Ensuring the mortgages you originate and/or service are in compliance with myriad requirements is critical for both operating efficiently and profitably, as well as avoiding major fines from the CFPB. Below are four essentials of creating and ensuring that your mortgage quality control (QC) plan is compliant and effective.
Establish Your Credit Culture
Mortgage lenders must establish their own set of standards for loan quality. These standards will define a company's credit culture and help develop appropriate controls necessary to ensure loans are of investment quality. A lender's overall commitment (or lack thereof) to Quality Control will ultimately determine how effective their Quality Control program is.
Understand All QC Requirements
Your QC plan needs to be reflective of the partners you work with as well as the laws of your respective governmental agencies. They include:
- Government Agencies
- Regulatory Agencies
- Warehouse Lines
Achieve the Following QC Objectives
- Ensure your organization is producing a quality product to sell to investors
- Maintain compliance with contractual obligations and applicable federal, state, and local laws and regulations
- Prevent fraud, negligence, errors, and omissions
- Guard against unacceptable levels of risk & potential law suits
- Assess compliance with internal policies
- Protect against repurchase demands
- Improve loan quality & production processes
- Minimize costs by reducing time file spends with UW and reducing time on warehouse line (by reducing investor conditions)
The Final Reason
And the final reason you should have a QC plan in place is... because it's required. A compliant QC plan is critical to any companies success in the current age of compliance we live in.