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FEATURE ANALYTICS The Quality Control Conundrum Safe and Sound: he's speaking out on the positives and possible pitfalls for originators striving to maintain successful compliance and control strategies. By Abby Gregory Are today's mortgage loans setting a new benchmark for quality in the marketplace? Lenders One CEO Jeff McGuiness thinks so, and W 66 | THE M REPORT Jeff McGuiness, CEO of Lenders One, shared one simple piece of advice. "I'm a believer in helping people understand why we're doing something now and how it will manifest itself in the future, hen asked what leadership initia- tives he deploys to keep his em- ployees and his clients solutions- focused in a volatile marketplace, he said. And when the discussion turned to the exceptional quality of mortgage loans in the current originations environment, McGuiness' wise words served to illustrate his chief industry concern: the sustainability of today's compliance strategies. " a national alliance of mortgage bankers, correspondent lenders, and suppliers of mortgage prod- ucts and services, McGuiness has a uniquely broad perspective on the housing finance sector. He's impressed by the quality control commitment—and resulting loans—that he's observing in the market, but McGuiness is also As the head of Lenders One, homing in on trends that could threaten the industry's progress toward stability. MREPORT // In defining quality lending, what standards are you most interested in when evaluat- ing a potential client? MCGUINESS // Primarily, we want to understand what types of control mechanisms they ment, we have to be confident that a lender is engaging in an intuitive dialogue that goes beyond present issues and helps establish opera- tional preparedness for what's to come as they anticipate the future. We need to be sure that they're not operating on yesterday's tech- niques and standards. have in place to ensure qual- ity loans. We want to know how they rank in relation to their previous dealings with investors and where they stand with related ranking agencies. Most important, we want to see strong operating protocol and an infrastructure that can support that environment in terms of people, training, and compliance procedures and processes. Given the regulatory environ- MREPORT // What factors have contributed significantly to the increasing safety of the mort- gage loans you're observing in the marketplace? MCGUINESS // There's been a layering effect to get to this point, and the path of progression for quality lending is not dissimilar to the layered processes that caused the housing crisis initially. The previous environment was created by removing control mechanisms over time, and now, we've been in this corrective environment for four or five years, where we're building back in those layers of control to move us to where we are today. We've never seen tight- er production standards or better quality-oriented loans, and if you look at performance standards in terms of the aging process of those loans, it's bearing out. MREPORT // In terms of tech- nology tools and procedures, what trends are gaining traction as lenders deal with compliance issues? MCGUINESS // Many of our cli- ents are investing in new technol- ogy systems now, and in talking to LOS providers, they're incred- ibly busy integrating new clients and developing new tools to meet compliance standards. But one of my biggest pet peeves in the mar- ket is a tendency toward spending SECONDARY MARKET ANALYTICS SERVICING ORIGINATION