Making quality control an effective, fully integrated part of any organization can be challenging, but when successful, it can provide great value. Credit unions have always valued quality along with a focus on member service. But quality in mortgage lending is a big job in an ever-evolving industry.
Loan quality generally means that mortgage loan files contain accurate and sufficient documentation supporting a borrower’s ability and willingness to repay, have acceptable and adequate collateral, meet internal requirements and investor guidelines, and comply with applicable federal, state, and local laws and regulations. That’s a lot … but getting QC right can help to break down the complexity.
Effective QC is the foundation of loan quality. Simply having a QC program is not enough. To be effective, QC must be a part of the company’s culture and leveraged by senior management as a key measurement of operating efficiency and risk management discipline. The senior management team and board of directors should believe that loan quality is vital to a successful lending operation, and invest in QC to achieve consistent quality.
Here are three tips to help credit unions get the most from their investment in QC and achieve loan quality:
Conduct a QC Self-Assessment. The QC Self-Assessment worksheet provided by Fannie Mae can help you develop or update your QC plan. This comprehensive assessment tool covers governance, prefunding and post-funding processes, reporting, and vendor management (for outsourced functions).
Go Beyond the Guide. Published by Fannie Mae, Beyond the Guide provides suggestions for creating a culture of quality, and provides a risk control framework focused on nine critical control points in the QC life cycle. The recently updated edition of Beyond the Guide includes sample reports, action plans, and other useful tools for effective QC.
Train your team. Fannie Mae sponsors annual QC and Underwriting Boot Camp trainings for Fannie Mae sellers. Many credit union staffers attend. “The information and networking at Boot Camp is in a class all its own!” was the post-event feedback from one credit union participant in 2016. “Nothing else even comes close!” Get information about the 2017 QC and Underwriting Boot Camp sessions.
These resources ―and more on Fannie Mae’s Loan Quality web page ― can help credit unions maintain quality in mortgage lending. The road to quality is a journey ― but there is help along the way.