For years, lenders were required to perform a quality control review of the loans they closed. Today, lenders need to perform both the post-closing QC review but must also conduct reviews on loans prior to the closing.
These required pre and post-closing quality reviews present a great opportunity for lenders to identify potential problems, and they help to indicate where additional training and process improvements may prove beneficial.
Unfortunately, some lenders overlook the obvious benefits of the required QC reviews and only see the associated costs of doing them. Yes, there is an expense involved but, as I’ve said in the past, this expense should be viewed as an investment in quality.
When the review results are utilized properly, this investment could pay big dividends. Returns to a lender in the form of reduced loan defects, fewer delays, avoiding loan indemnifications and repurchases, with better service to the consumer and their Realtor. All result in improved performance, profits and customer service.
Face it, you’re gonna spend the money to perform these reviews. So, why not get the maximum benefit? If the agencies didn’t require these reviews, lenders should be doing them anyway. It’s just good business.
Like any product, a lender needs to have checks and balances along the manufacturing process to ensure the product is created properly, without defects.
So, why do so many lenders dismiss the findings of their pre and post close audits? Lenders try every way possible to refute these findings to make it appear as if they never existed. Sure, this makes the reviews look great but does it do anything to improve the process and protect the lender from future losses resulting from defective loans? I say, “No!”
Don’t overlook the obvious. Pre and post close review will identify problem areas needing attention. Do not ignore these warning signs. Perform useful pre and post-close reviews intended to identify shortcomings, and use this information to create action plans to eliminate the causes.
The goal is to create a quality, compliant product that will perform as expected and is saleable in the secondary markets. A robust pre and post-close QC program will go a long way toward achieving this goal.