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Who Knew? How Mortgage Loan Quality Control is an Immediate Source of More Profit

Guest Post by Steve Spies

Want a better bottom line? The answer may be right under your nose. Your quality control team can drive more profits by targeting cost savings and revenue-generating opportunities. According to Mortgage Bankers Association data, average loan origination costs fell below $8,000 per loan in Q2 from a high of over $9,000 in Q1 2019. Even with that welcome decline, costs per loan in that range should have alarm bells ringing across the industry on out of control inefficiencies. The likely culprits are many; over documenting and reworking loans, bloated incentive compensation structures, implementation challenges with new technologies, and of course increased compliance and regulatory costs. All of this impacts your customer satisfaction scores. Eroding revenue and expense optimization is taking its toll.


The good news is finding ideas to stem this tide may need little additional work on your part.

Look no farther than what your QC reports are already telling you, or start digging deeper into your QC results for answers. Fancy analytics are unnecessary to know that incremental profit awaits from just one less doc per file, one less new hire, one less file rework, or one less repurchase. Your QC team can excel in spotting this potential.


Many Lenders view QC as just an audit compliance necessity. During the crisis, it became

synonymous with repurchase avoidance, and then a defense against stricter legal and regulatory compliance standards. Those foundational duties must continue, but limiting QC’s

value to those roles is realizing only a fraction of its power. It’s likely no other function in your

organization dissects every step and every document on a sample of your loans every month.

View QC as a rich source of guidance on loan manufacturing effectiveness.


Forward-thinking lenders realize investing in quality control as a real-time feedback

mechanism drives continuous improvement to revenue and cost. Shifting your mindset from QC as a no news is good news role, to a powerful proactive source of improvement may separate winners and losers. QC’s timely results drive cost savings now, rather than some imagined future state. And you just might find that money for desired investments in growth or new technology.


5 Immediate Ways Quality Control Work Can Lower Costs and Improve Revenue


To fertilize your thinking, here are five immediate ways (there are many more) your QC work can lower costs and improve revenue:

  1. Underwriting overlays – needed or overly cautious?

  2. Required documents – eliminate CYA docs

  3. Rework – loan defects slowing down the process?

  4. Technology – realizing the promised savings?

  5. Liquidity – repurchase/loss reserves excessive?


Realizing QC results for the gold mine it is advantages enlightened lenders. Rather than rotely sampling and reporting on repurchase and compliance, many QC reporting tools from vendors and in-house systems can be plumbed for endless insight into company operations. Engage your QC team or vendor to generate improvement ideas, gather market intel, stop overkill and prevent mistakes. QC is a money maker also leading to better customer service scores and better pricing. What are you waiting for?

About the Author

Steve Spies was formerly head of all Fannie Mae’s quality control strategies and operations, and a leading industry voice for effective QC. He is now principal and founder of SWS Risk Advisory LLC, working across the industry to maximize the value of quality control and risk management efforts.


Contact Steve at stevespies@swsrisk.com



Work with an Experienced Mortgage Quality Control Partner

At ADFITECH, we track industry changes daily and are always striving to support your success by sharing our knowledge of the latest updates, trends, and opportunities. Our mortgage quality control services are designed to ensure client confidence, minimize risk and maximize quality. For over 35 years, we have combined innovative technology with personal attention to every loan to meet each of our clients’ unique needs.


Now is an especially exciting time to partner with ADFITECH. We are currently updating our QC reporting platform with an all-new look and capabilities that are more advanced, robust and intuitive than ever. Stay tuned for more information!

Learn more about the benefits of working with an experienced quality control partner by contacting us today at (405) 715-8000 or by filling out a form here.

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