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   ARTICLE   |   From Scotsman Guide Residential Edition   |   September 2011

Assuring Quality at Every Step

Add these teams to your business to increase transparency and reduce risk

The average 30-year fixed mortgage rate has hovered around 4.5 percent for most of the year. At the same time, home prices have been decreasing. According to the S&P Case-Shiller National Home Price Index, home prices dropped by 4.2 percent this past first quarter, after declining 3.6 percent in the fourth quarter of 2010. Unfortunately, unemployment also has been steadily increasing, reaching 9.2 percent in June. And although it's a buyer's market, most are still not buying.

As if this weren't enough, refinance activity, which kept loan production stable in 2010, is down. Although branch operators and managers cannot control market fluctuations, they can control how their organization responds. Focusing on loan production is logical, but there are integration opportunities with other departments that many branch operators likely haven't considered.

With originations down, loan officers must maximize every lead they receive without sacrificing quality. Savvy organizations are actively promoting quality loan originations, with quality-assurance (QA) departments leading the way. By including QA and risk-management teams in sales meetings, operations meetings, product planning, credit risk and policy planning, branch operations can create transparency from origination through closing.

Branch operators and managers must learn how to enhance internal communication with regular QA updates and promote quality production through recognizing production associates or by spotting potential fraud.

The entire organization should be educated on the importance of best practices. Integrating QA into process development is critical. Brainstorming to create an understanding of the various roles within the organization also is a good idea. One of the best ways to give individuals working in disparate parts of an organization an idea of how other departments operate is by giving them the opportunity to participate in those roles — e.g., QA working with sales and production and vice versa.

To ensure all departments are on the same page, managers should take the time to illustrate how the industry is impacting their business. Show the cost of repurchases in dollars, jobs, units needed and reserve requirements via a cost-benefit analysis. Also show the amount saved by the organization through QA efforts. Enabling employees to earn incentives through loan performance (and through working with the QA department) will boost morale and motivation.

Education is crucial and should include role-specific training for loan officers and originators, processors, underwriters, closing officers, and fraud-prevention staff. As part of employee education, managers should provide fraud-scheme updates, using real-life examples and discussing what went wrong. Developing a risk watch that includes individuals, areas and processes should become standard operating procedure. Additionally, strive for complete transparency with internal reports identifying fraud, gaps and process risks.

By incorporating and aligning QA objectives into production's role, branch managers and operators can create a more seamless and transparent loan process. Require all departments to imbed a QA checklist at every step of the loan cycle, with the last step being a QA review of the complete loan file. Train the entire organization on the importance of a complete loan application. It will shorten QA time and promote accountability within the organization.

Including QA departments in the sales and production process can help mitigate potentially fraudulent issues before they occur. With an entire organization on board with quality initiatives, your business is better positioned to succeed.


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