In years past, it was relatively easy for consumers and businesses to get a mortgage. In fact, the mortgage guidelines were changing rapidly and at one point, it may have been possible to get a mortgage with no real quality checks in place. In part, this led to the credit crisis which took place in 2008.
Today, we are still feeling the effects of the credit crisis and as a result, mortgage companies are looking for ways to reduce the default rate of the loans that are given. In part, this is done through loan auditing and quality control.
Each loan that is run through the mortgage company needs to be checked for risks in multiple ways. A number of management methods, as well as an improvement in the technology that is available to mortgage companies, have made this possible.
As a result of using mortgage auditing and mortgage quality control software, such as what is available through LoanLogics, many banks are able to offer mortgage loans and create portfolios with a decreased default rate.
Loan Auditing -
The mortgage industry is making use of loan auditing, which not only benefits the industry as a whole, it benefits the consumer as well. When doing a forensic mortgage audit, all of the documentation that is associated with the loan is given a comprehensive review.
It makes it easy to identify any illegal activity that is taking place in the loan by any party that is associated with it, including brokers and lenders. Any violations in the lending process can cause serious consequences for anyone involved. Not only can loan auditing help to reduce the default rate, it can also benefit the mortgage industry by reducing costs that are associated with correcting mistakes at a future date.
Quality Control -
In the mortgage industry, quality management is an important aspect that needs to be considered. In some cases, quality management may be outsourced to other financial services. This allows for quality control without the need to have a complete audit department on staff. Quality control may cover various aspects of the loan, including all pre and post-closing audits and pre-funding audits for the investor. It may also be incorporated with forensic loan auditing, which was discussed earlier.
By incorporating quality control and loan auditing into the mortgage industry, everyone benefits. It helps to reduce the default rate and keeps the industry fluid for those that are in need of a loan.
Frank Shields is an expert in the loan and mortgage industry with experience managing client’s loan portfolio. Feel free to connect with him over at Google+.