Tag Archives: ARMCO Mortgage QC Industry Trends Report

Q4 2022 ACES Mortgage QC Industry Trends Report Shows Decline in Critical Defect Rate to 1.84%

The quarterly defect rate declined 25.5% over Q3, though the annual defect rate remained above 2% for 2022 /ScoopCloud/ -- ACES Quality Management® (ACES), the leading provider of enterprise quality management and control software for the financial services industry, announced the release of its quarterly ACES Mortgage QC Industry Trends Report covering the fourth quarter (Q4) of 2022, as well as the full calendar year (CY). The latest report analyzes post-closing quality control data derived from ACES Quality Management & Control® software.

Notable findings from the Q4/CY 2022 report include the following:

* The overall critical defect rate declined 25.5% over Q3 2022, ending the quarter at 1.84%.

* Due to two consecutive quarters of +2% defect rates, the overall rate for CY 2022 was 2.07%.

* Of the four major underwriting categories, Credit improved considerably over Q3, while Liabilities achieved a more modest improvement. Both Assets and Income/Employment increased significantly, ending Income/Employment's multi-quarter trend of decline.

* Income/Employment remained the leading category of defects reported, with Assets and Borrower and Mortgage Eligibility completing the top three categories of defects cited.

* A sub-category analysis of the Assets and Income/Employment categories found documentation to be the leading driver of defects within these two categories.

* Appraisal defects also increased in Q4, ending another multi-quarter trend of decline.

* Purchase share remained high in Q4, with the industry achieving defect parity for the quarter.

* Despite declining in terms of review share, FHA defects increased for the second consecutive quarter, as did conventional loans. USDA and VA loan defects continued to improve.

"After last quarter's historic high of 2.47%, the reduction in Q4's critical defect rate to a sub-2% level is encouraging and illustrates just how much the precipitous drop in origination volumes impacted lending operations," said ACES Executive Vice President Nick Volpe. "However, lenders are starting to see the GSEs take an aggressive stance on repurchase requests for loans with curable defects. In addition, HUD has yet to complete its reviews of some vintage FHA loan production, an area notorious for defects. All of this may spell trouble for lenders that are already financially strapped due to declining volumes."

Findings for the Q4 2022 ACES Mortgage QC Industry Trends Report are based on post-closing quality control data derived from the ACES Quality Management and Control® benchmarking system and incorporate data from prior quarters and/or calendar years, where applicable. All reviews and defect data evaluated for the report were based on loan audits selected by lenders for full file reviews.

"Loan defects are one of the greatest sources of financial risk to lenders in today's tight origination market," said ACES CEO Trevor Gauthier. "The best defense against this kind of threat is a robust QC auditing platform like ACES, which helps lenders retain the value of their loan production by identifying the point of origin for loan defects within the manufacturing process and uncovering defect trends to help resolve these issues before they become the impetus for a repurchase request or sale on the scratch-and-dent market."

The Mortgage QC Industry Trends Reports are available for download, free of charge, at https://www.acesquality.com/resources/reports.

ACES executives will analyze the Q4 2022 ACES Mortgage QC Industry Trends Report findings and offer insights into what lenders can expect in future quarters during a webinar titled, "QC Trends and Industry Insights" as part of its ongoing QC NOW Web Series.

Visit the ACES Webinar page for upcoming registration details: https://www.acesquality.com/resources/webinars.

About ACES Quality Management:

ACES Quality Management is the leading provider of enterprise quality management and control software for the financial services industry. The nation's most prominent lenders, servicers and financial institutions rely on ACES Quality Management & Control® Software to improve audit throughput and quality while controlling costs, including:

* 60% of the top 50 independent mortgage lenders;

* 8 of the top 10 loan servicers;

* 11 of the top 30 banks; and

* 3 of the top 5 credit unions in the United States.

Unlike other quality control platforms, only ACES delivers Flexible Audit Technology®, which gives independent mortgage lenders and financial institutions the ability to easily manage and customize ACES to meet their business needs without having to rely on IT or other outside resources. Using a customer-centric approach, ACES clients get responsive support and access to our experts to maximize their investment. For more information, visit www.acesquality.com or call 1-800-858-1598.

ACES Quality Management® (ACES), the leading provider of enterprise quality management and control software for the financial services industry, announced the release of its quarterly ACES Mortgage QC Industry Trends Report covering the fourth quarter (Q4) of 2022, as well as the full calendar year (CY).

Related link: https://www.acesquality.com/

Latest ARMCO QC Trends Report Draws Correlation Between Lenders’ Profitability and Adaptability to Market

DENVER, Colo. /ScoopCloud/ -- ACES Risk Management (ARMCO), the leading provider of enterprise financial risk management solutions, announced the release of the quarterly ARMCO Mortgage QC Trends Report. The latest report covers second quarter (Q2) 2019 and provides loan quality findings for mortgages reviewed by ACES Audit Technology™.

In Q2 2019, the overall critical defect rate declined for two consecutive quarters for the first time since Q3 2016, falling 5.5% to 1.72%. The industry's two-quarter decline in critical defects coincides with two consecutive quarters of strong but steady loan volume and a three-year high in lender profitability, according to the most recent Quarterly Performance Report issued by the Mortgage Bankers Association (MBA). In October 2019, the MBA Economic Forecast predicted 2019 origination volume to reach $2.06 trillion, its highest level since 2007.

The report's noteworthy findings include:
* Loan quality trends are positive: the overall critical defect rate in Q2 2019 fell 5.5% from the preceding quarter, with a 9.0% decline from the 2018 peak rate of 1.93% (Q4 2018)
* In Q2 2019, defects in Income/Employment and Credit, both core underwriting functions, declined 32.0% and 22.0% respectively, from the preceding quarter
* Interest rates in Q2 2019 were roughly a full point lower than Q2 2018 (3.3% vs 4.2%), which fueled a high refi-to-purchase ratio
* In Q2 2019, refinances comprised a higher percentage of all loans reviewed when compared to previous quarters, and were a driver in the quarter's lower critical defect rates
* In Q2 2019, critical defects on FHA loans underperformed conventional loans by a greater percentage than previous quarters

According to Nick Volpe, chief strategy officer at ARMCO, volume fluctuations like those seen in the quarters prior to Q1 2019 and Q2 2019 cause challenges for lenders, which often respond to sudden spikes and dips by adjusting their labor forces through layoffs, downsizing, re-allocating staff and hiring.

"These changes upset the status quo and usually result in more defects, because staff instability increases errors and oversights," he said. "When lenders adapt, usually when the market steadies, defects decrease. It is therefore safe to say that when lenders use technology that improves their scalability, they increase profitability faster than those who rely on manual processes."

"The positive benefits of technology like ACES go way beyond the immediate boost to speed and accuracy," said Phil McCall, president of ARMCO. "As the data reveals, they have a real impact on the speed to which lenders can return to heightened profitability. It's extremely satisfying to know that we're enabling our customers to not just reduce costs, but also to proactively increase profits."

ARMCO's Mortgage QC Industry Trends Reports are based on nationwide post-closing quality control loan data from over 90,000 unique loans selected for random full-file reviews, as was captured by the company's ACES Analytics benchmarking software. Defects listed in the report are categorized using the Fannie Mae loan defect taxonomy.

ARMCO Mortgage QC Industry Trends Reports are available for download, free of charge, at https://www.armco.us/learn/reports.

About ARMCO
Over half of the top 20 mortgage lenders in the U.S. choose ARMCO as their provider of risk management software. ARMCO's product line includes loan quality enterprise software, services, data and analytics. Its flagship product, ACES Audit Technology™, has set the bar for user definability in its category. It is used at virtually every point in the mortgage lifecycle, as well as for a wide range of risk-prone business operations outside traditional mortgage origination and servicing. ARMCO's consultative approach to customer relationships leverages 25 years of mortgage risk intel, assuring that its clients are using the most effective risk mitigation strategies, and are using the fastest, most reliable, most efficient means for preventing risk-related loss. ARMCO distributes the ARMCO Mortgage QC Industry Trends Report, a free quarterly analysis of industry-wide mortgage loan quality. For more information, visit http://www.armco.us/ or call 1-800-858-1598.

ACES Risk Management (ARMCO), the leading provider of enterprise financial risk management solutions, announced the release of the quarterly ARMCO Mortgage QC Trends Report. The latest report covers second quarter (Q2) 2019 and provides loan quality findings for mortgages reviewed by ACES Audit Technology.

Related link: https://www.armco.us/

Critical Defect Rates Continue Upward Trend – ARMCO Releases Q1 2017 Trends Report

POMPANO BEACH, Fla. /ScoopCloud/ -- ACES Risk Management (ARMCO), the leading provider of financial quality control and compliance software ACES Audit Technology(TM), announced the release of the ARMCO Mortgage QC Trends Report for the first quarter of 2017.

Some of the report's noteworthy findings include:
* The critical defect rate continued its upward trend, reaching 1.61 percent, a 7 percent increase from the previous quarter
* The top defect category for Q1 2017 was Borrower and Mortgage Eligibility
* FHA loans accounted for a disproportionately high number of critical defects

"The increase in the critical defect rate is the result of the purchase-dominated market we saw in the first quarter of this year," said Phil McCall, president of ARMCO. "Purchase transactions bring a lot more moving parts, and a lot more opportunity for errors and misrepresentations. Whether that rate continues to rise will depend in large part on the ratio of purchases to refinances as we move forward."

Each quarter, ARMCO releases the ARMCO Mortgage QC Industry Trends Report, which is based on post-closing quality control loan data captured by the company's ACES Analytics benchmarking software. The ACES Analytics benchmarking dataset includes post-closing quality control data from over 65 lenders, comprising more than 75,000 unique loans selected for random full-file reviews. Defects are categorized using the Fannie Mae loan defect taxonomy. The company issues a one-year analysis for the calendar year with each fourth quarter Mortgage QC Industry Trends Report.

Each ARMCO Mortgage QC Industry Trends report includes easy-to-read charts and graphs, a summary that outlines ARMCO's overall findings, a breakdown of defect rates for each Fannie Mae loan defect category, and a short conclusion. The current and previous reports also contain an analysis of the top credit-related critical defects, which is now a regular feature of the report.

"The more lenders know about when and where defects arise, the easier it is to avoid them," said McCall. "We provide the ARMCO QC Trends Report free of charge as part of our commitment to elevating quality for all lenders."

To obtain a copy of the report, please visit http://www.armco.us/knowledge/mortgage-qc-industry-report-2017-q1

About ARMCO:

ARMCO - ACES Risk Management delivers web-based audit technology solutions, as well as powerful data and analytics, to the nation's top mortgage lenders, servicers, investors and outsourcing professionals. A trusted partner devoted to client relationships, ARMCO offers best-in-class quality control and compliance software that provides U.S. banks, mortgage companies and service providers the technology and data needed to support loan integrity, meet regulatory requirements, reduce risk and drive positive business decisions. ARMCO's flagship product, ACES Audit Technology(TM), is available at any point in the mortgage loan lifecycle, to any size lender, and is user-definable. ACES standardizes audit requirements, ties pre-funding reviews to post-closing quality control audits, enables seamless trend analysis, identifies credit, compliance and process deficiencies and helps create manageable action plans.

For more information, visit http://www.armco.us/ or call 1-800-858-1598.

ACES Risk Management (ARMCO), the leading provider of financial quality control and compliance software ACES Audit Technology(TM), announced the release of the ARMCO Mortgage QC Trends Report for the first quarter of 2017.

Related link: http://www.armco.us/