Marketpulse Data: Report Reveals Early Signs Of Loan Quality Risk
ACES Quality Management released its quarterly ACES Mortgage QC Industry Trends Report covering the first quarter (Q1) of 2025. The latest report analyzes post-closing quality control data derived from ACES Quality Management & Control® software.
Notable findings from the Q1 2025 report include the following:
- The overall critical defect rate rose 12.93% to 1.31%, ending a two-quarter improvement streak.
- Income/Employment defects increased 42.5%, reclaiming the top spot at 22.99% of all critical defects.
- Borrower and Mortgage Eligibility defects surged 328.57% quarter-over-quarter, while Credit defects rose 11.96%.
- Assets, Legal/Regulatory/Compliance, and Appraisal categories posted significant improvements.
- Refinance defect share increased despite a drop in review volume, while purchase defect share declined.
“The rise in critical defects this quarter underscores how market volatility and operational pressure can impact loan quality,” said Nick Volpe, executive vice president at ACES Quality Management. “At the same time, we’re seeing that lenders who invest in automation and proactive quality control are making measurable improvements, particularly in underwriting and compliance.”
Findings for the Q1 ACES Mortgage QC Industry Trends Report are based on post-closing quality control data derived from the ACES Quality Management and Control® benchmarking system and incorporate data from prior quarters and/or calendar years, where applicable. All reviews and defect data evaluated for the report were based on loan audits selected by lenders for full file reviews. The Mortgage QC Industry Trends Reports are available for download, free of charge, at https://www.acesquality.com/resources/reports.
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