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National Mortgage Professional
Mar 30, 2009

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]
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