Business Process Archives - Cogent QC: Award-Winning Loan Quality Control & Compliance Software

Calculate, Streamline and Automate

April 20, 2018 By Kaan Etem

Technology is rapidly transforming mortgage banking. If you went to the MBA Tech18 conference, you saw some of the companies leading the charge. But with enterprise software, change can be slow to arrive. What can you do right now to boost productivity, streamline processes and automate workflows?

How about optimizing your sampling? Try our statistical sample size calculator and some of our white papers on leveraging statistics. You might get more done with less work. If you’d like to discuss how, contact us.

And while we automate client processes by leveraging Cogent QC Systems tech tools, you may find that revisiting the manual steps in your workflow will be fruitful, especially if that workflow has not changed in years.

Ultimately, when you’re ready for an adaptable workflow technology for your quality, compliance and risk management, let us know. We’d love to show you the most feature-rich, most customizable system available.

Are Your Data and Operations Safe?

May 23, 2017 By Kaan Etem

One of our favorite newsletters, published by mortgage industry veterans of 30+ years’ standing, is the Garrett McAuley Report, a no-nonsense look at some of the issues percolating in the industry. The latest edition mentions the relevance to our industry of the recent ransomware attacks that affected most major countries in the world . Here’s their take. How are you positioned for this eventuality?

For more along the same lines, check out their Articles page.

May 21, 2017

To Our Clients, Colleagues, and Friends:

Everyone has heard about the ransomware attacks last week, and our impression is that very few independent mortgage companies are prepared for this sort of thing. About 70-75% of our clients use Ellie Mae’s Encompass, and when we ask about the security of their loan files, the answer is usually along the lines of, “Not a problem. Encompass is hosted.” True but irrelevant if cyber-attacks take down Ellie Mae and you don’t have back-up. Do yourself a big favor and start thinking through all the ways you need to protect yourself.
Think about all the vendors you do business with, and think about how their sudden failure would affect you. As improbable as it seems, what if Ellie Mae failed, or your hedge advisor, or your biggest investor? I asked one mortgage executive how his company would be affected if Encompass made an announcement that they were immediately ceasing all operations. He laughed and said that could never happen, but people also said that about Lehman, Bear Stearns, New Century, and WaMu. I once met a fellow from Chicago, his last name was Kelly, who owned a bunch of banks. Back around 2005 or so, they bought preferred stock issued by Fannie Mae, and that was when Fannie Mae was considered A+ solid. When Fannie Mae was placed into conservatorship, the securities plunged in value, and the FDIC seized all 5 or 6 of his banks.Anyway, I’d say that 90% of our clients don’t do adequate due diligence on their counterparties, and there’s real risk there. Here’s a 13-page guide, Outsourcing Risk, put out by the Federal Reserve on managing counterparty risk, with an emphasis on outsourcing.

“Quality Control and the Bottom Line” article by Cogent in Secondary Marketing Executive magazine

February 3, 2014 By Kaan Etem

Secondary Marketing Executive magazine has just published in its February issue an article penned by Cogent SVP Kaan Etem on “Quality Control and the Bottom Line.” The article summarizes much of Cogent’s thinking about efficient and effective quality control, its potential impact on the bottom line, and related commentary on some of the new rules being introduced by Fannie, Freddie, and HUD. We hope it’s useful. Let us know what you think.

Lenders’ Dilemma: Invest in Tech or Exit Mortgage Business

October 28, 2013 By Kaan Etem

Here’s a timely article (registration required) highlighting how the new regulatory environment for lenders is forcing a stark choice: either invest in technology to streamline and automate loan origination and servicing processes – or exit the business.

Some choice excerpts:

“Origination costs are expected to rise 11% this year from a year ago, to nearly $5,900 per loan, as lenders scramble to meet tough new requirements from the Consumer Financial Protection Bureau, the Federal Housing Administration and Fannie Mae and Freddie Mac that take effect in January.”

“Large banks can justify investments in technology and can hire more staff because they spread the costs across more loans. But small banks with fewer than 100 employees may only have a handful of employees doing the work, which means relying even more on technology…”

“…921 compliance changes [have been documented] from various agencies since the housing market crashed in 2008. Particularly challenging for small lenders are new requirements from Fannie and Freddie that require lenders to deliver loans with as few defects as possible.”

“The government-sponsored enterprises are now electronically validating 100% of the loans they purchase as part of a broader initiative to improve loan quality. The Federal Housing Administration has proposed similar changes and may set a maximum threshold for the percent of loans it will allow to have defects.”

“Survival is dependent on improving quality control standards otherwise [lenders] won’t be able to compete or to sell loans that the GSEs will be willing to buy,” says Craig Focardi, CEB TowerGroup’s senior research director.”

“Everybody is extremely nervous because if you don’t dot your i’s and cross your t’s in compliance, you’re going to get a lot of repurchases and will be out of business. Everything in a loan file has to follow the letter of the law.”

“Many lenders don’t want to invest in the labor and technology that it takes for [quality control] and compliance,” says [Annemaria Allen, president and CEO of The Compliance Group in Carlsbad, Calif.], noting that such requirements have never really been enforced to the degree that they are now. “You have to be able to slice the data and we know that business units are screaming about this. But if you’re going to sell to Fannie and Freddie and you do a [lousy] job…they will be in your house nonstop and make sure you have the processes in place and embrace quality.”

Forewarned is forearmed. It’s a very different industry now than it was in 2007.

Categorize Audit Questions for Streamlined Reporting of Regulatory Data

September 30, 2013 By Kaan Etem

Sometimes it makes sense to organize audit questions by regulation. Compliance audits are often organized this way, with names of regulations comprising audit category names and audit questions clustering within those categories. This organization can be reinforced by audit category codes such as TIL, ECOA, CLA, FCRA and so on (hence, question number ‘TIL-012a’). This approach makes it quick and easy to report on regulation-specific audits using Cogent.

But frequently, audit questions are organized by category of defect, such as Assets, Credit, Liabilities, and Income. Traditional post-closing audits continue to be organized this way, as confirmed by FNMA recently (see recent blog post) In such a case, how do you report on specific regulations when a regulator comes in for an audit? The answer is via Categories.

Cogent’s loan audit software allows any audit question to be tagged with one or more Categories. Standard Categories include ‘area tested’, ‘regulation’, and ‘federal/state’. Additional Categories may also be created. With Category tagging, it is a simple matter to include in a report only those audit questions that are relevant to a regulatory audit. Access Category tables via your system’s Audit Lookup Table Manager under Administrator Tools.