Using 3DI to Transform the Mortgage QC Review Process: The Shift from 10% Sampling to 100% Automation

A few years ago a mortgage veteran COO friend of mine (Servicing / Title / Pre & Post Close QA-QA background) took a look at the 3DI technology roadmap and told his people "3DI will eliminate Mortgage QA one day." A couple of years after that, a SVP of a major Servicer took a look at 3DI output and told me "You folks are 15 years ahead of anyone we have ever seen or tested."

Some people think that this is impossible to which I say, "You're right. Want to see it again?"

In an ever-evolving mortgage landscape, ensuring accuracy, completeness, and compliance in every loan file is paramount. Traditionally, the Quality Control (QC) process has been a key step for mortgage lenders to verify the correctness and completeness of an underwriter's decision-making. The examination of the mortgage QC review process offers a clear look into the complexities involved. However, with technology advancements, there's an opportunity to reshape this process for the better.

1. Traditional QC Challenges and Limitations:

>> Sampling inefficiencies: Most lenders sample only a fraction, often just 10%, of their closed loans for post-close QC. This approach leaves a vast majority of loans unchecked, potentially exposing lenders to unidentified risks as well as potential buy backs.

>> Human Errors: Despite the best intentions, manual reviews can lead to oversights. A second or even third set of eyes in the QC process, while beneficial, isn't foolproof and can often lead to delays and increased operational expenses.

>> Time-intensive: Traditional QC can be slow, especially when a file must be re-underwritten or checked for missing public records. Delays can push back closings, frustrating borrowers and stakeholders.

2. Introducing 3DI: The Future of Mortgage QC

3DI, with an intelligent digital data integration plan, presents a transformative solution to these challenges. It uses technology to automate document classification, data extraction, and validation, streamlining the mortgage process.

>> Accuracy and completeness: 3DI pulls from 23 primary QA/QC documents (and hundreds of others), extracting and validating nearly 500 different data fields. This rigorous process ensures that no detail is missed.

>> Speed and efficiency: Automation accelerates the QC process. 3DI can review 100% of closed loans rapidly, identifying potential issues in minutes and reducing the risk of unidentified errors. This is a fixed cost "headless" process and involves no human bias of any kind.

>> Reduced Human Intervention: Minimizing manual checks reduces the possibility of human error and oversight. The automated process becomes the 'second set of eyes', but with the precision and speed of technology.

3. The Case for 100% Automated 3DI Process

While a shift from 10% sampling to 100% review may seem daunting, the benefits are substantial:

>> Comprehensive Risk Management: By examining every loan, lenders can have confidence in the integrity of their entire loan portfolio. This thorough review minimizes regulatory, reputational, and financial risks.

>> Cost Savings: While there's a small initial investment in technology, the long-term savings from a unit cost that is lower than the cost to do a traditional 10% sample, reduced manual labor, faster closings, and risk mitigation can be significant.

>> Improved Borrower Experience: Speedier reviews and fewer last-minute issues lead to timely closings, enhancing the overall borrower experience.

4. Embracing the Future

As the mortgage industry continues to evolve, lenders that adopt 3DI will be at an advantage. Eliminating the manual pre and post close QC process and moving to an automated approach not only reduces risks but also offers a competitive edge in a market where efficiency, accuracy, and borrower satisfaction are paramount.

In the intricate dance of the mortgage process, from initial application to the final clear to close, necessitates precision and vigilance. By leveraging 3DI technology, lenders can ensure every step is executed flawlessly, safeguarding their interests and those of both their borrowers and buyers.