{"id":26149,"date":"2022-11-09T17:44:04","date_gmt":"2022-11-09T17:44:04","guid":{"rendered":"https:\/\/mozaiq.ai\/?p=26149"},"modified":"2023-10-13T05:07:45","modified_gmt":"2023-10-13T05:07:45","slug":"loan-quality-is-a-critical-success-factor","status":"publish","type":"post","link":"http:\/\/mozaiq.ai\/loan-quality-is-a-critical-success-factor\/","title":{"rendered":"Loan Quality is a Critical Success Factor"},"content":{"rendered":"<section class=\"wpb-content-wrapper\"><section class=\"vc_row wpb_row vc_row-fluid  vc_custom_1654495324478 pofo-row-responsive-6646a11e6eaff\"><div class=\"wpb_column vc_column_container  col-xs-mobile-fullwidth\"><div class=\"vc_column-inner \"><div class=\"wpb_wrapper\">[vc_empty_space]<div class=\" vc_custom_1697173653686 last-paragraph-no-margin\"><h5>The Importance of Loan Quality<\/h5>\n<p>The Fed raised rates by another three-quarters of a point and hinted at continued yet lower increases in the future. The <a href=\"https:\/\/newslink.mba.org\/mba-newslinks\/2022\/october\/mba-forecast-recession-likely-in-2023-mortgage-originations-to-decline-9-to-2-05-trillion\/\">MBA<\/a> expects origination volume to decline to $2.05 trillion in 2023, down from an expected $2.26 trillion in 2022. Not good numbers if you\u2019re a mortgage lender. A tight market, eroding margins, and plummeting refi volumes are just some of the factors forcing lenders to cut staff, terminate lines of business and even shutdown.<\/p>\n<p>In such a competitive market, everything that a lender can do to successfully originate, fund and sell a loan is paramount to its existence. That\u2019s why the topic of loan quality was everywhere at this year\u2019s <a href=\"https:\/\/www.mba.org\/conferences-and-education\/conferences-meetings\">annual MBA Conference<\/a> in Nashville. Why? Because the quality of a loan has direct economic and reputational consequences on the lender.<\/p>\n<p>I\u2019ll explain. Examples of common, critical deficits fall into two categories: credit and collateral.\u00a0 Credit defects could be missing or expired documents required by the GSE, documentation not supporting the borrower income or assets, and incorrect calculations. Collateral defects often involve a lender missing flags on the appraisal for soft markets and high CU<sup>1<\/sup> scores. Poor loan quality can have severe adverse impacts on a lender:<\/p>\n<ul>\n<li>They may be forced to buy back the loan at significant costs to the lender<\/li>\n<li>They may not be able to sell certain loans to GSE\u2019s (Fannie and Freddie) and to aggregators<\/li>\n<li>They could lose their GSE tickets if quality is not maintained, where the threshold of critical defect rates must be consistently below 2% or less at Post Close. (5% or less at the Pre-fund stage).<\/li>\n<li>Aggregators could refuse to buy the loans, or squeeze already tight profit margins<\/li>\n<li>State and Federal regulators could revoke licenses<\/li>\n<li>A declining reputation could affect loan volumes and profits<\/li>\n<li>Margins move into negative territory<\/li>\n<\/ul>\n<p>No one in the mortgage ecosystem\u2014brokers, loan officers, realtors, or borrowers\u2014wants to work with a lender that closes a loan and then must bring the borrower back to the table to re-sign or even renegotiate loan terms, or requests additional documentation.<\/p>\n<p>Example: one lender said they are auditing 100% of their loans, pre-funding, to ensure that they don\u2019t run the risk of having to buy the loan back or incur a penalty with a cost of up to 30% on the loan amount. Do the math: 30% of a $300,000 mortgage is\u2026 $90,000. For one loan. And how are they auditing the loans? With people of course. After having shed over half their workforce.<\/p>\n<h2><strong>Checkpoint Audit Helps<\/strong><\/h2>\n<p>Checkpoint classifies mortgage loan files into discrete loan documents, extracts data with high accuracy and enables validation of the final output across multiple checkpoints in the loan fulfillment process, eliminating costly errors, increasing loan quality, and enabling a faster loan throughput, all while letting operations teams be more efficient.<\/p>\n<p>Auditing\u2014automated or not\u2014ensures that human errors are caught and resolved before costs are compounded. The further into the loan life cycle, the greater the time, effort, and cost required to fix the issues.<\/p>\n<p>Auditing <em>plus<\/em> Intelligent Automation ensures that loan reviews are consistently done the same way every time. The combination reduces human errors, enables 24\/7 reviews, and decreases FTE costs, since usually high value and high-cost resources are doing the audits.<\/p>\n<p>The Checkpoint Audit platform does not remove humans from the decision making, it helps them be more efficient by finding and highlighting potential issues that the underwriter or operations team can then make a decision on.<\/p>\n<p>Finally, and importantly, it sets the lender up to absorb increases in loan volumes (once the market rebounds) while maintaining the higher quality of their loans, without having to hire expert resources.<\/p>\n<p><a href=\"https:\/\/mozaiq.ai\/downloads\/\">Checkpoint audit<\/a> is the intelligent automation audit platform for mortgage lenders. Check out the <a href=\"https:\/\/mozaiq.ai\/demo-no-11-checkpoint-at-post-close\/\">Checkpoint Audit demo<\/a> and <a href=\"https:\/\/mozaiq.ai\/contact-us\/\">contact us<\/a> to learn more.<\/p>\n<p><em><sup>1<\/sup>CU scores: \u201cCollateral underwriter&#8221; scores. An automated score that the GSE&#8217;s put on an appraisal.\u00a0 If it is too high there is a high risk associated with that property maintaining its value.\u00a0 The main critical defects are associated to Credit (borrower&#8217;s ability to pay) and Collateral (property value is solid).<\/em><\/p>\n<\/div><\/div><\/div><\/div><\/section><section data-vc-full-width=\"true\" data-vc-full-width-init=\"false\" class=\"vc_row wpb_row vc_row-fluid  vc_custom_1652327203559 cover-background wow fadeIn vc_row-has-fill pofo-stretch-content pofo-stretch-row-container pofo-row-responsive-6646a11e6eec1\"><div class=\"wpb_column vc_column_container vc_col-sm-12 vc_col-md-12 col-xs-mobile-fullwidth text-center\"><div class=\"vc_column-inner \"><div class=\"wpb_wrapper\"><span class=\"text-extra-large margin-25px-bottom vertical-align-middle sm-width-100 display-inline-block alt-font heading-style3  vc_custom_1697172803609 pofo-button-responsive-6646a11e6ef6c  heading-1\"  style=\"color: #ffffff;\">Find out how we can support all of your intelligent mortgage automation needs.<\/span><a  href=\"\/book-a-demo\/\" target=\"_self\" class=\"btn pofo-button-1 button-style6  btn-white btn-rounded  btn-large pofo-button-responsive-6646a11e6efc4\" >BOOK A DEMO<i class=\"ti-arrow-right icon-medium  margin-5px-left no-margin-right\" aria-hidden=\"true\"><\/i><\/a><\/div><\/div><\/div><\/section><div class=\"vc_row-full-width vc_clearfix\"><\/div>\n<\/section>","protected":false},"excerpt":{"rendered":"<p>The quality of a mortgage loan has direct economic and reputational consequences on lenders&#8217; ability to transact with GSEs.<\/p>\n","protected":false},"author":2,"featured_media":28989,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[56,57,61,59],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>The Importance of Mortgage Loan Quality - mozaiq.ai<\/title>\n<meta name=\"description\" content=\"Lenders cannot afford to originate poor quality loans, else they&#039;ll be forced to buy back their loans at high costs, or even be shut down.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/mozaiq.ai\/loan-quality-is-a-critical-success-factor\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Importance of Mortgage Loan Quality - mozaiq.ai\" \/>\n<meta property=\"og:description\" content=\"Lenders cannot afford to originate poor quality loans, else they&#039;ll be forced to buy back their loans at high costs, or even be shut down.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/mozaiq.ai\/loan-quality-is-a-critical-success-factor\/\" \/>\n<meta property=\"og:site_name\" content=\"mozaiq.ai\" \/>\n<meta property=\"article:published_time\" content=\"2022-11-09T17:44:04+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-10-13T05:07:45+00:00\" \/>\n<meta name=\"author\" content=\"Francesco Paola\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Francesco Paola\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/mozaiq.ai\/loan-quality-is-a-critical-success-factor\/\",\"url\":\"https:\/\/mozaiq.ai\/loan-quality-is-a-critical-success-factor\/\",\"name\":\"The Importance of Mortgage Loan Quality - mozaiq.ai\",\"isPartOf\":{\"@id\":\"http:\/\/mozaiq.ai\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/mozaiq.ai\/loan-quality-is-a-critical-success-factor\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/mozaiq.ai\/loan-quality-is-a-critical-success-factor\/#primaryimage\"},\"thumbnailUrl\":\"http:\/\/mozaiq.ai\/wp-content\/uploads\/2023\/10\/MOZAIQ-Blog-Loan-Quality-Is-A-Sucess-Factor.png\",\"datePublished\":\"2022-11-09T17:44:04+00:00\",\"dateModified\":\"2023-10-13T05:07:45+00:00\",\"author\":{\"@id\":\"http:\/\/mozaiq.ai\/#\/schema\/person\/ccb21b189e126519514c1941426f4bd1\"},\"description\":\"Lenders cannot afford to originate poor quality loans, else they'll be forced to buy back their loans at high costs, or even be shut down.\",\"breadcrumb\":{\"@id\":\"https:\/\/mozaiq.ai\/loan-quality-is-a-critical-success-factor\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/mozaiq.ai\/loan-quality-is-a-critical-success-factor\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/mozaiq.ai\/loan-quality-is-a-critical-success-factor\/#primaryimage\",\"url\":\"http:\/\/mozaiq.ai\/wp-content\/uploads\/2023\/10\/MOZAIQ-Blog-Loan-Quality-Is-A-Sucess-Factor.png\",\"contentUrl\":\"http:\/\/mozaiq.ai\/wp-content\/uploads\/2023\/10\/MOZAIQ-Blog-Loan-Quality-Is-A-Sucess-Factor.png\",\"width\":2000,\"height\":1000},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/mozaiq.ai\/loan-quality-is-a-critical-success-factor\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"http:\/\/mozaiq.ai\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Loan Quality is a Critical Success Factor\"}]},{\"@type\":\"WebSite\",\"@id\":\"http:\/\/mozaiq.ai\/#website\",\"url\":\"http:\/\/mozaiq.ai\/\",\"name\":\"mozaiq.ai\",\"description\":\"MOZAIQ Intelligent Mortgage Automation.  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