Zeb Lowe: In our initial conversation, you told me that a robust quality control program promotes community stability and supports first-time homebuyers in achieving their homeownership dreams. Can you connect those dots for me?
Ed Gerding: Sure. Well established and effective quality control programs contribute to community stability by promoting responsible lending practices and ensuring the accuracy of the data obtained through the property appraisal process. Quality control reviews include analysis and identification of any property issues and items of safety, soundness, or structural integrity to determine whether the lender appropriately required inspections or repairs prior to the purchase of the home by the borrower. This process helps to ensure the accuracy of property values, hedging the risk of blight and preserving community stability and aesthetics. Quality control also ensures that mortgage loans meet investor and regulatory standards, which minimize the risk of defaults and foreclosures adversely impacting local markets.
Quality control processes also support the dream of owning a home by confirming that lending institutions offer ‘First Time Homebuyer Programs’ to borrowers, that may offer low- or no-down payment mortgages (such as VA loans, Home Possible and HomeReady mortgage programs), down payment assistance and/or closing cost coverage, which assists them financially in obtaining the dream of homeownership.
ZL: How does Consolidated Analytics’ quality control initiatives contribute to the broader goal of community reinvestment and support for low to moderate-income markets?
EG: The Community Reinvestment Act (CRA) is a federal and state law that encourages banks and lenders to meet credit needs, including mortgages, for low- and-moderate income communities. The Consolidated Analytics quality control loan level reviews and quality control lender program audits ensure that redlining and other discriminatory lending practices are not occurring and that financial institutions are providing the appropriate assistance and loan programs for the low- and moderate-income communities in which they operate and are chartered. Such programs and assistance for low- and moderate-income communities help build generational wealth as they can transfer the home asset across family members, ensuring financial advantages persist over time.
ZL: What are the core principles or pillars that underpin Consolidated Analytics’ approach to quality control, and how do these principles guide the development and implementation of your QC initiatives?
EG: Consolidated Analytics is a strong advocate of having a quality control program that adheres to all agency requirements and all agency QC recommendations so that an institution has the strongest and most risk-averse program that mitigates financial loss, protects against reputational risk and makes it an industry ‘best-in-class’ program. The ‘best-in-class’ principle is how we approach helping our lender partners in the mortgage banking community structure and operate their QC programs, so it contributes to their profitability, longevity and good standing in the mortgage banking arena.
ZL: Consolidated Analytics recently rolled out a ‘Quality Control Checklist.’ Can you explain its key functionalities and how it helps lenders ensure compliance with investor requirements and enhance their QC processes?
EG: As a thought leader in the mortgage industry, we wanted to provide lenders with a new tool to use in their risk mitigation toolbox. This checklist allows a lender to assess their quality control program by giving them the ability to rate each QC component of their program and input comments and other pertinent information that either documents agency compliance or highlights the necessary actions to gain compliance. Additional functionality of the QC checklist includes links to the Fannie Mae selling guide Chapter D – Ensuring Quality Control, related Fannie Mae announcements and some best practice tips from our QC experts. This is just another way for Consolidated Analytics to help position our lender partners and the lending community for continued success.
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ZL: How do Consolidated Analytics’ quality control reviews and tools benefit lenders in terms of risk mitigation, financial stability and overall operational efficiency?
EG: Consolidated Analytics’ quality control reviews and tools have successfully hedged associated contractual risks through adherence to investor requirements and regulatory compliance, prevented financial loss exposure in the form of repurchase requests and buy-back requirements, mitigated reputational risk, and promoted a lender’s good standing within the industry. Our diligent and methodical approach to quality control also reduces the risk of errors, oversights, and potentially fraudulent activity, helping to ensure a lender’s processes are reliable, cost-effective, and efficient.
To learn more about Consolidated Analytics and the solutions they offer, visit their website.
Ed Gerding is the Senior Vice President of Risk Solutions at Consolidated Analytics, Inc. Ed is an Executive Leader with 20 plus years of mortgage banking and financial services experience in Risk Management, Fraud Prevention & Investigations, Quality Assurance and Counterparty Oversight. He is a Certified Mortgage Banker (CMB) and Accredited Mortgage Professional (AMP) who leverages his thorough understanding of risk management and mortgage operations to reduce risk, create operational efficiencies and effectively serve the needs of clients.
