With new mortgage rules adopted this month and more scheduled to take effect in 2015, four in five lenders today report being concerned about loan quality, a survey by Capsilon Corp., a provider of data management solutions, finds.
Polling more than 100 executives from leading mortgage lenders during the Mortgage Bankers Association annual meeting in late October, Capsilon found that 39% plan to spend more on compliance next year, and 95% were somewhat concerned or very concerned about loan quality.
Loan production costs are also on the rise, with 80% of respondents stating their loan production costs are higher today than they were in 2013.
The MBA has reported previously based on industry findings that production costs increased to $6,932 per loan in the second quarter of 2014, up 19% from $5,818 in the same quarter last year.
“Clearly, this survey data confirms that lenders are struggling with increasing costs as they contend with a myriad of new regulations that require a heightened focus on data integrity and loan quality,” said Sanjeev Malaney, CEO of Capsilon Corporation in a press release. “Rather than relying on expensive labor to ensure data integrity to stay competitive, lenders must move to a data-centric model where technology automates much of the process. Technology gives lenders the ability to move to a straight-through loan processing model, where much of the workflow is automated, with only a small percentage of loans requiring human intervention.”
Quality control is still an uncertainty factor, with roughly half of the lenders surveyed reporting their compliance services are conducted in-house, while 15% outsource compliance and 36% use a combination of services. Many are looking to the upcoming TILA and RESPA rules to take effect next year as being a leading cause for rising costs.
Written by Elizabeth Ecker
