Without lender and investor trust in the quality of mortgage data and underwriting, credit for buying homes or refinancing existing loans would probably dry up. Today the mortgage industry faces the challenge of increasing the speed, transparency, and consistency of efforts aimed at improving mortgage quality and striving to keep it at that higher level across the entire housing cycle.
Investors need confidence in the data lenders collect when mortgages are underwritten so mortgages are priced precisely, trade more easily, and continue to channel global credit to local lenders. Meanwhile lenders need certainty in the data they gather about property values, borrower credit, and financial capacity to be certain the loans they sell meet investor requirements and are less likely to trigger a buyback request. At the same time, lenders must maintain high quality while managing overhead and limited staff resources.
Currently lenders make representations and warranties that the loans they sell comply with investor requirements. Under Freddie Mac guidelines, many key “reps and warrants” can expire after three years of generally consistent loan payments. Our goal is to help more customers take advantage of this framework by bringing Greater Purchase Certainty to the marketplace.
One way to meet this challenge is to create a channel for fast, effective, and actionable feedback between investors and lenders about loan quality. A two-way quality feedback loop can help the industry to maintain quality when loans are sold, delivered, put in the pipeline, or still on the underwriter’s desk. Our goal in 2014 is to drive toward that simple, secure, continuous feedback loop that will make it faster and easier to flag data issues, correct loan manufacturing processes, build better in-house quality control systems, and ultimately, expand lending opportunities.
We took a first step in that direction with Quality Control Information Manager. QCIM is a secure, web-based system that gives lenders instant access to the status of quality control loan file requests from Freddie Mac. Designed for faster two-way communications between lenders and Freddie Mac, QCIM gives direct access to data and results on specific performing and non-performing loans, loan status in the quality review process, and the status of current repurchase requests, and access to past correspondence about the loan.
As suggested earlier, quality is a two-way street. QCIM also allows rapid feedback from lenders we can use to expedite and improve reviews of loans sent to Freddie Mac for quality control reviews.
We are also supplying lenders with updated Quality Control documentation checklists designed to cut the time it takes to pull the right documents for investor quality reviews. We redesigned checklists for performing loans, non-performing loans, and potentially predatory loans. Quicker submissions and reviews will help build a stronger feedback loop between lenders and investors for creating top-quality loans.
Regardless of how the housing market may change, the demand for quality – and new ways to keep quality high – will always be constant. Watch our Quality Control page for the latest tools and technology to give lenders greater certainty the loans they sell meet today’s requirements for quality.
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