Mortgage Industry News

Organizational Development:  Improving Quality Dynamics
by: Deborah Aydelotte

Developing an effective internal organizational dynamic is an ongoing process, and the changed market environment presents a unique challenge.  Every internal group considers themselves a performance watchdog, and while this is commendable, it can also be dangerous to developing the long term strength of the organization. 

Let me explain.  Between identifying and correcting a performance issue, the far easier task is identification.  When I hear a quality or compliance person self congratulate in the knowledge they have found an error, I wonder if they understand their responsibility and enormous potential to change the dynamic and success of the business rather than stopping short at identification. 

I’ve seen and managed many different models and by far the most successful is a quality joint ownership model.  Sound simple?  Not that important?  Think again.

Developing a model wherein production and support groups actively work together to identify and correct issues is better suited to an agile business.  It reduces the duration of quality process improvement by weeks and months.

Think about the approach in a tactical situation.  Model #1:  A potential issue is found by a quality group, some research is done but not extensive, alarms are sounded, quality group accepts kudos for its find, issue is thrown over the wall and the business is left to research and hopefully correct.    

Model #2:  A potential issue is found by a quality group, the business manager is alerted, a nimble joint effort is initiated to dig deeper, additional data is gathered to clarify and validate root cause, a high level plan of attack is developed jointly and reviewed with executive management.  Jointly the groups can already say they are addressing the issue.  Kudos all around.

Unfortunately, model #1 is more often employed.  Many firms unconsciously drive their groups into organizational paralysis either through muddied vision or lack of forethought.

More importantly, the “throw it over the wall” or “gotcha” model includes throwing ownership over the wall as well.  Lack of skin in the game by the quality groups has negative impacts which not only promote a less agile performance improvement model, but also weaken internal dynamics to the point of kindergarten antics.  Productivity and partnership slowly become casualties – guaranteed – as does a nimble improvement model.

As a mortgage entity, internal groups should strive for quality joint ownership.  As a C-level executive, I would require and expect it. 

How to get there from here: 

Performance Quality Ownership – Creating a philosophical shift around this requires cooperation in all groups and understanding the overall company benefit.  While the message needs to come from the top, the senior managers are catalysts to making it happen.  We all own quality and should work together to improve with joint responsibility. 

Create a Quality Road Map – Gather the production, quality and technology groups semi-annually to review tools, current needs and upcoming changes including early warning info and how to address potential legislation.  I’ve discussed this process with many colleagues who acknowledge disparate, isolated efforts tend to tie them into knots with multiple overlapping tools, inconsistent findings, unmanageable processes and additional cost.  The first step is as simple as a white board exercise identifying what tools/applications (fraud tools, valuation tools, compliance tools, etc.) are used at what point in the process and what value they provide.  I’ve heard managers say “I don’t need to do that, I’ve got it all in my head”.  You would be surprised at what you and your partner groups learn by putting 60 minutes to this exercise.  Note that this is highly effective when discussing leveraging tools and quality processes across multiple business channels.

Quality Tune-Up – Business leaders should request that quality partners review processes and procedures often, outside of regular audits.  As an example, ask your compliance group to sit with your folks (yes, at their desks) semi-annually and audit the most critical compliance check points.  This not only improves the dynamic between the groups, but provides additional, more frequent insight into where improvement is needed.

Granted, the “gotcha” models provide drama and excitement, but I prefer the more holistic partner dynamic any day.  Your responsibility as a manager is to own and ensure the safety and soundness of the business from a comprehensive perspective, drawing all partners into the ownership circle.

Mary Kladde

One of the biggest objections I find to using fulfillment services such as those offered by Titan’s is control over document production. At Titan, we require control over the document production process as this is one of the defining moments in a loan’s life. As many lenders know, the production of loan closing documents and the overall facilitation of the closing process often times has the single most significant impact on post closing performance to include warehouse line management and timely investor purchase turn times. Not controlling this process would make it impossible to provide meaningful service reps and warrants.

Most of our potential clients have gotten used to producing docs, even as a broker, and cannot fathom why we would want or need to take that level of control away from them. Let’s face it, as a service company you’d be insane to rep and warrant what you can’t control. Looking at the market today, there are very few outsource fulfillment companies left that will “only” do post-closing. It is specifically due to the fact that without controlling the closing process, you are endlessly cleaning up small, yet significant mistakes. Mistakes, that if caught in the document and closing process, would have taken only moments to resolve at the time; now consume time and money for days in post closing. Not controlling the closing process means that you are cleaning up other people’s mistakes. And right, wrong, or indifferent, these mistakes roll down hill and fall onto the shoulders of the last person to touch the file. It’s no longer an issue of who or how the mistake was made, but how long it has taken to clean up and clean up always seems to take longer than expected.

Today, there are innumerable doc engines that will produce a doc set for a closing in a matter of minutes. However, many clients are not aware that there are relatively no reps and warrants for the accuracy of those document packages specific to investor programs and requirements. With few exceptions, the client is totally reliant upon the infallibility of the doc engine and in-house expertise and experience to not expose them to purchase issues or warehouse line loss. In addition, the lender is also reliant upon the accuracy of in-house data entry. “In-house” there are no reps and warrants against losses from poor employee performance or lack of experience.

When using these doc engines, it is important that the lender employ an experienced closer. Not a processor that knows how to use a doc engine, but an experienced closer. The fact is most problems for both purchase and repurchase happen in closing. An experienced closer knows that document production is the easiest part of their job. The work they perform on the closing and funding audit to ensure accuracy, compliance, and adherence to the Final Approval Clear to Close are the real work in closing. And, it is a true fact that it is almost impossible for a processor to audit themselves.

Here at Titan, we are able to produce figures for the settlement agent prior to receiving the Final Clear to Close Approval. This enables our lenders to disclose fund requirements to the borrowers well in advance, securing their customer’s confidence in the transaction. While the lender continues toward their Final Clear to Close Approval, we simultaneously perform an impartial 3rd party audit of the file, complete verbal verifications of employment and the necessary compliance and fraud checks needed to produce a clean and timely disbursement. All work in unison to produce and deliver documents to the settlement agent when expected. At Titan, we have the option of being able to accomplish the meat of the closing work, even as we are waiting for the Final Approval to send live docs. Experienced closers allow Titan to perform with agility not only for the borrower, but for the lender, ensuring a purchasable loan package.