries to entice private investors back into the space, lenders are looking to technology to provide data verification and analysis of the loans they're originating, according to a panel discussion at the Mortgage Bankers Association convention and expo in Atlanta.
In the midst of unprecedented mortgage buybacks required by the government-sponsored enterprises, several efforts are underway to improve loan quality and verification of data, according to compliance and legal professionals on the panel.
Scott Samlin, executive director of legal and compliance at Morgan Stanley, presented figures showing that 43% of mortgage repurchases are related to inaccurate employment and income data in the original loan file, followed by errors in value (28%), undisclosed debt (10%), occupancy (8%), underwriting issues (3%) and other issues (8%).
When mortgages are improperly originated, positive loan performance is not necessarily a defense against buybacks. Just because a borrower never misses a payment that does not absolve lenders from their repurchase obligations, Samlin said.
"Those days are over," Samlin said. "If you can't document it, then you'll be on the hook for the repurchase."
New technology to review loan data will improve the instances of buybacks, but the panel recommended lenders have more than one verification provider. "If you missed it the first time, then you'll likely miss again," unless lenders have duplicate review services, Samlin cautioned.
