Critical Defect Rate Decreased in Q1 2022 According to ACES Quality Management Mortgage QC Industry Trend Report | National


Overall Critical Default Rate Trends Down for Second Straight Quarter Despite Challenging Mortgage Lending Environment

DENVER, Colo., Sept. 12, 2022 (SEND2PRESS NEWSWIRE) — ACES Quality Management® (ACES), the leading provider of enterprise quality management and control software for the financial services industry, announced the release of its quarterly report ACES Mortgage QC Industry Trends Report covering the first quarter (Q1) of 2022. The latest report analyzes post-closing quality control data derived from ACES Quality Management & Control® software.

Notable findings from the Q1 2022 report include:

* Global Critical Default ended Q1 2022 at 1.93%, down 0.02% from Q4 2022.

* Lower volumes have helped stabilize lender processes, keeping defaults at bay, but signs are starting to appear that the credit box is widening in the hunt for volume.

* Defaults in the Income/Employment category remain high.

* The share of valuation-related defaults fell in the first quarter of 2022 after increasing in the previous quarter, but there are signs that lenders should pay particular attention to this area in the future.

* Buy and refinance actions remained unchanged from the prior quarter. The share of conventional loans continued its downward trend over several quarters, with FHA loans filling the void and the share of VA loans also rebounding.

* Purchase defaults increased specifically in the FHA category, which is expected given the dominance of purchase loans in the review share and the increase in FHA loans.

“Despite an overall decline in the rate of critical defaults in Q1 2022, the Income/Employment category remains a glaring problem. Lenders are finding this area difficult to rectify, and with staff changes and new products coming online , it’s more important than ever that quality control managers get granular results and feedback to their production group,” said Nick Volpe, Executive Vice President of ACES. “Furthermore, as lenders expand the credit box to win the battle for volume, they must be careful not to stretch too far and further aggravate the shortcomings of this category.”

The findings of the Q1 2022 ACES Mortgage QC Industry Trends Report are based on post-closing quality control data derived from the ACES Quality Management and Control® benchmarking system and incorporates quarterly and/or calendar year data previous ones, if any. All reviews and default data assessed for the report were based on loan audits selected by lenders for comprehensive file reviews.

“While the increase in defaults in three of the four ‘basic underwriting’ categories is concerning, not all was ‘catastrophic’ for the first quarter of 2022. Of the top 11 ACES loan default categories, five showed a huge improvement over last quarter, and none more so than the Documentation category, which fell 37% from 14.57% to 9.09,” Volpe added. “This is a tangible example of the importance of quality control reports. Through quality control and quality assurance testing, lenders can of course correct and improve the overall quality of their mortgage originations.

The Mortgage QC Industry Trend Reports are available for free download at

About ACES Quality Management

ACES Quality Management is the leading provider of enterprise quality management and control software for the financial services industry. The nation’s largest lenders, service providers and financial institutions rely on ACES Quality Management & Control® software to improve audit throughput and quality while controlling costs, including:

* 60% of the top 50 independent mortgage lenders;

* 8 of the top 10 loan managers;

* 11 of the top 30 banks; and

* 1 of the top 3 credit unions in the United States.

Unlike other quality control platforms, only ACES provides Flexible Audit Technology®, which gives independent mortgage lenders and financial institutions the ability to easily manage and customize ACES to meet their business needs without having to count on IT or other external resources. Using a customer-centric approach, ACES customers benefit from responsive support and access to our experts to maximize their investment. For more information, visit or call 1-800-858-1598.

NEWS SOURCE: ACES Quality Management

This press release has been issued on behalf of the source of the information (ACES Quality Management) which is solely responsible for its accuracy, by Send2Press® Newswire. The information is believed to be accurate but not guaranteed. Story ID: 84934 APDF-R8.6

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