What is Mortgage Quality Control?
Upfront vs. Ongoing Mortgage Quality ControlMuch of the work involved with mortgage quality control occurs at the beginning of the life of the loan. However, if your bank continues to service the loan, mortgage quality control involves ongoing monitoring to ensure that the customer is paying the mortgage, taxes, and insurance. Monitoring escrow levels, issuing refunds, or requiring additional payments is also an important step. And, as with any loan product, adequate document management and tracking processes are vital.
The Secondary MarketIt is common for banks to originate loans and then sell them in the secondary mortgage market. Some loans are “desk funded,” meaning the financial institution closes the loan and then immediately sells it—without the loan ever being booked on the bank’s core. In other cases the mortgage is retained; the bank might sell the servicing, but it keeps the loan. Many mortgages are acquired by aggregators and are bundled with other loans into securities that are then sold on the stock market. It’s important to note that banks may be required to buy back sold loans if they are later identified as having documentation issues. Therefore, it is critical that the loan documentation is complete and in order.
Document Management ResourcesFor more document management information, be sure to check out our extensive resource library with free document tracking spreadsheets, whitepapers, and ebooks. Searching for more banking definitions? Check out our banking definitions page.
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