Quality Assurance throughout the Loan Process

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

This week’s topic came easy to me because of a variety of projects I am working on that have me diving into quality assurance and quality control-related subjects.

It’s not hard to conclude that in today’s market, lenders have tightened their lending guidelines along with their quality control measures to better protect against the risks and losses associated with mortgage fraud and loan defaults. The industry simply cannot afford oversights and mistakes at this point in time when the economy is surely suffering because of the high foreclosure rates and fraud convictions across the country.

It’s important that all parties involved in each loan transaction fully understand what quality assurance measures are, what quality control means and why these subjects are so important today. We each have a responsibility to be on the watch for fraud and questionable business practices. (When I refer to “each of us” I mean the consumer, originator, processor, underwriter, closer and the funder involved with each loan).

First, for the consumers:

• HUD’s Don’t Be a Victim of Loan Fraud website at http://www.hud.gov/offices/hsg/sfh/buying/loanfraud.cfm

• HUD’s Don’t be a Victim of Loan Fraud Fact Sheet at http://www.hud.gov/offices/hsg/sfh/buying/loanfraudfaq.pdf which is nicely formatted and perfect for color printing

• HUD’s Don’t be a Victim of Loan Fraud Brochure which is perfect for color print and distribution at http://www.hud.gov/offices/hsg/sfh/buying/loanfraudbroc.pdf

For those of us involved with originating, processing and underwriting, we can get a much clearer picture of how mortgage fraud is affecting our industry by referring to the FBI’s Mortgage Fraud web page at http://www.fbi.gov/hq/mortgage_fraud.htm. There you’ll find the various fraud schemes defined, articles explaining recent fraud convictions and arrests, facts, figures and reports. If your employment position involves any contact with the loan file, YOU need to spend some time on this website. It never ceases to blow my mind what people out there are doing and getting away with. At least until they’re caught.

There are some great tools out there that can be utilized at various stages of the loan process. I highly recommend taking advantage of them. Not because you’re required to but because your efforts just might turn up a red flag on a file that involves mortgage fraud. Something found by using one of these simple validation or verification tactics could very well lead to a future mortgage fraud conviction.

To Confirm the Existence of a Business, Such as an Employer or Place of Employment

Use 411.com, yellowbook.com, or any other reputable online directory to search for a listing by business name, business type, reverse phone number, or reverse address. These resources should be utilized for every single verbal VOE used for documentation in your loan files. Provide a printout of the web page to demonstrate you’ve verified the business exists. What to do if you don’t find the business listed or find that the phone number of address doesn’t match the information on the loan application? Immediately bring the discrepancy to the attention of your supervisor and ask for further instructions.

Another way to validate the existence of a business is to check the state licensing website for the business in question. If the business requires licensing, you can most likely find a search option at the state licensing website. You should also be able to search for corporations for most states.

I’ve also tracked down business information on occasion by simply entering the business name as a Google search and tracking down the business website.

Consult www.theworknumber.com to determine if the business reports to theworknumber. If you find the business name listed, simply request verification from the website.

You can also utilize Google Maps to determine if a business exists and precisely where it exists. This option is helpful to determine the reasonable commuting distance between the borrower’s residence and place of employment. Go to www.maps.google.com, enter the business name, business address or business type and click on “Find Businesses.” The map will populate reflecting the location on an area map.

To Validate the Reasonableness of Earnings/Income

You have options to verify average wages by area, occupation and/or industry at The Department of Labor website at http://www.bls.gov/bls/blswage.htm

Seek out employment projections and statistics by occupation or industry at http://www.bls.gov/emp/home.htm

Verify employment trends by occupation, training and earnings by going to http://www.bls.gov

To Validate and Confirm Identity

Check the SSN deceased list at http://ssdi.rootsweb.ancestry.com. Simply enter the social security number in question and click Submit. Refer to http://helpdesk.rootsweb.com/ssdi for a tutorial on the website.

Consult with your credit bureau(s) to learn about measures that can be taken and incorporated into your credit report requests. Most offer a range of additional products that can be utilized to identity possible identity theft and fraud.

To validate Occupancy

Use 411.com, yellowbook.com, or any other reputable online directory to search for a listing by borrower name, reverse phone number, or reverse address.

Obtain tax transcripts for the IRS using IRS form 4506-t. There are many vendors out there who offer their services which can help you obtain copies of the IRS files tax returns in transcript format. Those returns will identify the property address the borrower has filed under and any additional properties claimed as investment properties on schedule E.

To Validate Property Value, Neighborhood Trends

Refer to www.zillow.com where you can search for current listings and recent sales. You’ll get the most effective “hit” list by entering a zip code.

www.realtor.com will help you find estimated home values, area listings etc.

You might also check with your lenders. Many of them are now offering AVM services right at their websites!

It’s always a good idea to build a relationship with a top-quality vendor who can assist you with quality assurance and AVM products and processes as well. A few to consider include Interthinx, CoreLogic, and Rapid Reporting.

Take a hard look at the measures your organization is taking in regards to quality assurance and risk control measures. There’s never been a better time to add some of these simple tactics into your processing routines. Something this simple could very well stop something fraudulent and far more complicated.

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.