A mortgage audit inspects your application, review, and funding process to ensure that you observe all applicable laws, the credit risk is acceptable, and data is captured accurately. It may be done quarterly or annually and only involves reviewing a sample of the mortgage loans going through your company. This piece looks at the vital benefits of mortgage audit services to your business.
Reduce Mortgage Fraud
According to the FBI, mortgage fraud is any deliberate misstatement, misrepresentation, or omission of material relating to the potential mortgage that an underwriter or lender funds, purchases, or insures. It was one of the primary drivers of the 2008 subprime mortgage crisis.
Audit services help reduce mortgage fraud by retracing all the steps and verifying all the documents. Auditors review all crucial documents, including re-verifying the borrower’s income, liability, tax returns, and assets. Any additional sources of income are factored in as well.
Moreover, the borrower’s employer is contacted to confirm their income, and the information of the person contacted and the dates are noted. Many other details go into an audit, which helps ensure transparency and discourage fraud. In any case, this information is vital to solving legal issues that may arise down the line.
Streamline the Process
A mortgage audit is not all about fraud investigation. Reviewing your mortgage processes helps uncover honest mistakes and optimize your mortgage process. For example, income verification for non-traditional workers who don’t fill out a W-2 form requires more information to be captured, which may lead to errors.
For instance, lenders have to analyze the borrower’s bank statement, dividends and interest, tax returns, and retirement plans when dealing with contractors and many self-employed workers.
With mortgage audit services, borrowers can trust professional auditors to review whether all the crucial information was obtained and whether the necessary supporting documents were attached. This also allows lenders to streamline their mortgage processing in crucial areas where weaknesses arise during auditing.
Audits can also uncover areas where your company is not compliant, helping avoid legal issues that may arise during state-mandated audits. For instance, a mortgage lender in Connecticut was recently appealing a $750,000 fine and license revocation by the state’s Department of Banking.
The DoB’s decision followed a 2018 routine compliance audit that found the lender was using unlicensed agents. Such issues could most likely be avoided if the company had engaged mortgage audit services routinely, allowing it to make changes before getting in trouble.
Specialized mortgage audit services use advanced tools and experienced professionals to generate accurate results with statistical and graphical analyses. These representations enable you to examine each aspect of every loan.
Moreover, high levels of accuracy help minimize risks of conflicts resulting from mortgage transactions, thereby reducing the possibility of legal disputes. It also helps you tailor smooth processes and demonstrate credibility to your solicitors and clients.
Any excellent mortgage audit must generate informative reports, including details of key findings and recommendations on areas to improve.
Professional mortgage auditors leverage sophisticated quality control technology like machine learning and advanced analytics. This digitization of the mortgage audit process enhances back-office needs such as reporting, allowing you to receive and share high-quality reports that are easy to understand.
The reports can also be fully customized according to the requirements of all concerned parties, which helps maintain professional transparency effortlessly. In any case, a good report will help you better understand your mortgage process and areas that need correction.
The mortgage audit process is long and time-consuming — from conducting insurance, tax, income, and reserve audits to tracking other trailing documents. Therefore, you may find your company unable to handle more significant business volumes when you are busy with mortgage audits, especially when you don’t have an excellent in-house team to scale up fast.
Still, you can shorten the turnaround time, accommodate your average mortgage volumes and maintain the audit quality by onboarding qualified external mortgage services.
Additionally, working with expert auditors to improve your operational efficiency allows you to close loans faster. This enables prompt customer payments, earning your business an excellent reputation and increasing your competitive advantage.
The Bottomline on Mortgage Audit Services
Although a crucial part of any mortgage business, audits can be hectic, time-consuming, and strenuous on your resources. Outsourcing will help your business to cut in-house staff onboarding costs while helping reduce fraud, streamlining the process, generating custom reports, obtaining accurate evaluations, and achieving a shorter turnaround.
Even better, mortgage audit services leave room for your staff to focus on the company’s core competencies, bringing in more business and increasing revenue.