Partner with Servion Quality Control to Strengthen Your Second Level of Defense

Financial institutions and credit unions face risks when it comes to meeting investor and regulatory requirements for mortgage originations and servicing. Partnering with Servion Quality Control, an experienced mortgage quality control services provider, can help you manage these unique risks by strengthening the second level of your three lines of defense risk management framework within your organization’s compliance management system.

The Three Lines of Defense (LOD) model and compliance management systems (CMS) are both essential components of risk management in the mortgage industry. Both are designed to ensure that your organization is operating in compliance with applicable guidelines, laws, and regulations. They also aid in identifying and monitoring risks, developing policies and procedures, training employees, and creating and implementing corrective action.

Why is this important? Because noncompliance can result in significant financial and reputational harm. Adding a qualified Quality Control (QC) partner to your second level in your 3 LOD model can provide an efficient and cost-effective way to ensure your second line of defense is intact and actively monitoring your first line mortgage origination and servicing processes.

The three LOD framework consists of the following three lines of defense that work together to manage risk:

Operational management (first line): The first line of defense is responsible for managing risks in their day-to-day operations. This includes identifying risks, implementing controls, and monitoring the effectiveness of those controls.

Compliance / quality control (second line): The second line of defense is responsible for overseeing the risk management process and ensuring that the organization is complying with applicable guidelines, laws, and regulations. This includes developing policies and procedures, testing and monitoring compliance, as well as providing guidance to the first line.

Internal audit (third line): The third line of defense is responsible for providing independent assurance that the organization's risk management processes are functioning effectively. This includes conducting audits and providing recommendations to management on areas for improvement.

The Role of a Qualified Mortgage Quality Control Partner

A qualified mortgage QC partner can play a critical role in ensuring that your first line mortgage origination and servicing activities are functioning effectively. More specifically, this partner can provide independent, objective reviews of your mortgage origination and servicing activities, helping to identify areas of risk and potential root causes.

Here are some additional benefits of working with a qualified mortgage quality control partner:

• Independent, objective reviews: A qualified mortgage quality control partner can provide an independent, objective review of your mortgage origination and servicing activities, identifying areas of potential risk and helping to perform root cause analyses.
• Identify areas of noncompliance: A mortgage quality control partner can help identify areas where your organization may be at risk of noncompliance with applicable guidelines, laws, and regulations. This can help you take proactive steps to mitigate those risks.
• Provide guidance on best practices: A qualified mortgage quality control partner can provide guidance on industry best practices, helping you to develop and implement effective policies and procedures.
• Assist in root cause analysis: A qualified mortgage quality control partner can assist your organization in performing a root cause analysis of any identified risks. This analysis will be integral in developing an effective corrective action plan to mitigate any identified risks going forward, helping to ensure that your organization’s risk exposure remains low.

In today’s every-changing regulatory environment, the importance of following the three-part risk management framework and having a structured compliance management system in place for your organization cannot be overstated. Collaborating with a qualified mortgage quality control partner can provide an effective and efficient way to strengthen your second line of defense given tight market conditions and slim bottom lines in today’s mortgage market.

Servion can ensure that your mortgage lending and servicing activities are functioning effectively, providing independent, objective reviews, identifying areas of noncompliance, providing guidance on best practices, and assisting in root cause analysis. Working together, we can help to strengthen your 3 LOD framework and overall CMS, thereby minimizing your risk exposure and ultimately protecting your organization’s overall reputation and bottom line.