Kaan Etem, Author at Cogent QC: Award-Winning Loan Quality Control & Compliance Software

HUD Introduces Defect Taxonomy for FHA Lending

July 7, 2015 By Kaan Etem

In a growing trend towards streamlining and standardization of quality control and compliance methodologies, HUD has introduced a Defect Taxonomy in its “FHA’s Single Family Housing Loan Quality Assessment Methodology“. This document lays out the methodology that the FHA plans to adopt to improve its own QA efforts.

Knowing how FHA will be evaluating loans is helpful in designing your own QA program. Particularly useful is the definition of nine defect categories, numerous sources/causes for the defects, and four levels of defect severity. These can be roughly translated in ‘Cogentspeak’ to audit question categories, preset comments, and findings levels respectively.

For those configuring their Cogent FHA audit shells: your work has just become easier and more complex at the same time.

Another Successful Cogent Quality Symposium

May 14, 2015 By Kaan Etem

The 2015 Cogent Quality Symposium (May 6-8) once again brought together clients from all corners of the country in downtown San Francisco. As with all Symposia, the main attraction for clients was the opportunity to interact with other Cogent clients. Judging by feedback, the single most requested item at the Symposium was the opportunity to spend more time with other Cogent clients, sharing challenges and solutions and just plain stories. We will take that into next year’s Symposium planning.

Meanwhile, we are introducing a couple of initiatives to enable clients to interact immediately and on an ongoing basis with fellow Cogent users:

Starting in Summer 2015, we will schedule live quarterly WebEx sessions for all Cogent users. The initial format – open to change based on feedback – will be 60-minute sessions, beginning with a demo of new or existing Cogent QC System features and proceeding to open discussion on Cogent-related issues.
We are launching a Cogent QC Systems Users Group on LinkedIn. This will serve as a discussion board.

More information on those initiatives coming shortly.

Of course, client networking was not the full story. Cogent introduced a slew of technical features in the latest release, Version 4.7.7.7, and announced a brand new technology called Document Depot. We will shortly offer an online demo of Document Depot, which allows Cogent QC System users (both ProductionQC and ServicingQC) to upload any document in a standard format (such as PDF, DOC, XLS, etc.) into the Cogent system database. This may include appraisal reports, credit reports, loan documents, reverification letters, and so on. The document may be associated in Cogent with a particular loan record and/or with a particular audit question.

Lastly, what’s a San Francisco experience without a gourmet touch? This year, that took the form of a wonderful menu at La Mar Cebicheria on the Embarcadero. Here’s a taste, for those who could not make it this year. We hope to see everyone next year!

Cogent Selected for HW Tech100 List of Most Innovative Technology Companies

March 3, 2015 By Kaan Etem

Cogent is pleased to announce that we have been selected by Housing Wire for its 2015 HW Tech100 list of the most innovative technology companies in the housing economy. Over 250 nominations were received by the judges, who whittled the list down to the select 100. Of that 100, 60 were returning winners from last year and 40, including Cogent, were new inductees. We are honored to be included in such impressive company. As always, we will seek to continuously improve our technology in collaboration with our clients.

Here is how Housing Wire describes the HW Tech100:

Compliance Humor

December 1, 2014 By Kaan Etem

So many industry professionals have been wrestling with it in 2014 that “compliance” may have become the industry’s word of the year. The jury’s still out but it’s never too early to joke about it.

Happy holiday season!

How Not to Be Fooled by Odds

October 15, 2014 By Kaan Etem

The New York Times ran an article recently titled “How Not to Be Fooled by Odds” in which the author defines what is meant by a statement such as “the odds of a Republican takeover of the Senate is about 74%.” Stating that “there really is a difference between saying something will almost certainly happen and saying that it is more likely to happen than not,” the author goes on to explain what is and is not meant by the statement. Concluding that “…a prediction that puts a 74 percent chance on an outcome should be “wrong” about 26 percent of the time,” he presents a list of situations that occur about 26% of the time, including:

The odds that a National Football League defense prevents a first down on third-and-one.
The percentage of full-time graduate students in electrical engineering in this country who are American citizens
The percentage of mothers with children under 18 who stay home with their children
The share of Americans who live in California, Texas or New York

In the same way, we need to be careful about what is actually being asserted by other statistics. For example, in the third year of California’s drought, we are quite focused on rain. So what is meant by the statement “There is a 40% chance of rain” (technically, the PoP or ‘Probability of Precipitation’)? Consulting the National Weather Service, we find the following:

Mathematically, PoP is defined as follows:

PoP = C x A where “C” = the confidence that precipitation will occur somewhere in the forecast area, and where “A” = the percent of the area that will receive measureable precipitation, if it occurs at all.

So… in the case of the forecast above, if the forecaster knows precipitation is sure to occur ( confidence is 100% ), he/she is expressing how much of the area will receive measurable rain. ( PoP = “C” x “A” or “1” times “.4” which equals .4 or 40%.)

But, most of the time, the forecaster is expressing a combination of degree of confidence and areal coverage. If the forecaster is only 50% sure that precipitation will occur, and expects that, if it does occur,it will produce measurable rain over about 80 percent of the area, the PoP (chance of rain) is 40%. ( PoP = .5 x .8 which equals .4 or 40%. )

In either event, the correct way to interpret the forecast is: there is a 40 percent chance that rain will occur at any given point in the area.

As you present your quality control findings to others, be sure that everyone understands what they mean. A clear definition of your terms at the beginning or end of any report is a good first step.