ACES Quality Management

(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 Industry Trends Report covering the fourth quarter (Q4) and calendar year (CY) of 2023. The latest report analyzes post-closing quality control data derived from ACES Quality Management & Control® software.

Notable findings from the Q4 2023 report include the following:

* The overall critical defect rate declined 8.38%, ending the quarter at 1.53%.

* The overall rate for CY 2023 was 1.68%, down 19.18% from CY 2022.

* Of the four major underwriting categories, Credit and Liabilities improved in Q4 2023, while defects increased for Assets and Income/Employment. However, only one category – Credit – improved overall for CY 2023.

* Income/Employment remains the leading category of defects reported in Q4 2023, with Assets and Borrower and Mortgage Eligibility completing the top three categories of defects cited.

* Income/Employment and Assets were also the top two most cited defect categories for CY 2023, with Loan Documentation in third place.

* The sub-category analysis for both Q4 2023 and CY 2023 showed a tremendous increase in Calculation/Analysis-related errors for the Assets category. Eligibility-related defects also increased in the Credit and Income/Employment categories in Q4, while CY 2023 saw moderate increases in Credit Documentation, Income/Employment Analysis and Eligibility.

* Purchase review share decreased by 1.34% over Q3, while refinance review share increased by 8.79%. Defect-wise, purchase share increased by 6.28%, and refinance share decreased by 36.2%.

* VA review share increased the most in 2023, rising 19.44%, followed by a 4.46% increase in FHA review share. USDA review share declined by 15.63%, as did conventional by 4.22%.

* While FHA defect share increased by 1.85% quarter-over-quarter, USDA and VA loans experienced the most increases in Q4, rising 8.62% and 8.48%. While USDA review share also increased in Q4, VA review share remained relatively flat.

* For CY 2023, conventional and FHA defect share increased 5.83% and 11.6%, respectively. Defect share decreased by 68.15% for USDA loans and 26.61% for VA loans.

“Building on the gains made in late 2022, mortgage lenders improved loan quality in both Q4 2023 and for the year overall,” said ACES Executive Vice President Nick Volpe. “However, persistent adversity in the form of interest rates and affordability challenges only emphasizes the need for lenders to remain vigilant and protect the integrity of existing loan production.”

Findings for the Q4/CY 2023 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 incorporate 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 overall critical defect rate for Q4 2023 dropped to 1.53%, among the lowest rates observed since this report’s inception. Given five straight quarters of decline, it’s evident lenders are prioritizing loan quality in the current market to preserve as much revenue as possible,” said Trevor Gauthier, CEO of ACES Quality Management. “The market downturn led to operational staff cuts for many lenders, and those reductions certainly impacted QC departments. Lenders’ ability to consistently drive down their critical defects in that environment speaks to the power of ACES to help lenders manage loan quality and mitigate risk in any environment.”

The Mortgage QC Industry Trends Reports are available for download, free of charge, at

Join ACES EVP, Nick Volpe and ACES President, Phill McCall on July 17th for their QC NOW webinar as they take a deeper dive into these analytics and how it aligns with the current state of the industry and how to best navigate through the volatile financial landscape. Register here for the webinar.

About ACES Quality Management

ACES Quality Management 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:

* 60% of the top 50 independent mortgage lenders;

* 8 of the top 10 loan servicers;

* 11 of the top 30 banks; and

* 3 of the top 5 credit unions in the United States.

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 or call 1-800-858-1598.

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