Preventing Bad Loans Before They Start: Our Pre-Fund QC Services

The Challenges

The client’s existing quality control program involved reviewing loans post-closing, which led to identifying significant errors only after the fact. To prevent these issues, the client needed a robust pre-fund audit process to detect minor and major oversights. The main goals were to:

• Reinstate investor credibility and secure investor approval.
• Strengthen repurchase requests.
• Increase the warehouse lending line.

The Solutions

We established a pre-funding QC team of seasoned experts to review loan files thoroughly. Our team performed a comprehensive re-underwriting of randomly selected loans and compared the results with the underwriters' outputs. This unbiased review highlighted errors originating from the underwriters and allowed us to refine our approach. We then implemented a graded loan file review system, providing pre-fund QC reports with pass, fail, or pass-with-conditions analyses within 24 hours. Teams across different time zones managed the process to ensure timely delivery.

Key features of our pre-fund review process included:

• Verification of borrower liabilities and income-supporting documents.
• Multi-tier verification to identify potential risks.
• Thorough appraisal desk reviews to detect faults.
• Comprehensive title reviews to confirm title credentials.
• Customized pre-fund audit services tailored to the loan type.

Results Achieved

Our pre-fund QC services brought about notable improvements in several areas, including:

• Enhanced quality of pre-fund auditing through rigorous checks.
• Improved relationships with investors, lenders, and borrowers.
• Reduced pre-fund audit turnaround time to 24 hours.
• Increased scalability to support a growing customer base.
• Detailed monthly pre-funding reports summarizing individual audits.
• 50% reduction in operational costs.