Overall critical defect rate trends downward for a second straight quarter despite challenging mortgage lending environment
DENVER, Colo. /CitizenWire/ — ACES Quality Management® (ACES), the leading provider of enterprise quality management and control software for the financial services industry, announced the release of its quarterly ACES Mortgage QC Industry Trends Report covering the first quarter (Q1) of 2022. The latest report analyzes post-closing quality control data derived from ACES Quality Management & Control® software.
Notable findings from the Q1 2022 report include:
* The overall critical defect ended Q1 2022 at 1.93%, representing a .02% decline from Q4 2022.
* Declining volumes have helped stabilize lender processes, keeping defects at bay, but signs are starting to emerge that the credit box is widening in the hunt for volume.
* Defects in the Income/Employment category continue to remain high.
* The share of appraisal-related defects fell in Q1 2022 after rising in the prior quarter, but signs indicate lenders should pay special attention to this area going forward.
* Purchase and refinance shares remained unchanged from the prior quarter. Conventional loan share continued its multi-quarter trend of decline, with FHA loans filling the void and VA loan share also on the rebound.
* Purchase defects increased specifically I the FHA category, which is expected given purchase loans’ dominance in review share and the increase in FHA loans.
“Despite an overall decline in the critical defect rate for Q1 2022, the Income/Employment category remains a glaring problem. Lenders are finding this area a difficult one to rectify, and with staffing changes and new products coming online, it is more important than ever that QC managers get granular findings and feedback to their production group,” said ACES Executive Vice President Nick Volpe. “Additionally, as lenders expand the credit box to win the fight for volume, they must be careful not to stretch too far and further exacerbate defects in this category.”
Findings for the Q1 2022 ACES Mortgage QC Industry Trends Report are based on post-closing quality control data derived from the ACES Quality Management and Control® benchmarking system and incorporate data from prior quarters and/or calendar years, where applicable. All reviews and defect data evaluated for the report were based on loan audits selected by lenders for full file reviews.
“While the defect increases in three of the four ‘core underwriting’ categories are cause for concern, it was not all ‘doom and gloom’ for Q1 2022. Out of the 11 primary loan defect categories ACES tracks, five showed considerable improvement over last quarter, and none more so than the Documentation category, which dropped 37% from 14.57% to 9.09,” added Volpe. “This is a tangible example of the importance of quality control reporting. With quality control and quality assurance testing, lenders can course correct and improve the overall quality of their mortgage originations.”
Mortgage QC Industry Trends Reports are available for download, free of charge, at https://www.acesquality.com/resources/reports.
About ACES Quality Management
ACES Quality Management is the leading provider of enterprise quality management and control software for the financial services industry. The nation’s most prominent lenders, servicers and financial institutions rely on ACES Quality Management & Control® Software to improve audit throughput and quality while controlling costs, including:
* 60% of the top 50 independent mortgage lenders;
* 8 of the top 10 loan servicers;
* 11 of the top 30 banks; and
* 1 of the top 3 credit unions in the United States.
Unlike other quality control platforms, only ACES delivers Flexible Audit Technology®, which gives independent mortgage lenders and financial institutions the ability to easily manage and customize ACES to meet their business needs without having to rely on IT or other outside resources. Using a customer-centric approach, ACES clients get responsive support and access to our experts to maximize their investment. For more information, visit www.acesquality.com or call 1-800-858-1598.
Learn More: https://www.acesquality.com/
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