Internal housekeepingDuy Vuprocessing, underwriting, quality control, fraud, Neighborhood Watch, red flags, Home Mortgage Disclosure Act, HUD, upfront mortgage insurance premium
Mortgage lending, as a whole, consists of several areas of
expertise. Most of us are extremely familiar with the front room or
production functions of the business, such as origination,
processing and underwriting and somewhat familiar with back-room
functions, such as closing, post-closing and insuring. However,
there are several other aspects of mortgage lending that are
addressed on a daily basis by individuals that do not directly
participate in production or servicing functions however are
directly affected by the work that we do performing the production
or servicing pieces of the operation.
Home Mortgage Disclosure Act (HMDA) and compliance for instance.
Most of us dread our compliance officers and their whips, but
without them, the regulators, both state and federal, would shut
down our operations. "Housekeeping," as one of my processors likes
to call it, is a very real consideration for any mortgage lender,
as well as broker, and just as the word itself implies, it carries
with it several small and large areas that we need to keep track of
each day.
When we consider all of the applications that need to be
completed from start to finish where origination, processing and
underwriting are concerned, we always keep in mind the common
things, such as Regulation Z and three-day disclosure. For
underwriters, it might be completing HMDA information screens
within the loan origination software or making sure that the
information contained in the screens is accurate.
The insuring department will always focus on getting the upfront
mortgage insurance premium (UFMIP) remitted to the United States
Department of Housing and Urban Development (HUD) within 10 days
and even perhaps remitting the monthly MIP should the loan be
purchased by the investor as of the second payment. But there are a
lot of other little items, housekeeping items that we need to keep
in mind each day.
One item of importance for production is FHA Connection.
Processors and underwriters are consistently thinking of the tools
that we utilize each day within the system such as case number
assignment, LDP, GSA and other such items that we need in order to
complete the process. But there are other functions in FHA
Connection that need to be addressed as well. Managers,
particularly underwriting managers, may want to regularly access
Underwriter Activity within FHA Connection. This function allows
each institution to have hands-on information as to the quality of
the underwriting of each mortgage application insured by the FHA.
Not only that, as deficiencies are found with these report cards,
they can act as valuable training tools for the rest of the
underwriting staff.
Neighborhood Watch is also an area that each institution should
regularly utilize. This system allows each lender an in-depth look
at the quality of mortgage they are approving and closing,
including conclusive information on current loan defaults where
FHA-insured mortgages that have been originated by a particular
lender is concerned, as well as overall compare ratios (allowing a
lender to compare their overall loan quality and performance to
that of their peers both locally and nationally).
Lenders are also required to report Single Lender information in
Neighborhood Watchany findings on a particular case from an audit
or underwriting standpoint that might indicate fraud or possibly
lax underwriting performance. Again, very useful stuff as it allows
lenders and brokers to internally monitor their overall performance
from a production standpoint.
Housekeeping in the mortgage industry is comprised of several
areas which we, as lenders and brokers, need to keep a watchful eye
on. To do so will only benefit us in the long run. There are many
tools available to manage this piece of the business, including FHA
Connection, compliance software and the like, and I strongly
recommend that each individual responsible for the long-term
performance of their particular areas research the best tools
available.
Duy Vu is operations manager for Cincinnati, Ohio-based Mid-American Financial Group
Inc. and South Chapter Director for the Ohio Association of Mortgage
Professionals. He may be reached at (800) 669-0166 or e-mail
[email protected]
