Executive Conversation: Phil McCall on the rising risk of inaccurate data

October 11, 2018

HousingWire By Sarah Wheeler October 11, 2018

Executive Conversations is a HousingWire web series that profiles powerful people in the financial industry, highlighting the operations and the people that make this sector tick. In the latest installment, we sit down with Phil McCall, president of ARMCO, to talk about the importance of data integrity, and how lenders can use quality control technology to increase their efficiency while reducing risk.

Q. What sort of risk do lenders face when it comes to data integrity?

A. Lenders usually feel the pain of data errors when they go to sell their loans. The GSEs require uniform data sets, so when documents have inconsistencies or missing data, the purchase process is delayed until those issues are addressed. Data integrity issues often lead to price adjustments.

Bottom line, lenders are often losing money because of incorrect data.

Another big risk is from the regulatory agencies, who are pushing back on lenders and making them fix errors on loan application records as far back as three years. For example, the CFPB could identify data integrity errors during a HMDA audit and require a full re-submission of a lender’s LAR data for up to three years.

This could put a major strain on resources because this type of re-submission usually needs to be completed with a three to four month period. A mid-size lender taking in 25,000+ applications per year could be required to research, re-validate and re-enter data for 75,000 applications or more.

No lender has those resources available and outsourced resources who handle these types of situations are costly. They can make the fines levied for these types errors look small in comparison. It’s hard to put an exact dollar amount on that work, but it’s significant and real.

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