Missing Mortgage Documents are Costing You More than You May Think
Missing documentation has been an issue for mortgage lenders for years, and it remains a major obstacle even in today’s innovative industry.
According to Fannie Mae, 40-60% of repurchase requests are resolved by delivering a key document that was missing when the loan file was originally submitted to them. This means that up to 60% of repurchase requests could be avoided with an effective document management system. Unfortunately, most mortgage lenders don’t have one, and missing documentation remains a problem.
The Biggest Systemic Problem in Mortgage Quality Control
In fact, the problem of missing documents has gotten worse as files have grown thicker and mortgage application volumes have increased.
While rising rates and market volatility drove some decline in mortgage applications in February and March, volume is predicted to remain strong through 2021. According to an April 21 MBA press release that discussed the association’s Weekly Mortgage Applications Survey for the week of April 16, mortgage loan application volume increased 8.6% from the prior week. Predicted volumes, as well as the traditional increase in summer purchase demand, means more documents to handle. And without sufficient document management strategies, it will also likely mean more missing documentation challenges for lenders.
Mistakes and oversights hiding in billions of documents cost the mortgage industry both time and money.
“It is, hands down, the most time-wasting problem I see,” says Brady Meadows, Strategic Account Manager at MetaSource. In addition to time spent searching for them, missing documents create uncountable false findings. They give the impression that steps were missed, when in fact, the findings are due to poor document management .
It’s a paper-clogged labyrinth of false starts and retraced steps that persist even in an age of automation.
“I’ve been in the QC business for over 10 years and throughout the entire time, the biggest systemic problem has been missing documents,” Meadows says.
“It’s a problem no one is talking about,” he says. “Everyone is more efficient at the mortgage process, but complete document storage continues to be overlooked. When a loan gets to the post-closing step, there’s supposed to be a quote-unquote “complete” package – but is there really?”
A review of the top mortgage QC findings for 2020 answers the question. The root cause of the finding that has consistently topped this list in four of the last five years is missing documentation.
Long gone are the days of hard copy files and searching through filing cabinets. In today’s industry, missing documents can be a result of many things. The document can truly be missing, it can be named wrong, or it can be in the incorrect folder, among other problems. Additionally, the tools that lenders use to pull certain documents from their systems can be compromised. This can happen when changes are made to file names or folders and adjustments aren’t made to the “management” tools controlling the document naming conventions, electronic folder placements, or extractions.
While some vendors and auditors will access your system to view documents, they will encounter the issues above and be unable or unwilling to search further to find the needed documents. To be ready for any audit or need for document delivery, it is critical to ensure the mortgage file is complete and placed in the system for storage.
The Real Cost of Missing Mortgage Documents
The problem is so ingrained that lenders have come to believe that missing documents are an unavoidable part of the process, Meadows says. “I think the industry has just accepted it as a way of doing business.”
But a close look at the amount of time, money and risk associated with missing documents reveals preventable setbacks that any business would find unacceptable. Common challenges brought on by missing mortgage files include:
- Inefficiency that leads to hours of correcting defects instead of working on more pressing tasks
- Regulatory issues that result in unnecessary write-ups
- Unqualified loans that linger on warehouse lines, can’t be sold or have to be repurchased
- Unhappy servicing partners and investors due to high number of purchase conditions
Multiply these challenges by a systemic inability to capture, classify, retrieve and store critical loan documents, and you are left with a problem that can no longer masquerade as a necessary cost of doing business.
The Myth of Unavoidable Missing Mortgage Documents
Contrary to most lenders’ beliefs, preventing the all-too-common issue of missing mortgage files is possible. With a trusted partner and the right solution, you can ensure that your loan packages are truly “complete” by the time you reach the post-closing step of the mortgage process.
At MetaSource, we ensure that our mortgage clients aren’t forced to accept status quo obstacles as an unavoidable cost of doing business. Instead, we help them overcome these obstacles through combined expertise in mortgage processes and state-of-the-art document management solutions that compare their files to what’s required.
We’ll provide you with the custom solution you need and the simple implementation process you want, so your needs are met all of the time.
With an array of QC audits, state-of-the-art scanning, classifying, extraction and mortgage workflow technology, MetaSource can help you meet the highest standards of efficiency and cost-effectiveness. We can ensure that your files and data are classified, stored, audit-ready and easy to access. Plus, our document management solutions provide unmatched visibility and accessibility across the life of a loan, so you’re always in-the-know.
Tailored Solutions for Seamless Mortgage Document Management
Here are just some of the solutions our mortgage clients use to eliminate missing documents, avoid findings, prevent fines and, ultimately, achieve peace of mind:
MetaStor®: A robust, cloud-based document management and workflow platform for the mortgage industry. MetaStor puts data and documents at your fingertips for easy retrieval and complete files.
Symmetri™: Your solution for easily transferring data from borrower platforms into your LOS. Symmetri is a software integration solution that eliminates the paper-choke and gaps that often lead to missing documents.
QLinkTM-Encompass® Integration: An integration solution between our mortgage QC platform, QLink, and ICE Mortgage Technology’s Encompass. This integration allows lenders to select and submit loan documents to MetaSource for audit right from within Encompass and in just a few clicks. By eliminating the need to switch between platforms, this solution reduces the chance of missing documents.
MetaBoarding: Loan boarding automation software that uses a blend of optical character recognition (OCR) technology and mortgage experts to properly classify documents for error-free efficiency.
To learn more about MetaSource’s solutions that can help you end the document and process gaps that are holding you back, give us a call or click on the link below.