However, according to ACES, a predictive analytics platform used by mortgage companies, defect rates are likely to improve in the coming months.
Using data from over one million mortgage applications, ACES determined that there has been a decrease in risk and defects since 2019. This is due to both an increase in the accuracy of the applications themselves, as well as the improved speed at which lenders are able to process them. Lenders are now able to identify potential risks earlier on in the loan application process, allowing them to act more quickly and proactively.
Since 2018, the percentage of mortgages with incomplete or inaccurate information has dropped by approximately 12%, according to ACES. This suggests that lenders are increasingly utilizing ACES and other data-driven tools to identify and address issues quickly. Additionally, ACES found that the rate of applications with suspicious activity was down by nearly 6%. This indicates that lenders are much more prepared to tackle these kinds of issues, leading to fewer mistakes overall.
The report also showed that the average time it takes to close on a loan has decreased significantly since the beginning of 2020. While the duration of the process was already declining prior to the pandemic, ACES believes that new technologies have contributed to the acceleration of the approvals process. This not only allows lenders to be more efficient, but it also provides borrowers with a better experience, as they are able to get the loan approval quicker.
Finally, ACES identified several trends that could help further reduce defects in the future. These include enhanced automation, better data insights, and improved fraud detection capabilities. With these improvements, lenders will be able to address issues faster and more accurately, which should lead to a decrease in potential defective mortgage loans.
In conclusion, while the mortgage market has faced numerous challenges in recent years, ACES predicts that defect rates are likely to improve in the near future. This is thanks to the advancements in technology and data-driven tools, which are helping lenders to identify and remedy any issues quickly and accurately. As lenders continue to utilize these capabilities, they should be able to prevent an increased number of defective loans, resulting in a more secure and efficient mortgage process for all involved.
This article was contributed on Dec 17, 2023