Perspectives

Five Ways "Beyond the Guide" Helps Mortgage Lenders Ensure Strong Loan Quality

Steve Spies

When first published in 2010, Fannie Mae’s Beyond the Guide (BTG) was a ground-breaking statement. It spoke of our commitment to building a lasting culture and framework for ensuring that loan quality is a permanent part of the industry’s risk management principles. We introduced our new representation and warranty framework in 2013, and continue to learn and innovate with the industry.

So it’s a great time to share new insights toward our objective of continuously improving loan quality. Applying the following five fresh perspectives from the newly published edition of Beyond the Guide can help you get the most from your quality control program, giving you more certainty and confidence in your loan quality:

  1. Corporate culture and governance are the foundation of outstanding loan quality: Quality levels will be in in direct proportion to the CEO’s and board’s commitment to it. Internal audit’s role in holding senior management accountable for quality cannot be overstated.
  2. Lenders create their own certainty: An effective quality control program will provide precise guidance on repurchase risk, and BTG provides templates on how to measure it.
  3. Monthly robust reporting drives dynamic assessment toward meeting aggressive quality targets: We provide a framework for ensuring individual accountability and driving root cause remediation of loan manufacturing issues.
  4. Integrating and evaluating quality control on third parties may prevent a host of potential issues: We elaborate on anti-fraud strategies and rigorous vendor oversight that can be combined with targeted loan sampling techniques.
  5. Technology and data validation services have matured into reliable quality control tools: For example, our proprietary Collateral Underwriter® (CU™) appraisal assessment system can be part of all loan manufacturing platforms, and BTG outlines value-added ways to deploy CU.

Most of all, the past six years have confirmed our belief that a strong quality control program pays for itself. It protects the bottom line while fostering a positive culture and pride in your product. We think you will find Beyond the Guide mandatory reading for everyone in your organization. Please visit our Loan Quality portal for a comprehensive toolkit that can help you build a best-in-class quality control program.

Steve Spies
Vice President – Loan Quality

March 6, 2017