Errors involving the implementation of TILA-RESPA Integrated Disclosure (TRID) rules and loan package documentation comprised more than 68 percent of loan defects last year, according to ACES Risk Management (ARMCO).
The firm’s Mortgage QC Industry Trends Report for the fourth quarter of 2016 and calendar year 2016 said the benchmark Critical Defect Rate increased to 1.50 percent in Q4 2016, compared with 1.27 percent in Q3 2016.
During the fourth quarter 2016, purchase transactions among the subject group comprised 51 percent of the benchmark data, up from 48 percent in the previous quarter.
“The data suggests lenders are getting more adept at complying with critical TRID-related issues. However, new areas of concern are beginning to spring up and an early correlation can be linked to a more purchase-focused market,” ARMCO Chief Operating Officer Phil McCall said in a release.
“Lenders need to learn from their own defects if they want to protect themselves against compliance-related issues, but they also need to stay apprised of changing trends if they want to mitigate the increased risk of fraudulent activity that is inherent with a purchase-driven market,” McCall added.
ARMCO’s trends report includes post-closing quality control data from more than 65 lenders, comprising more than 75,000 unique loans selected for random full-file reviews.