Mortgage market generates more defective loans for third consecutive quarter

Published January 31, 2018

By Kelsey Ramírez
January 2018

The mortgage market is generating more defective loans for the third consecutive quarter, however, one expert claimed this increase is to be expected. The critical defect rate increased for the third consecutive quarter, reaching 1.76% in the second quarter of 2017, according to the ARMCO Mortgage QC Trends report from ACES Risk Management. This is up 9% from 1.61% in the first quarter last year. A critical defect is defined as a defect that would result in the loan being uninsurable or ineligible for sale. The critical defect rate comprises loans in which at least one critical defect was identified during the post-closing quality control review.

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