ACES Quality Management has launched a technology designed to help mortgage lenders identify compliance, operational, and data-quality risks beyond the loans captured through traditional quality-control sampling.
ACES Population Testing applies a financial institution’s policies to every record within a selected loan population. The system reports whether each record passes or fails each policy and combines those results into an overall quality score, according to the company.
The technology can be used across pre-funding, post-closing, and servicing reviews. But it is not intended to replace traditional QC sampling or make the final call on whether a loan contains a defect.
Instead, the system flags records that warrant closer examination. Auditors can then investigate those files through ACES Quality Management & Control software, determine whether an actual defect exists, and decide what remediation is required.
For mortgage bankers weighing a growing number of automated compliance and quality-control tools, a failed test should be treated as a flag for further review — not proof that the loan itself is defective.
“Compliance and quality programs are under constant pressure to extend their reach without expanding their teams,” ACES CEO Trevor Gauthier said.
Gauthier said the technology is intended to identify risks that might otherwise go unreviewed and direct employees toward the records most in need of human investigation.
Looking Beyond The Sample
Mortgage lenders traditionally use required and discretionary samples to evaluate loan quality after closing. Sampling makes a labor-intensive review process manageable, but it also means most loans never receive the same level of examination.
Population testing takes a different approach. The lender chooses the pool of records to be examined and the rules it wants applied. Those rules can address the institution’s compliance requirements, internal procedures, or data-quality standards.
Lenders can write their own policies or use ACES Managed Policies, a library of ACES-authored content that the company describes as compliance-vetted.
The potential advantage is not that every loan receives a full human audit. Rather, automated testing can screen a much larger group and narrow the files sent to reviewers.
For mortgage bankers, that could make the technology particularly relevant when staffing and expense controls limit how far a QC department can extend its reviews. It could also help institutions find recurring data problems or concentrations of risk that may not appear in a smaller sample.
Built From BaseCap Technology
ACES Population Testing is built on technology the company obtained through its acquisition of BaseCap Analytics in January.
Founded in 2016, BaseCap developed data-quality technology that connects with enterprise loan data to conduct automated checks, identify inconsistencies, and support loan-acquisition reviews. ACES said the underlying population-testing engine has already been operating at financial institutions for several years.
The launch therefore represents the integration and expansion of acquired technology within ACES’ broader quality-management platform. It also gives ACES a way to connect two stages of the QC process: automated screening across a selected population, and human investigation of the exceptions that screening produces.
