MetaSource Study Also Finds Lenders Falling Short of Agency Guidelines for Fund Sourcing
SALT LAKE CITY, UT, January 15, 2020 /24-7PressRelease/ — An annual review of tens of thousands of post-close quality control (QC) mortgage audits conducted by MetaSource in 2019 shows lenders still struggling to consistently meet requirements related to closing disclosures and calculations.
The top trouble spots center on provisions of the TILA-RESPA Integrated Disclosures (TRID) rule that govern fee increases that vary from original estimates and deadlines for delivery of disclosure documents.
Such tolerance and timing violations in the closing disclosure process made up the top two defects identified in the MetaSource study of 2019 audits.
“What I see is mostly what we’ve been seeing for years,” said Brady Meadows, Strategic Account Manager at MetaSource. “Lenders are having the same problems year after year.”
Meadows says the findings show how difficult it can be for lenders to maintain practices that ensure consistent results. “Lenders seem to be comfortable with their risk exposure regarding TRID findings,” Meadows said. “But effective QC processes are an opportunity to improve practices that create unnecessary risks.”
Other findings topping the 2019 list include:
• Incorrect Income Calculation
• Closing Disclosure – Calculating Cash to Close
• Verification of Employment – Missing or Defective
Employment Verification Processes Fall Short
One surprise among the findings was a jump in problems related to verification of employment, an agency-related (Fannie, Freddie, Ginnie) finding which moved to fifth overall on the list, up from eighth in 2018. The finding ranked second among agency-related defects on conventional loans, third on FHA loans, and ninth on VA loans. FHA lenders also struggled with agency guidelines related to “unacceptable source of funds,” which was ninth on the list of overall FHA findings, including both agency and regulatory issues, up from 36th place in 2018.
The findings suggest that lenders may not be following the guidelines around the sourcing and attribution of funds used to qualify for a loan. “It’s a risky practice which could leave lenders on the hook for up to 30 years in some cases since HUD requires lenders to provide indemnification for the entire life of the loan when there are significant insuring issues,” warns MetaSource Senior Vice President for Mortgage Services, Mary Kladde Walraven. “Considering the risk, more focused training specific to agency requirements, especially FHA, is prudent.” Walraven says.
The complete list of the Top 15 Mortgage QC Findings for 2019 can be found on the MetaSource Mortgage blog.
About MetaSource, LLC
Achieve breakthrough growth with a digital transformation from MetaSource. Software and services from MetaSource will optimize your processes to eliminate error-prone tasks, data silos and other inefficiencies that prevent you from achieving your true business potential. By working with MetaSource, you will get real-time, actionable data you can leverage into increased knowledge worker productivity, reduced human error, and make smarter decisions. MetaSource serves a wide variety of industries, with special expertise serving the mortgage industry. MetaSource’s mortgage services include quality control (QC) audits (pre-fund, post-close, servicing, MERS), lien release, whole loan purchase reviews, and cutting-edge technology. MetaSource solutions enable its clients to focus on their core business while MetaSource does the rest. More at https://mortgage.metasource.com
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