One In Eight Loan Files Contains Errors

Almost one in every eight home loan files written over the last decade was either incomplete or contained erroneous material, according to LoanLogics.

File content was missing or incorrect on 11.5% of all mortgages over the last 10 years, says the company, which processes more than half of all home loans through its various technologies. Because of inefficient systems, loan file errors, and the resulting delays, the costs to borrowers were $7.8 billion higher than they needed to be, the company says.

For its analysis, LoanLogics examined data for 2014, 2019, and 2024, evaluating “Doc to Data” discrepancies where information claimed in a file is incorrect or missing, and “Doc to Doc” discrepancies where documentation claimed to be part of a file is incorrect or missing.

The combined error rate for Doc to Data and Doc to Doc transfers jumped from 9.7% in 2014 to 13.3% in 2019 before drifting back down to 11.4% in 2024.

The spike in error rates in 2019 correlates to higher mortgage volumes across the industry and was likely due, says LoanLogics Vice President Roby Robertson, “to fluctuations in inexperienced staff brought on to deal with the increased workload.”

By last year, though, lenders had cut their workforce in response to reduced volume, leaving more experienced and knowledgeable staff to handle a lesser load. And as result, error rates came down.

Still, the analysis shows zero material improvement in loan file quality after a decade of industry investment and purported innovation. And the reason, offered Craig Riddell, executive vice president of market development, is the inappropriate application of technologies by lenders.

“Poor results and aging integrations and redundancy are the byproduct of incomplete or poor training, rushed implementation,” he said, “leading to unexpected and costly data conflicts that necessitate manual intervention.”