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Q4 2021 Critical Defect Rate Rose to 1.95%, Per ACES Quality Management Mortgage QC Industry Trends Report

DENVER, Colo. -- 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 fourth quarter (Q4) and full calendar year (CY) of 2021. The latest report analyzes post-closing quality control data derived from ACES Quality Management & Control® software.

Notable findings from the Q4 2021 report include:

* The overall critical defect increased 0.08% to 1.95%, a change of 4% from the prior quarter, as lenders transitioned to a purchase-heavy lending environment.

* Income/Employment defects declined in overall share but remained the No. 1 most frequently cited issue, even after pandemic-related verification issues had subsided.

* Appraisal-related defects rose in Q4 2021 after experiencing minimal levels throughout the last refinance cycle.

* Purchase review share was 20 points higher than refinances.

* Conventional lending share is now 8 points below the pandemic peak amid a mini-resurgence in FHA lending.

"While the overall defect rate rose slightly in Q4 2021, defect rates have improved in totality when comparing 2021 to 2020," said ACES Executive Vice President Nick Volpe. "Given the uptick in Q4 and the persistent issues we're still seeing in the Income/Employment category, lenders should focus their efforts on shoring up this component of their underwriting process."

Findings for the Q4 2021 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.

"As lenders battle over volume, quality control and compliance teams are more important than ever to ensure that the loans that make it through the door meet all regulatory and eligibility requirements," said ACES CEO Trevor Gauthier. "On the origination side, we're seeing the credit box expand to help qualify more borrowers and maintain share. And with 1.3 million loans still in active forbearance along with the renewed focus on servicing from the CFPB and other regulators, servicers and lenders alike must be diligent in their compliance practices to survive this increased level of scrutiny. Leveraging a system like ACES helps both sides of the house ensure they are auditing to the best and most up-to-date standards."

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:

* 4 of the top 5 and more than 50% of the top 50 independent mortgage lenders;

* 7 of the top 10 loan servicers;

* 11 of the top 30 banks; and

* 1 of the top 3 credit unions in the USA.

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.

Related link: https://www.acesquality.com/

This news story was published by the Neotrope® News Network - all rights reserved. ID:NEO2022

Business, Free News Articles, Reports and Studies

Critical Defect Rate Moderates in Q4 but CY 2020 Defect Rate Remains High, Per ACES Mortgage QC Industry Trends Report

DENVER, Colo. -- 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 Trends Report covering both the fourth quarter (Q4) and the 2020 calendar year (CY). The latest report provides an analysis of post-closing quality control data derived from ACES Quality Management & Control Software™.

Notable findings from the Q4/CY 2020 report include:

* The overall critical defect rate improved to 2.09%, which was lower than the prior quarter but still higher than other quarters in 2020.

* Loan Documentation defects rose in 2020, which was most likely driven by pandemic-related issues and symptomatic of manufacturing-related defects overall.

* 2020 was dominated by refinances as a result of pandemic-driven historically/record low interest rates.

* Conventional loan share hit its highest point since ACES began publishing the QC Trends Report in 2016.

* Early Payment Defaults decreased in Q4 2020 and Q1 2021, providing some hope for the future, but lenders should be mindful of upcoming forbearance-related deadlines.

"Despite the distinct differences in the Fannie Mae defect categories of 2020 compared to previous years, the defect share for Income and Employment in 2020 was 23.95%, just above 2019's defect share of 23.10%," said ACES Executive Vice President Nick Volpe. "Of the remaining core credit categories, liabilities is the only category to increase in 2020. This is a testament to the agility lenders showed last year, despite the continuing challenges lenders faced in maintaining loan quality."

Findings for the Q4/CY 2020 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 incorporates 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.

"It would be easy to say the last two quarters of 2020 were dismal, but considering the pandemic, unemployment and critical defect rates, our Q4 findings are buoyant," said ACES CEO Trevor Gauthier. "Critical defect rates and early payment defaults will continue to be areas to watch closely, particularly as lenders respond to the changing landscape of 2021 and more borrowers come out of forbearance."

ACES executives will analyze the findings from the Q4 2020 ACES Mortgage QC Industry Trends Report and offer insights into what lenders can expect in future quarters during a webinar titled, "Insights into Mortgage QC Trends" as part of its ongoing QC NOW Web Series. Visit the QC Now website for upcoming registration details.

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, formerly known as ACES Risk Management (ARMCO), 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:

* 3 of the top 5 and more than 50% of the top 50 independent mortgage lenders;

* 7 of the top 10 loan servicers;

* 11 of the top 30 banks; and

* 1 of the top 3 credit unions in the USA.

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 https://www.acesquality.com/ or call 1-800-858-1598.

Related link: https://www.acesquality.com/

This news story was published by the Neotrope® News Network - all rights reserved.

Business, Free News Articles, Reports and Studies

ARMCO’s Mortgage QC Industry Trends Report Reveals Both Increases and Decreases in Key Areas of Loan Defects

POMPANO BEACH, Fla. -- ACES Risk Management (ARMCO), the leading provider of financial quality control and compliance software, announced that it has released its ARMCO Mortgage QC Industry Trends report for the third quarter of 2016. Using the Fannie Mae loan defect taxonomy, the report analyzes post-closing quality control data from loan files and findings captured by the ACES Analytics benchmarking system. Meaningful information contained in the report provides the industry with insight into the current state of loan quality nationwide.

The report notes a continuing downward trend in the critical defect rate, which dropped to 1.27 percent after reaching a high of 1.92 percent in Q1 of 2016. This reflects a 28.3 percent drop in Q3 of 2016, following a 17.8 percent drop in Q2 of 2016, providing an overall drop of just over 46 percent from the high of 1.92 percent from Q2 of 2016.

"During the past nine months, investors and lenders have been able to clarify the impact of TRID-related errors on their operations and fine-tune the associated risks - both short and long term," says Phil McCall, COO of ARMCO.

An analysis of top-ranking defect categories for 2016 highlights Legal/Regulatory/Compliance as an ongoing leading problem area. In fact, the number of total defects associated with the Legal/Regulatory/Compliance category spiked by more than 14 percent in the quarter covered by the report. However, the critical defects within that same category dropped to a 12-month low, comprising 22.69 percent of all critical defects. Changes in lender severity ratings related to TRID are the cause of this decrease, as explained in detail in the report.

Comprising 32.5 percent of all reported defects, Loan Package Documentation comes in as the second highest defect category and is still an ongoing issue within the entire lending process. While this category is known to be problematic across the industry, these defects are generally curable and rarely affect loan salability.

Notably, critical defects associated with Income/Employment led all categories for "Credit Related Defects." The miscalculation of income was the primary reason reported with critical defects in this category.

"The findings in the Q3 Mortgage QC Industry Trends report demonstrate that while the industry as a whole is making progress in mitigating loan defects, there are still recurring trouble areas that must be addressed," said Avi Naider, CEO of ARMCO. "At the same time, as we passed the one year anniversary of the implementation date for TRID, it's fascinating to see a complex picture emerging among our lender base: Essentially, TRID defects still represent a large percentage of overall defects. Yet, lenders are concluding that minor TRID defects do not impact the saleability of their loans based on their experience in the marketplace."

The report also notes that Fannie Mae has provided considerable guidance to lenders as to how defects are reported for "Credit Related Defects" and what causes a defect, the risk associated with a defect, and how to report these defects under a standardized platform. To date, no similar guidance has been provided by the Consumer Financial Protection Bureau (CFPB) regarding TRID. Ultimately, the report concludes, the CFPB should consider offering guidance and establishing standards pertaining to TRID defects, to avoid deviations in reporting of similar defects across industry lenders.

Click here to review the full report: http://www2.armco.us/mortgage-qc-industry-report-2016-q3.

About ARMCO:

ARMCO - ACES Risk Management delivers web-based audit technology solutions, as well as powerful data and analytics, to the nation's top mortgage lenders, servicers, investors and outsourcing professionals. A trusted partner devoted to client relationships, ARMCO offers best-in-class quality control and compliance software that provides U.S. banks, mortgage companies and service providers the technology and data needed to support loan integrity, meet regulatory requirements, reduce risk and drive positive business decisions. ARMCO's flagship product, ACES Audit Technology(TM), is available at any point in the mortgage loan lifecycle, to any size lender, and is user-definable. ACES standardizes audit requirements, ties pre-funding reviews to post-closing quality control audits, enables seamless trend analysis, identifies credit, compliance and process deficiencies and helps create manageable action plans. For more information, visit http://www.armco.us/ or call 1-800-858-1598.

About the ARMCO Mortgage QC Industry Trends Report:

The ARMCO Mortgage QC Industry Trends Report represents post-closing quality control analysis throughout the United States using data and findings derived from mortgage lenders utilizing the ACES Analytics benchmarking software. This report provides an in-depth analysis of residential mortgage defects as reported during post- closing quality control audits. Data presented comprises net defects and is categorized in accordance with the Fannie Mae loan defect taxonomy. View the report here - http://www2.armco.us/mortgage-qc-industry-report-2016-q3.

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