MReport February 2021

TheMReport — News and strategies for the evolving mortgage marketplace.

Issue link:

Contents of this Issue


Page 21 of 67

20 | M R EP O RT FEATURE W hen the corona- virus pandemic first took hold of our country last spring, and we found ourselves in lockdown, leaders of compa- nies across the country were left to figure out how to encourage and inspire a remote workforce shaken and concerned about the future. One popular strategy emerged: to challenge employees to think about the kind of people they wanted to be by the end of this pandemic and work toward it. Some introduced contests to encourage improved health, others instituted programs designed to promote professional develop- ment and education, and others cultivated new hobbies. These efforts had one goal in common— to instill in employees a desire to transform and emerge from the pandemic better people. Businesses in every corner of the mortgage industry have also experienced a transformation in 2020. It was a record-breaking year thanks to the surge in demand for mortgage refinancing fueled by historically low rates. And because of remote working and social distancing requirements, the year was further punctuated by new processes and workflows and the acceptance of alternative methodol- ogies such as virtual appraisals and eClosings. The lessons COVID-19 and unprecedented volume have taught us ushered in a much-need- ed transformation and made us all the better for it. Technology Adoption T he past year opened lenders' eyes to some of their short- comings regarding offering a truly digital mortgage. Many stepped up their game and did a great job of distancing the mortgage process from borrowers— that will un- doubtedly continue well into the new year. As lenders catch their breath from the volume surge, they will continue to review procedures and technologies and adopt even more of them to create a more seamless process and a better borrower experience. Simultaneously, both the federal government and several state gov- ernments took action during the pandemic to allow for remote and electronic notarization to keep the mortgage business moving forward. These measures are likely to lead to more permanent changes. Borrowers want the ease and convenience of signing docu- ments and closing their mortgage loans remotely. It's a significant advancement for the industry to facilitate what people have wanted for decades. Quality Control T here is and will continue to be a greater need to check files for quality. The heavy volumes lenders experienced in 2020 forced them to hire teams of people quickly. Some may have shortened training because their loan volumes required all hands on deck. Add to that, the more volume that comes in, the greater the risk for errors. Together, these things make it increasingly im- portant for lenders to run quality control checks both before loans close and afterward to ensure there are no issues and risk for buybacks. And these QA/QC checks will continue to be a criti- cal component of the mortgage process for the foreseeable future. Before closing, each loan should be taken through a series of validations to ensure compliance and to determine how the loan checked out, highlighting things that need a closer look. Areas that require scrutiny include: • Verification of undisclosed debt • Verification of assets • Review of the automated un- derwriting approval • Review of credit underwrit- ing attributes (income, assets, liabilities, etc.) • Verification of compliance with lender guidelines and state and federal regulations • Custom or layered lender requirements for nonagency products (Non-QM, Portfolio, Consumer, etc.) • Real-time rebuttal access—cure deficiencies required for CTC Lenders should perform post- closing, automated, and manual audits. These reviews verify data and use technology to compare documents for inconsistencies, omissions, and compliance thresh- olds, such as dates. You should review 10% of each loan type of your closed loans, as required by Fannie Mae and Freddie Mac. Some areas to reexamine include: • Reverification of employment and assets, rent and lease • Review of the automated un- derwriting approval • Retrospective appraisal reviews • Audit reports • Occupancy checks Charting Rough Waters How the challenges of 2020 set the stage for growth in 2021. By Greg Holmes

Articles in this issue

Archives of this issue

view archives of TheMReport - MReport February 2021