Published on October 24, 2019
Written by The Servion Group
For many financial institutions, quality control (QC) amounts to not much more than a box you’re required to check every month in order to offer mortgages. This is an unfortunate and unplanned side effect of QC being primarily a vendor-provided service. When we work with a credit union or community bank who uses a QC vendor versus one that performs its own QC in-house, we often see a stark contrast in the culture of quality between the two.
Those performing internal QC generally have a much greater impact on the quality of their mortgage pipeline and the performance of their lending staff. That may not be surprising, but it does highlight a common problem with using a QC vendor: The gap between performing a review and truly understanding it.
Many QC Plans get a good once-over after they are written but then go into a rubber-stamped annual review process. The first thing to do is review your QC plan with an eye toward:
Don’t let your QC vendor get away with telling you their checklists are proprietary information or they can’t show you the process for sending verifications. As the lender, you’re ultimately responsible for the performance of the vendor when it comes to investor oversight. So, make sure you do the following:
The QC vendor space is very competitive and reporting is one of the main areas where they can steal business. This means the reports should be clear and concise. If you are constantly thinking there are too many pages and you wish you had a better summary of just the important items, then you should have it. Make your vendor customize your reports for the way you lend. Remember:
Most financial institutions are required to audit a portion of the files the QC vendor audited. For most investors it is around 10%, so if your QC vendor audited ten files for July 2019 you will have to audit one of those again. Your vendor should be ready and willing to help you check their work. If they aren’t you have to ask yourself why. Performing this step helps:
After completing the steps above you should now be pretty sure about the findings that either came from your QC vendor’s review or that came from your check-the-checker review. With confidence in the findings, you can implement changes specific to your institution and see permanent improvement.
We have a different approach to quality control and we value the chance to become part of our clients’ culture of quality. The recipe in this article comes from our experience improving QC for our clients, and we’d love to talk to you about it. Call me at 651-746-6346 or send an email to firstname.lastname@example.org.