MORTGAGE LENDERS ENCOUNTER A QUALITY CONTROL DILEMMA
BUILD OR BUY QC SOFTWARE? A DOLLAR AND SENSE DECISION
WHY IS MORTGAGE QUALITY CONTROL NECESSARY?
Regulations by banking authorities mandate that Mortgage lenders must perform Quality Control reviews on a standard 10% randomized selection of mortgage originations within 90 days of closing. The QC department must also operate without interference from the origination department. There must be a “Chinese Wall” between these two departments to insure a proper evaluation of the original underwriting of each loan reviewed. In many cases the origination department dislikes or distrusts the QC department, viewing it as its enemy. In reality, a good QC department adds value to the entire institution by identifying problem areas that can be fixed. Failure to comply with these banking authority guidelines and regulations will almost certainly result in fines, sanctions or even termination of a lenders right to continue to lend money for mortgages.
Larger banks have full QC/QA departments that perform these functions and if they use a stratification selection program, they may need to review less than the required 10%. Larger Banks sometimes outsource overflow business, while smaller banks may or may not have a dedicated QC department, and/or they may elect to outsource the entire QC function.
Originally, mortgage quality control started as an all-manual operation and was very inefficient and very time consuming. It has since evolved into a semi-automated, time and money saving process. Some banks may use a simple Excel spread sheet to speed up the process, but this too, is very inefficient. Modern QC software technology has evolved to streamline and speed up the QC function by over 50%, while maintaining superior records and feeding back important information, for later use, to the origination departments and to senior management so they may identify problem areas and implement improved origination techniques and standards. All this results in savings in both time and money, and an improved bottom line.
WHAT DOES QUALITY CONTROL AUTOMATION SOFTWARE DO?
QC software imports the loan data from the origination department or from an .ULL file and creates a loan pool. The programs then select the loans in the pool to review, using one of several methodologies such as pure random, stratified or random by type. It automates the re-verification process after the loan has been issued by automatically sending out pre-written reverification letters, , verification of employment, etc; then using bar code scanners, it receives and records the replies. The QC Reviewers now reviews the selected loans. Then a credit report is ordered directly through the QC System. The underwriter writes any exceptions, any detection of fraud, and rates the loan. Pre identified reports built into the system are produced and sent to appropriate parties. The loan review is then closed. All the data is then managed into workable pools, shared with senior management and other departments and saved for future reference. The loan pool may now be sold. Imagine having to do all this work manually!
The first automated QC software products introduced in the early nineties used inefficient computer languages and technology that, although speeding up the process, also created down time and other inefficiencies because of software and compatibility problems; bugs, glitches and incompatibilities with other software and devices installed on the same server.
The age of the Internet is in full bloom and the technology is now being utilized to its fullest. No longer do your full time processors and underwriters need to be housed on a full time basis. Each employee (or virtual employee) may work at their preferred location (on or off-site) and their availability is utilized efficiently with the increase or decrease in volume of monthly originations. Virtual employees are most often paid on a per-file basis with no employee overhead expenses such as FICA, sick time and vacations, etc. This flexibility offers greater efficiencies in your total work force utilization and departmental expenses.
WHO NEEDS QUALITY CONTROL SOFTWARE?
Smaller mortgage lenders that originate less than 175 loans per month will almost always benefit from outsourcing the QC function to specialized firms that cater to those smaller sized banks and act as the banks own QC department until critical mass is achieved.
Lenders that originate over 175 loans per month, up to 1500 per month will be best served with a licensed QC software such as FullCircle that their staff can utilize. Most software services are available 24/7 and can be accessed from anywhere there is an Internet connection.
Originators that close over 1500 loans per month should strongly consider licensing a reliable, proven QC software program, for installation on their own servers or hosted on a dedicated basis. Three or four full time employees should easily handle 150 loan reviews and the economics of this arrangement will offer considerable savings and efficiency.
The largest 5% of Mortgage Banks in the U.S. all utilize QC software of some type. Many are using outdated, inefficient software because of vendor loyalty, but this is not a valid reason since newer and more efficient and technologically advanced programs are now available. QC managers will quickly see the difference when comparing their current QC software with FullCircle Software.
Most of the top Mortgage Banks in the US have developed their own QC software at great expense, when you figure, not only the development man-hour costs, but also the IT staff and QC experts that it must support to maintain these programs. The FullCircle software is more than sufficient for these big firms to operate their QC departments. By utilizing Full Circle software, banks can eliminate several full time employees; developers, IT managers and more. Payroll expenses can be cut dramatically, and the savings can pay for the Full Circle license and maintenance with lots of money left over for other departmental uses. When necessary, FullCircle will even provide the software code to these large firms for their own customization.
WHY IS QUALITY CONTROL SOFTWARE NEEDED?
Mortgage banks need to speed up the QC process. Why? Because it will give savings in labor costs that are greater than 50%. Since loan reviews are mandatory and they are required on a timely basis, it is prudent to use an automated program. Payback of the initial investment is usually recovered within the first four to six months. That is the reason that “Full Circle” Quality Control Software was created.
WHY FullCircle QC AUTOMATION SOFTWARE IS SUPERIOR
A recent study has shown that FULL CIRCLE software total cost of ownership is vastly lower than in-house propriatory QC systems. The FULL CIRCLE software is easier to use and feature rich in comparison to existing vendor programs. FULL CIRCLE software was designed and built by expert software developers to utilize the latest and most advanced Microsoft technology, and is written to support all MISMO standards. It provides faster downloads, flexibility in creating and utilizing documents and reports, easier processing, and more efficient underwriting, thereby greatly enhancing the value to your firm.
FullCircle was created by a former CEO of the mortgage industry in collaboration with three of the top recognized consultants in the mortgage industry. A leading software design firm was consulted and the specifications reviewed. Leading software developers teamed up to create a program that is MISMO compatible. The most modern Microsoft languages (.net, & C#) were used in writing this state-of-the-art program.
The advanced design of FullCircle Software insures that you will encounter fewer bugs, glitches, incompatibilities, etc., offering more continuity and less down time in your QC department. This is because of its contiguous design, unlike most of the competitive software on the market today that use many separate programs, patched together. With this old methodology, every time a user encounters a bug or glitch, it disrupts the user and perhaps the entire department. One of the leading programs on the market today uses over 28 different programs in its software design. That adds at least 28 points of failure that the FullCircle software does not encounter. If you do encounter an error, the software is programmed to e-mail the error immediately for modification to FullCircle’s customer service.
HOW DOES FullCircle SOFTWARE PERFORM BETTER
- Faster and more reliable
- MISMO Compatible & Compliant
- User friendly-easier navigation
- More information on each screen
- Less bugs and glitches – instant error notification
- One all-encompassing version
- Easier installation
- Easy to use pre-designed forms, and reports with easier custom report availability
- Expanded data fields
- Easier loan downloads no matter which LOS’s you are using
- Hosting options
- Order credit reports from within the program
- Fully customizable
- Expandable to accommodate as many users as you need, without limits
- Unlimited customer levels for Outsourcing Companies at no additional cost
TECHNICAL ADVANTAGES
- Uses the latest Microsoft Technologies
- Enhanced User Interface Design- easier navigation, user friendly, more information at the same time, minimal annoying pop-up windows, more space for data, etc.
- Integrated BI Report Writer- No extra cost for Business Intelligence
- MISMO compliant- supports open standards and more
- Microsoft SQL database is standard
- Microsoft Office integration; Outlook, Word, Excel
- Credit Report Technology built in, merged reports, saved in customer file.
- Fully Customizable to desired specs.
ALTERNATIVE SOLUTIONS USING FullCircle SOFTWARE
FullCircle software offers several alternate solutions:
- License FullCircle software (unlimited use) and install it on a local server.
- License FullCircle software (unlimited use) and have it hosted by QC Solutions.
- Use the transactional version of FullCircle software on a low cost, pay per file basis.
- Web-based service (coming soon) is ideal for smaller users
Which solution is the most efficient and economical depends on each mortgage bank’s monthly usage and particular needs?
Down time is costly. FullCircle will stand up to the entire load your department could possibly put on it. In the event you do have a technical problem, FullCircle provides service that is available everyday from 9AM to 8PM EST.
Once you have experienced the speed and smoothness of the FullCircle Quality Control Software, you will be convinced it is the only software to consider for your QC needs.
A remote demonstration is available on demand during business hours. Call 561-429-6889. Once you have seen the remote demonstration, we can arrange for an on-site hands-on demonstration with your quality control department.
THE OUTSOURCING ALTERNATIVE
Many banks that originate a smaller quantity of mortgage loans routinely outsource their quality control function to firms specializing in quality control outsourcing. The original reason was because the expense to prepare and maintain a quality control department was prohibitive. With FullCircle transactional, all that is now changed. Even smaller originators can have their own quality control department without the big start-up costs such as servers and IT department personnel. Only one supervisory employee is necessary with your virtual (1099) employees doing the work. This gives the originator greater control with reduced cost.
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