The document discusses the importance of quality control in the mortgage industry, emphasizing the need for effective processes and systems to reduce the high failure rate of new businesses. It outlines various aspects of quality management, including compliance, training, risk management, and employee satisfaction. Additionally, the document examines the reactive versus proactive approaches to business management and the impact of quality control on business growth and efficiency.

1. Mortgage Quality Control Beyond Compliance Policies and Procedures, Training Programs and Quality Control

2. The Need for Quality Process Statistics All New Businesses 90% fail in 2 Years 50% of these fail in 5 Years National “A” Wholesaler List @ 6000 brokers @ 80% added since 2004 @ 250 on list since 2000

3. The Need for Quality Process Defining Quality Control Traditional Audit Function Also known as Post Closing Review Investor/Agency QC Plan New Business Management System States Investors/FHA/FNMA/FHLMC Also known as “Production Quality Control Plan”

4. The Need for Quality Process Regulatory Climate Risk Management Business Growth and Profit Employee Satisfaction

5. The Need for Quality Process Regulatory Climate State Oversight Licensing Process Audit Federal Oversight Predatory Lending Federal Law Compliance Industry Oversight Warehouse/Investor Approval

6. The Need for Quality Process Risk Management Liability Employee Actions Dishonesty Competence Investor Actions Suspension Repurchase State Actions Audit Findings

7. The Need for Quality Process Business Growth and Profit Shrinking Volumes Shrinking Margins Efficiency Pipeline Management Quantifying Costs and Resources Survivability

8. The Need for Quality Process Employee Satisfaction Competency Reliance on Systems not People Process Management

9. Proactive or Reactive? Crisis Management – Reactive Model Management Priorities New Production – 75% Problem Solving Time Management Report 65 - 80% of Time Spent on Problems Predictable Issues Chronically Repeated

10. Hot Spots and Conflict Zones Origination Processing Underwriting Closing/Funding Post-Closing Human Resources

11. Hot Spots and Conflict Zones Origination Incomplete Application Fraud Rate/Program Lock Issues Inadvertent Pre-Approval Customer and Referral Source Management

12. Hot Spots and Conflict Zones Processing Incomplete Submission Erroneous Submission Closing Preparation

13. Hot Spots and Conflict Zones Underwriting/Approval Process/Flow Guideline Maintenance Conditions Management Regulatory Compliance

14. Hot Spots and Conflict Zones Closing/Funding Missing Documentation Incorrect Information Pre-Closing Audit

15. Hot Spots and Conflict Zones Post-Closing Incomplete Documentation Fraud Detection

16. Proactive or Reactive? Business Management – Proactive Model Management Priorities New Production 75% Problem Solving 25% of Time Spent on Problems Predictable Issues – Manage with System New Issues Addressed in System

17. Proactive or Reactive? Does your business rely on YOU? Daily Decisions Direction Solutions NOT a business Reactive Model High % of Failure