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#2060998 - 01/28/16 05:45 PM Bank Quality Control
LisSinToMe Offline
New Poster
Joined: Oct 2014
Posts: 9
Does anyone work where the bank has a Quality Control Dept? I am proposing to establish a QC Dept where I work because we are growing so fast. My background is solely in Mortgage QC and I need info about any other requirements, best practices...We do not have an internal audit division or anyone else for me to ask. We are FDIC regulated

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General Discussion
#2061078 - 01/28/16 08:34 PM Re: Bank Quality Control LisSinToMe
osucpa Offline
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Joined: May 2011
Posts: 1,406
Topics can have a lot of different meanings. Could you give some detail as to the purpose of the Quality Control Department and what areas of the bank it would cover.

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#2061217 - 01/29/16 03:37 PM Re: Bank Quality Control LisSinToMe
LisSinToMe Offline
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Joined: Oct 2014
Posts: 9
I mainly have worked in mortgage and lending. I know QC for mortgage is REQUIRED by either the GSEs (HUD, Fannie) and/or any aggregator you sell to as a correspondent..

1. Do banks have any type of QC requirements relating to savings, deposits or consumer lending? If so, where would I find the requirements and best practices?

2 I know HUD has servicing QC requirements on FHA loans but are there any servicing QC requirements on a bank's loan portfolio?

3. Is there any good way to "sell" the idea of having a QC Dept or someone who is the "QC Director"? We currently have an external vendor doing the bare minimum for our mortgage Post-Closing QC but the mortgage division basically oversees this and all results go to the Mortgage Division VP who is also an EVP of the bank (Bank Lending).

We recently had our FDIC Safety and Soundness and a Compliance exam both of which we passed with flying colors so the response I generally get is "not a needed" function.

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#2061227 - 01/29/16 04:03 PM Re: Bank Quality Control LisSinToMe
Rocky P Offline
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Joined: Jun 2003
Posts: 7,650
Florida
Usually the easiest sell in when the bank gets a CAMELS 3 or comments on the ROE.

If you passed with flying colors, either
- the examiners missed (or did not check) a few things;
- you have an excellent, experienced and nitpicky staff; or .
- there are already some controls in place, and internal monitoring reflects no exceptions.

In many banks, there is someone in operations that makes sure the i's are dotted and t's crossed, whether they use checklists or some other means. Same for backroom on loans, before they're booked. With loans, a loan review officer usually reviews loans for the credit aspect.

Banks are all about risk. They may already be covered. QC does cost money, coming out of the shareholder's pockets. If the bank is already doing great, no losses or exceptions IMHO, why create another layer of protection? If things start to deteriorate, then the Risk Manager or Committee needs to analyze and recommend something.
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#2061231 - 01/29/16 04:24 PM Re: Bank Quality Control LisSinToMe
LisSinToMe Offline
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Joined: Oct 2014
Posts: 9
The issue that I am seeing is that we are growing...extremely quickly...and while the current structure is working it has been showing strains (things being missed, single parties being responsible for more and more). Since the bank intends to continue to grow (we increased our mortgage lending almost 200% in the past year) and acquire more banks (we bought up 2 small struggling banks in the past 2 years), I see a large scale collapse. The examiners saw minor failings and excused them based on past behavior and explanations as a one time mistake, growing pains... They did not dig any further to see why but I think they will next time because, while they did not show up as a large proportion of the selected sample, next time there will be no way to hide it because the number of errors has been steadily increasing as a percentage of our loans.

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#2061298 - 01/29/16 07:09 PM Re: Bank Quality Control LisSinToMe
edAudit Offline
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edAudit
Joined: Jul 2008
Posts: 4,796
You are here
We do not have an internal audit division


This may be one of the things that you look into.
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#2061328 - 01/29/16 07:57 PM Re: Bank Quality Control edAudit
Cornfed Turtle Offline
Diamond Poster
Joined: Mar 2006
Posts: 1,323
"...Somewhere in Middle Americ...
I second ed's suggestion.

Don't know your size, but it's better (easier) to get an audit committee and all the trimmings before it is required (or as Rocky said above....needed.)

Don't know your position, but may have been a discussion item at the exit meeting, too.

(Don't know much, do I? laugh )

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#2061345 - 01/29/16 08:46 PM Re: Bank Quality Control LisSinToMe
Richard Insley Offline
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Richard Insley
Joined: Oct 2000
Posts: 10,179
Toano, VA
Meaningful QC is an excellent business practice, but I've never been a fan of centralizing it. You could centralize the record-keeping, but the actual work is best done by the business unit (or its operations support staff) as a part of the "assembly line."
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