Return on Quality

One of our favorite websites is www.informationisbeautiful.net, where David McCandless, an independent London-based “visual & data journalist” (his words) practices the art of data visualization and information design. 

We like the way he conveys information, often multi-layered, with the minimum of words.  As he puts it, “I’m interested in how designed information can help us understand the world, cut through BS and reveal hidden connections, patterns and stories underneath. Or, failing that, it can just look cool!”

It’s that last bit that we want to talk about briefly here.  One of David’s recent creations is a graphic that compares, side by side, point by point, the assertions of “The Global Warming Skeptics” against “The Scientific Consensus”. 

This particular visualization is more wordy that most of his work.  For that reason, one is inclined to think that a lot of research went into it.  And that is the case.  Every familiar argument made by the “skeptics” seems to have been researched and refuted.  If you’re a believer in global warming, you might think that this is close to the final word on the debate. 

Yet one look at the comments section at the bottom of this page suggests otherwise.  It’s worth spending a few minutes examining the visualization and then the comments.  That should be enough to convince you that a beautifully presented argument is not proof.  It has to be backed by solid evidence.  And if there’s any debate that lacks conclusive data, it has to be the global warming issue, where complex meteorological phenomena meet millennial time spans in a cauldron of scant measurement.

We came across a well-written article recently titled “The New Rules For Compliance In The Post-Crash Environment” by Louis Pizante, CEO of Mavent, Inc. and a veteran of the industry. 

In addition to a concise synopsis of the events leading up to the current regulatory overhaul of the mortgage industry, the article outlines some of the changes we can expect in the way compliance reviews are performed.  In short: earlier in the origination process, more electronically and with greater automation. 

Mortgage compliance and quality control reviews can and should be performed on many levels, and at different points in the loan life cycle.  Tools such as automated compliance engines, automated fraud engines and automated valuation models can flag loans that merit further review.  The next step is to apply a rigorous methodology to digging deeper in order to:

1) determine whether a complete file review confirms the automated findings;2) fix the individual loans if possible;3) identify the source(s) of the issue(s);4) select additional loans from these source(s) and conduct complete file reviews to see if there is a pattern of issues;5) generate feedback to the field and document corrective actions to fix the flaw(s) in the origination or servicing processes and/or stop doing business with the identified sources.

We are seeing more tools for automating more aspects of the mortgage life cycle.  Don’t forget, though, that it was partially the over-reliance on automated underwriting tools that got us into our current mess.  Maybe tomorrow will be different, but today we still need human beings checking to see if it all makes sense.