The mortgage industry's quality control landscape is experiencing significant changes, with traditional defect categories such as income and employment decline sharply, while issues like fraud and compliance volatility rise. ACES Quality Management's report shows the critical defect rate fell to 1.16%, driven by a 35.5% drop in income-related defects. However, legal and compliance defects became the leading issue, posing risks amid uncertain regulatory guidance. As lenders navigate this shifting risk landscape, agility and insight into emerging threats are increasingly essential for maintaining compliance.
Legal/Regulatory/Compliance defects surged to become the leading defect category in the fourth quarter. This increase is particularly concerning given the category's history of volatility.
Data from ACES Quality Management's latest QC Industry Trends Report revealed the critical defect rate fell to 1.16%, marking the second-lowest level recorded since the report began.
Traditional defect categories such as income and employment and credit are seeing historic declines, while once-marginal issues like insurance gaps and fraud are now taking center stage.
As some risks recede, new ones are taking shape. Legal/Regulatory/Compliance defects surged to become the leading defect category in the fourth quarter.
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