DENVER, Colo., April 4, 2024—ACES Quality Management® (ACES), the leading provider of enterprise quality management and control software for the financial services industry, announced the release of its quarterly ACES Mortgage QC Industry Trends Report covering the third quarter (Q3) of 2023. The latest report analyzes post-closing quality control data derived from ACES Quality Management & Control® software.
Notable findings from the Q3 2023 report include the following:
- The overall critical defect rate decreased by 2.91% to 1.67%, representing four consecutive quarters of decline.
- Defects in the Liabilities category increased for the third straight quarter, whereas Credit and Income/Employment defects decreased significantly.
- Despite its improvement over the last quarter, Income/Employment continues to lead all defect categories, followed by Loan Documentation and Borrower and Mortgage Eligibility.
- Appraisal defects edged up slightly in Q3 after declining in Q2.
- Once again, purchase and refinance transactions achieved relative defect parity, thus firmly solidifying the market’s status as being purchase-driven.
- FHA and VA review share increased in Q3, while USDA and conventional reviews declined. However, defect share increased across all loan types except conventional.
"With the last years’ worth of defect data trending downward, it’s clear lenders have gotten a better handle on loan quality after the alarming spike observed in Q3 2022. A natural result of proactive remediation efforts. However, we would be remiss in not acknowledging the corresponding decline in origination volume,” said ACES Executive Vice President Nick Volpe. "While fewer loans may afford lenders the opportunity to intensify their focus on quality, it's clear that maintaining high standards amidst market fluctuations remains paramount. The persistence of this trend underscores the industry's adaptability and dedication to ensuring the integrity of lending practices.”
Findings for the Q3 2023 ACES Mortgage QC Industry Trends Report are based on post-closing quality control data derived from the ACES Quality Management and Control® benchmarking system and incorporate data from prior quarters and/or calendar years, where applicable. All reviews and defect data evaluated for the report were based on loan audits selected by lenders for full file reviews.
"As a provider of QC management software, it’s been especially gratifying to observe the industry bolster its QC efforts over the last several quarters. With the market inevitably poised for shifts, lenders are now better equipped to manage changes in volume and adapt to regulatory changes,” said ACES CEO Trevor Gauthier. “Last year, the lenders that thrived were those who embraced quality control and proactively prepared for the evolving market landscape. We eagerly anticipate witnessing lenders maintain their steadfast commitment to prioritizing quality as they navigate future market dynamics.”
The Mortgage QC Industry Trends Reports are available for download, free of charge, at https://www.acesquality.com/resources/reports.
About ACES Quality Management
ACES Quality Management is the leading provider of enterprise quality management and control software for the financial services industry. The nation's most prominent lenders, servicers and financial institutions rely on ACES Quality Management & Control® Software to improve audit throughput and quality while controlling costs, including:
- 60% of the top 50 independent mortgage lenders;
- 8 of the top 10 loan servicers;
- 11 of the top 30 banks; and
- 3 of the top 5 credit unions in the United States.
Unlike other quality control platforms, only ACES delivers Flexible Audit Technology®, which gives independent mortgage lenders and financial institutions the ability to easily manage and customize ACES to meet their business needs without having to rely on IT or other outside resources. Using a customer-centric approach, ACES clients get responsive support and access to our experts to maximize their investment. For more information, visit www.acesquality.com or call 1-800-858-1598.
Media Contact
Lindsey Neal
Depth for ACES Quality Management
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