The three biggest mortgage compliance problems on the production side have been outlined in a new report. Progress is being made with most of the deficiencies.
The No. 1 compliance problem on the origination and retail side is inaccurate form 1003 Uniform Residential Loan Applications.
Issues include incomplete borrower information, liabilities that don’t match the credit report, no Home Mortgage Disclosure Act data and missing signatures.
Those findings were reported by Quality Mortgage Services, which said it culled the information from quality control audits and reviews on thousands of loans.
However, the share of reviews that found incomplete applications fell to 18 percent last year from 22 percent in 2011.
The initial disclosures of the Truth in Lending Act and Good Faith Estimate was the next-biggest problem. This includes loans with errors in fees and missing signatures. However, this category also improved from 2011 to 2012, from a 20 percent error rate to 16 percent.
Improperly prepared disclosures and missing disclosures that are required by the Federal Housing Administration came in as the third-worst compliance deficiency.
“This is worsening as more and more originations are moving to the purchase market and first time homebuyers,” the report stated. “As the refinance market reduces and the purchase market returns, more government lending programs will be used.”
Quality Mortgage noted that initial 1003 and TILA defects improved from 2011 to 2012, while disclosures required by FHA worsened.
