The top 15 mortgage quality control issues in 2019, as compiled from tens of thousands of post-close QC audits performed by MetaSource over the past year, continue to demonstrate challenges executing the TRID Rule designed to meet the objectives and requirements of Title X of the Dodd-Frank Act.
In the fourth full year of the requirements imposed by the TILA-RESPA Integrated Disclosures (TRID) rule, our audits show little change at the top of the list, where closing disclosure timing and calculations continue to give lenders trouble.
“What I see is mostly what we’ve been seeing for years,” said Brady Meadows, Strategic Account Manager at MetaSource. “Lenders are having the same problems year after year.”
Meadows says the findings show how difficult it can be for lenders to maintain practices that ensure consistent results. “Lenders seem to be comfortable with their risk exposure regarding TRID findings. But effective QC processes are an opportunity to improve practices that expose them to unnecessary risk,” Meadows says.
Employment Verification Processes Come Up Short
Meadows said one of the most surprising findings of the review was the jump in problems related to verification of employment, an agency (Fannie, Freddie, Ginnie) related finding which moved to fifth on the list, up from eighth in 2018. The finding ranked second among agency related defects on conventional loans, third on FHA loans and ninth on VA loans.
FHA loans were also found to have a higher incidence of “unacceptable source of funds,” ranking ninth among overall FHA related findings, including both agency and regulatory findings, up from 36th in 2018. “Unacceptable source of funds” did not rank among the top 10 agency findings for either conventional or VA loans. This difference is not necessarily surprising due to the fact that the FHA has more stringent rules about acceptable funds.
The numbers suggest that lenders may not be following the guidelines around the sourcing and attribution of funds used to qualify for a loan. “It’s a risky practice which could leave lenders on the hook for up to 30 years in some cases since HUD requires lenders to provide indemnification for the entire life of the loan when there are significant insuring issues,” warns MetaSource Senior Vice President for Mortgage Services Mary Kladde Walraven. “Considering the risk, more focused training specific to agency requirements, especially FHA, is prudent,” Walraven says.
Below are MetaSources’s 2019 findings including all loan types and both regulatory and agency findings.
- Closing Disclosure – Tolerance Violation
- Closing Disclosure – Timing Violation
- Incorrect Income Calculation
- Closing Disclosure – Calculating Cash to Close
- Verification of Employment – Missing or Defective
- Insufficient Assets to Close
- Loan Estimate – Timing Violation
- Intent to Proceed – Missing or Defective
- AUS Findings Report – Missing or Defective
- Omission of Debts – Unacceptable
- Security Instrument – Missing or Defective
- Closing Disclosure – Miscellaneous
- Missing – Sale Proceeds
- Notice of Right to Cancel – Missing or Defective
- Loan Estimate – Missing or Defective
If you are struggling to maintain compliance with TILA-RESPA requirements and other quality control issues or would like help with improving your compliance, call the industry-leading experts at MetaSource today. We can even audit your internal auditors to see how they’re doing.