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As the mortgage industry continues to evolve at breakneck speed, risk management has never been a more critical lynchpin in the lending ecosystem. At the vanguard stands Mortgage Connect Risk Solutions (MCRS), formerly Adfitech, a leader in risk management, quality control, third-party reviews, and due diligence, known for protecting mortgage lenders and investors from the risks inherent in mortgage lending.
With over four decades of experience, MCRS has a serious record, performing pre-fund quality assurance and post-close quality control on more than 1.5 million loans and reviewing over 300 million documents. This experience, coupled with their use of proprietary and industry-leading technology solutions, has allowed MCRS to effectively serve a wide range of clients. Whether for lenders originating loans for sale, investors aggregating seasoned loans or new loans to securitize, or those dealing with MSRs, Mortgage Connect Risk Solutions offers both the experience and solutions to help clients understand and manage their risk.
Risk management is more important than ever
According to Fannie Mae, significant defects in the origination process often make loans ineligible for delivery or sale. This could lead to significant financial losses and, sometimes, GSE revocation for the lender. The risks within seasoned loans often remain unknown until due diligence is performed, making this process critical for making informed investment decisions. MCRS’s approach to risk management helps clients understand these risks comprehensively, whether for newly originated or seasoned loan transactions.
Best practices
MCRS’s due diligence process goes beyond standard checks, especially in complex self-employment or rental income scenarios. Every file undergoes comprehensive credit, collateral, and compliance underwriting performed by tenured employees with years of expertise. This meticulous approach ensures loans meet the MCRS standard, which is particularly crucial in non-agency and non-conventional lending where risks and complexities are higher.
The company’s philosophy on due diligence is straightforward: protect clients by ensuring accuracy, consistency, and transparency. To this end, MCRS maintains a digitized library that has been representing agency guidelines for over thirty years. The library ensures that files are always underwritten to the guidelines in place at the time of origination, including pre-TRID files. The focus is consistently on bringing unknown risks into the light and allowing clients to make informed decisions based on their specific situations.
Innovation
Innovation is the core of MCRS’s approach to due diligence. The company is pioneering advancements in quality control by integrating emerging technologies to improve accuracy and efficiency. Their proprietary Automated Review Tools (ART) uses Optical Character Recognition (OCR) and advanced data extraction techniques to streamline the review process for more thorough data verification. Combining proprietary tools with industry-best-in-class solutions is the innovation that keeps MCRS at the helm of quality control and risk management.
While artificial intelligence (AI) is increasingly integrated into the industry, MCRS takes a more cautious and strategic approach. They are carefully examining how AI can enable and empower personnel while keeping all decision-making in the hands (and minds) of humans. This allows MCRS to access the benefits of AI while maintaining the necessary human oversight required in risk management.
Looking into the future
After forty years in the mortgage industry, MCRS has seen many trends come and go. Right now, MCRS has a few insights to share for those curious about what the future may hold. As the sector prepares for potential volume increases brought upon by rate drops, MCRS recommends that lenders consider moving high-cost backend underwriters who perform quality control reviews to front-end originations, shifting the expense to revenue production. Then, partner with best-in-class pre-fund quality assurance, post-close quality control, and due diligence partners like MCRS to fulfill your quality control needs and requirements. This strategy helps lenders convert fixed costs to variable costs, maintaining quality and consistency during volume spikes without the need for extensive hiring.
MCRS also predicts that AI will play an increasingly significant role in the industry, particularly in data extraction, document analysis, and underwriting guideline navigation. While AI is not yet fully integrated, its potential to revolutionize these processes is substantial. MCRS is poised to adopt these advancements as they become more reliable. It is currently partnering with a well-known AI firm to enhance its end-to-end operations and develop use cases for the future.
Mortgage Connect Risk Solutions’ attitude toward risk management, technology, and foresight positions them as leaders in the present and future of mortgage risk management. Their commitment to excellence in due diligence and quality control ensures they are not only addressing current industry challenges but are also prepared to set new standards for the future. MCRS remains steadfast and ready to help lenders and investors deal with the complexities of risk management with confidence and precision.
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