Streamline Mortgage Quality Control through Document & Data Management

Quality control is critical for mortgage lenders. Faced with pressures of thin margins, harsh regulatory compliance requirements, and rising operational costs, lenders struggle to create robust QC plans for their mortgage process. 

Mortgage quality control (QC) is defined as a process used to ensure that companies involved in issuing mortgages comply with all applicable laws related to those mortgages.

A robust quality control plan is an integral part of the mortgage loan process. Regulators such as Fannie Mae, Freddie Mac, and other government agencies want to see quality control programs established before purchasing loans originated by your institution. The essential components of your QC program include:

  • Identity re-verification
  • Credit and financial information
  • Compliance with consumer laws and regulations
  • Fraud prevention processes

Mortgage quality control improves and enhances mortgage workflows

Mortgage quality control protects the interests of all concerned parties. The policies established as part of quality control prevent customers from taking on mortgage debt that they cannot manage while ensuring that private and confidential information must only be used when essential and not released to unauthorized parties. 

QC also protects lenders by setting standards for any institution that brokers or provides mortgages, keeping the industry stable and lenders in business over the long term. 

QC processes are essential, starting right from the mortgage application stage, continuing throughout the origination and servicing lifecycles. 

But mortgage QC processes are tedious and resource-intensive. Document digitization and intelligent data management techniques have transformed the mortgage QC process with automation and optimized workflows, leading to better outcomes cost-effectively. We find that progressive lending institutions now turn to workflow automation, smart reporting, and digital analytics to enhance their mortgage quality processes.

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Mortgage quality control: Documents and data management

The exact process of mortgage quality control varies based on applicable laws and regulations. But there are a few basics that are likely to be included in any quality control plan.

The focus is on criteria that the loan applicant must meet to have his mortgage approved. For this part of the quality control plan, lenders and brokers develop screening techniques to qualify the applicant, thereby reducing the risk of mortgage defaults. 

Here are some of the basic steps in developing an effective mortgage QC process:

  • Timely creation of a loan applicant's file
  • Issuing all the relevant documents for loan approval and early transfer of funds to the loan recipient
  • Developing a checklist of all necessary tasks logically organized for maximum efficiency
  • Policies and compliance for background checks, licenses and credentials of all personnel engaged in lending and mortgage processing

 As QC processes become more complex, lenders also have to think about cost-optimization of operations, which is crucial for staying profitable. 

Mortgage quality control challenges

During the mortgage issuance lifecycle, several QC issues may crop up, such as incorrect calculations of the loan applicant's income, missing or insufficient verification of the applicant's employment details, and missing or conflicting records. Several studies have shown that these challenges are likely to result from poor practices or inadequate document management processes and errors in manual checkpoints and verification of loan application documents. Lenders are under pressure to process large volumes of mortgage applications. Efficient document and data management takes a hit if these processes are primarily manual and prone to delays and errors. 

Why outsource your mortgage QC to a digitization partner

Are you sure about the quality of your underwritten documents? Are you worried your documents have errors or are incomplete? Mortgage quality control processes involve high effort and substantial cost. That's why lenders prefer to outsource the QC process to external data management specialists

When you outsource your mortgage underwriting QC solution, you reduce the overhead costs of QC specialists and leverage specialized technology for accurate data reporting and analytics. Outsourcing is an easier route to meeting strict regulatory compliances as service providers already have processes and checkpoints for these in place. When you outsource QC processes, it is easy to scale up the QC operations when there is an upsurge in loan application volumes.

At DRS, as data digitization specialists, we conduct a thorough and detailed review of your lending documentation and processes. We provide an inside look at the process, identifying any flaws in it to take remedial action.

Document imaging technologies such as optical character recognition (OCR) and intelligent data capture solutions run rule-based auto-checks on documents, avoid manual errors, and free up employees' time. Using automation, we extract and analyze relevant data throughout the mortgage lifecycle at a fraction of the time and cost involved in manual processes while minimizing process delays. Faster mortgage processing means a better customer experience!

  1. Document aggregation:  We aggregate all the relevant information, documents, and data to plan the mortgage underwriting QC strategy. 
  2. Check documentation: Much of the mortgage process involves verification of identity and financial information. We check if the documentation submitted is complete and accurate. During QC reviews, we re-verify the documents to avoid any problems at a later date. 
  3. Compliance Checks: Automated compliance checks to ascertain that the origination of all loans is as per the law and that approved loans meet all QC standards. 
  4. Smart QC reports:  Our solutions feature custom reporting for top company management, duly validated for accuracy.

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How DRS streamlines your mortgage QC process

DRS Imaging works with financial institutions and back-office service providers to support effective document management and data extraction solutions. 

Work with a professional document scanning and digitization service provider like DRS for quality control of documents and data used in the mortgage lending process. Converting paper documents submitted by borrowers into digital format makes it easier to integrate the information with your existing ECM or document management system. DRS Imaging offers this support through its document digitization and version control services. 

DRS creates an impact in document management for financial institutions with robust document digitization, data capture and document management solutions for quality control of mortgages.

  • Store financial documents in compliant, audit-proof archives and add data protection measures and long-term backup storage options
  • Built-in Sarbanes-Oxley audit trails
  • Improve efficiency with workflow automation
  • Integrate with LOB systems such as Sharepoint, SAP, Oracle, Ellucian/Banner, Jack Henry, etc.

Partner with DRS to support your digital transformation initiatives and avail of our mortgage QC support services.