Mortgage TrueView, a provider of data-driven business intelligence services, released a new Home Mortgage Disclosure Act scoring and benchmarking tool designed to give lenders insight into their own lending practice, as well as a comparison to the rest of the industry.
“For the first time, lenders have the ability to understand their own HMDA data in order to both stay compliant and increase loan volume for unintentionally underserved market segments,” the company said in a statement.
Mortgage TrueView’s HMDA scores are designed to measure a lender’s decisiveness in approving or denying loan applications.
“The score can be provided on a total population of loans, a defined product segment, or a specific geographic location,” says Becky Walzak, executive vice president, director of regulatory compliance with Mortgage TrueView.
According to Walzak, there are four possible outcomes with a loan application: approve, deny, withdraw or cancel.
“Approve and deny are considered active decisions, and withdraw and cancel are considered passive decisions,” Walzak said.
The first part of Mortgage TrueView’s score—the decisiveness or “D Score”—measures a lender’s effectiveness in rendering an underwriting decision, the company said. The higher the “D Score,” the more effective the lender is in making timely decisions about loans, rather than allowing them to lapse into a cancellation or withdrawal.
“If your D Score is low, there are likely number of opportunities to improve how your application process works and to increase revenues, while mitigating possible risks,” said David Moffat, president and CEO of Mortgage TrueView.
“A high score generally indicates that loan applicants are able to constructively engage with a lender. A high score also means the risks associated with possible misclassification of cancelled or withdrawn applications are lessened.”
The second part of the HDMA score is the action or “A Score,” the company said. The “A Score” looks at approvals and denials on both an absolute and relative basis to determine where there may be variances in a lender’s organization, or in product types.
“The A score highlights where the underlying process is inconsistent, either internally or with the rest of the industry, and as a result is costing your business additional revenue,” Moffat said. “It helps lenders identify risks and opportunities in their business.”