Deteriorating quality in the core underwriting categories should be an area of focus for lenders in the coming months
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 second quarter (Q2) of 2023. The latest report analyzes post-closing quality control data derived from ACES Quality Management & Control® software.
Notable findings from the Q2 2023 report include the following:
* The overall critical defect rate decreased by 3.37% to 1.72%, marking the third consecutive quarter of decline.
* Defects in the Credit and Liabilities categories increased for the second straight quarter.
* While Income/Employment and Assets continued to improve, these remain the top two defect categories for Q2 2023, followed by Loan Documentation at No. 3.
* Analysis of the core underwriting sub-categories showed dramatic improvement in Asset Eligibility from Q1, whereas Credit Documentation and Income/Employment quality deteriorated significantly.
* After increasing slightly in Q1, Appraisal defects declined in Q2.
* Q2 marked the third consecutive quarter where purchase and refinance transactions achieved relative defect parity.
* Last quarter’s improvement in FHA defects proved momentary, as defects rose this quarter, outstripping review share. Defects decreased across USDA, VA and conventional loans, with VA loans experiencing the most improvement.
“The downward trend in critical defect rates over the last few quarters speaks to the care lenders are putting into each loan. At a time when every loan originated matters, lenders are taking quality control seriously and doing all they can to prevent buyback requests from the GSEs,” said ACES Executive Vice President Nick Volpe. “Critical defect rates continue to trend in the right direction, and now, with interest rates trending down at the time of this report, we’re looking forward to seeing lenders maintain high loan quality as the market once again changes.”
Findings for the Q2 2023 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.
“Our findings for Q2 have been a welcoming of positive news, and with continued predictions for a more robust origination environment in 2024, the future looks bright for lenders that have survived the drop in volume and increased QC scrutiny,” said ACES CEO Trevor Gauthier. “The lenders that have been successful in 2023 are those that have embraced QC and prepared for the next market shift. We’re looking forward to watching lenders continue to keep quality at the forefront of their operations.”
The 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
* 3 of the top 5 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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