Early payment defaults also fell below pre-pandemic levels, though Income/Employment’s rapid increase led all defect categories
(DENVER, Colo.) — NEWS: ACES Quality Management® (ACES), the leading provider of enterprise quality management and control software for the financial services industry, announced the release of its quarterly ACES Mortgage QC Trends Report covering the first quarter (Q1) of 2021. The latest report provides an analysis of post-closing quality control data derived from ACES Quality Management & Control® software.
Notable findings from the Q1 2021 report include:
* The downward trend in critical defects continued in Q1 2021, ending the quarter at 2.01% versus the prior quarter’s rate of 2.09%.
* A rapid rise in the Income/Employment category led all defect categories, with several of the core underwriting/qualification categories increasing as well.
* Declines in the Regulatory Compliance and Loan Documentation categories show that lenders are self-correcting and stabilizing their operations.
* Refinance review share continues to be strong, and defect performance has improved.
* Conventional loans dominated while defect performance declined.
* Early Payment Defaults fall below pre-pandemic levels in a hopeful sign that the worst is behind us, though we remain cautious about loans exiting forbearance status.
“With Q1 2021 marking a second consecutive quarter of decline in the critical defect rate, the record spike observed in Q2 2020 appears to have been a one-off increase, which is encouraging,” said ACES Executive Vice President Nick Volpe. “However, lenders and servicers should still proceed with caution, as declines in gain-on-sale, the conclusion of the eviction moratorium, persistent inflation and a potential default wave as forbearances come to an end all have the potential to trigger industry disruption.”
Findings for the Q1 2021 ACES Mortgage QC Industry Trends Report are based on post-closing quality control data derived from the ACES Quality Management and Control benchmarking system and incorporates data from prior quarters and/or calendar years, where applicable. All reviews and defect data evaluated for the report were based on loan audits selected by lenders for full file reviews.
“The declines observed in not only the overall critical defect rate, but also in EPDs and the Regulatory Compliance and Loan Documentation defect categories speak to an industry that has made considerable strides to course-correct after the tumultuous year that was 2020,” said ACES CEO Trevor Gauthier. “Unfortunately, 2021 may not prove to be any less challenging, which places even greater emphasis on lenders’ defect tracking and reporting efforts to remain ahead of the curve and adjust their operations as necessary to stay on track.”
Mortgage QC Industry Trends Reports are available for download, free of charge, at https://www.acesquality.com/resources/reports.
About ACES Quality Management®
ACES Quality Management®, formerly known as ACES Risk Management (ARMCO), is the leading provider of enterprise quality management and control software for the financial services industry. The nation’s most prominent lenders, servicers and financial institutions rely on ACES Quality Management & Control® software to improve audit throughput and quality while controlling costs, including:
* 3 of the top 5 and more than 50% of the top 50 independent mortgage lenders;
* 7 of the top 10 loan servicers;
* 11 of the top 30 banks; and
* 1 of the top 3 credit unions in the USA.
Unlike other quality control platforms, only ACES delivers Flexible Audit Technology®, which gives independent mortgage lenders and financial institutions the ability to easily manage and customize ACES to meet their business needs without having to rely on IT or other outside resources. Using a customer-centric approach, ACES clients get responsive support and access to our experts to maximize their investment. For more information, visit https://www.acesquality.com/ or call 1-800-858-1598.
Related link: https://www.acesquality.com/
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