System and method for auditing loan portfolios and loan servicing portfolios

• US 6,643,625 B1
• Filed: 12/17/1999
• Issued: 11/04/2003
• Est. Priority Date: 12/17/1999
• Status: Expired due to Term

• Current Assignee: Genworth Mortgage Holdings LLC (Genworth Financial Incorporated)
• Original Assignee: Genworth Mortgage Holdings LLC (Genworth Financial Incorporated)
• Inventors: Acosta, Oscar E., Bill, Mark S.
• Primary Examiner(s): Millin, Vincent
• Assistant Examiner(s): Kyle, Charles R.
• Application Number:
  US09/466,753
• Time in Patent Office: 1,418 Days
• Field of Search: 705/38, 705/11, 705/30
• US Class Current: 705/38
• CPC Class Codes: G06Q 10/06393 Score-carding, benchmarking or key performance indicator [KPI] analysis
• CPC Class Codes: G06Q 40/02 Banking, e.g. interest calculation or account maintenance credit or loans G06Q40/03
• CPC Class Codes: G06Q 40/03 Credit; Loans; Processing thereof
• CPC Class Codes: G06Q 40/12 Accounting

Abstract

A computer-assisted method of auditing of loan portfolios and loan servicing portfolios wherein the loans are of a plurality of types by keying questions which determine compliance with a large, complex, and constantly changing set legal requirements to a set of selectable audit types. When an audit type is selected, the system uses sampling methods to select a set of loans of that type to audit and generates a checklist comprising a set of questions keyed to the particular type of audit.

Claims

1. A computer-assisted method of auditing loan portfolios and loan servicing portfolios wherein loans are of a plurality of types comprising the steps of

storing on a server a computer record for each loan in a portfolio;

storing on the server rules which comprise each current and historical legal regulation and any investor-specific parameter applicable to each type of loan;

storing on the server a set of selectable audit types;

storing on the server a set of questions to determine compliance with each rule, each question keyed to one or more audit types;

periodically adding questions to the set of questions as new rules are promulgated;

storing on the server a set of sampling criteria comprising historical error rates, confidence intervals, and precision;

selecting one or more selected audit types and sampling criteria by inputting appropriate selection data with an input device;

automatically selecting an audit sample subset of loan records in response to said selection of one or more selected audit types and sampling criteria;

automatically generating the audit sample subset of loan records and a checklist of questions appropriately customized for the one or more selected audit types by automatically forming the checklist of questions from those keyed to the one or more selected audit types;

storing auditor'"'"'s answers to the checklist questions, including any exceptions, in an audit trail database on a server,

storing any auditor recommendations pertaining to any of the exceptions in the audit trail database; and

automatically generating management reports comprising the sampling criteria, an exception rate pertaining to the subset, a list of any loans in the subset which have exceptions and the exceptions pertaining to each such loan, and any recommendations for cure of each type of exception found in sample subset.

2. Method according to claim 1 wherein the records include both alphanumeric data and graphical images of loan documents, and the data and images for each loan in the sample subset are served up to the auditor'"'"'s client workstation.

3. Method according to claim 1 wherein hyperlinks to the management reports are automatically e-mailed to appropriate managers, optionally along with a time-limited password, and optionally sending reminders to managers to request a response, or notifications of past due responses.

4. Method according to claim 1 wherein a manager'"'"'s response to exceptions are stored in an audit trail record.

5. Method according to claim 1 wherein a report as to in-process audits and time expended by auditors in auditing each subset is generated, and optionally calculating auditor time per loan audit, number of audits per period, and quality score.

6. Method according to claim 1 wherein historical exception rate reports, trend reports based on current and historical audits, and systemic root cause reports are automatically generated.

7. Method of claim 1 wherein the sampling criteria include historical exception rates, confidence intervals, and precision.

8. Method of claim 1 wherein rebuttal rates are calculated and used to evaluate the performance of auditors.

9. Method of claim 1 wherein historical trends of exceptions are calculated and used to determine changes in quality of loan origination and/or servicing activities.

10. A computer based system for auditing loan and loan servicing portfolios comprising

a workstation for use by a loan portfolio auditor

a server on which is stored

records for each loan origination and loan servicing in a portfolio,

rules which comprise each current and historical legal regulation and any investor-specific parameter applicable to each type of loan and loan servicing, a set of sampling criteria, a set of questions to determine compliance with each of the rules, each question keyed to one or more audit types,

a set of selectable audit types, and

a computer program adapted to

automatically select an audit sample subset of loan origination records or loan servicing records according to one or more selected audit type and the set of sampling criteria, and

automatically create and transmit to an auditor client workstation a checklist of questions keyed to the selected audit type.

11. System according to claim 10 wherein the program is adapted to store in an audit trail database the auditor'"'"'s answers to the checklists, including any exceptions due to failure to satisfy a checklist item, and any auditor recommendations pertaining to any of the exceptions.

12. System according to claim 10 wherein the program is adapted to generate management reports comprising audit sampling criteria, exception rate pertaining to the sample subset, any loans which have exceptions, the exceptions pertaining to each such loan, and any auditor recommendations for cure of each such type of exception found in the sample subset.

13. System according to claim 10 wherein the records include both alphanumeric data and images of loan documents, and the program is adapted to serve up to the auditor'"'"'s client workstation data and images for each loan or loan servicing in the sample subset.

14. System according to claim 10 adapted to automatically e-mail to appropriate managers hyperlinks to the management reports.

15. System according to claim 10 wherein adapted to store manager'"'"'s responses to exceptions in the audit trail record.

16. System according to claim 10 adapted to generate a report as to in process audits and time expended by auditors in auditing each audit sample subset.

17. System according to claim 10 adapted to generate historical exception rates and trend reports based on current and historical audits.

18. System according to claim 10 adapted to calculate sampling size criteria based on historical exception rates.

19. System according to claim 10 adapted to calculate rebuttal rates suitable for use in evaluating the performance of auditors.

20. System according to claim 10 adapted to calculate historical trends of exceptions suitable for determining changes in quality of loan origination and/or servicing activities.

21. System according to claim 10 wherein the sampling criteria comprise one or more of historical error rates, confidence intervals, and precision.

22. System according to claim 10 wherein the audit sample subset can be automatically requested from a file management system.

23. A computer assisted method of auditing loan portfolios or loan servicing portfolios, wherein loans in the loan portfolios or the loan servicing portfolios are of a plurality of distinctly different types for auditing purposes, the method comprising the steps of:

storing in a memory a computer record for each loan in a portfolio;

storing in the memory rules which comprise current and historical legal regulations and investor-specific parameters applicable to each type of loan;

storing in the memory a set of selectable audit types;

storing in the memory a set of questions to determine compliance with each rule, with each question keyed to at least one audit type;

selecting a particular audit type and sampling criteria for selecting a subset of records to be audited by inputting appropriate selection data with an input device;

automatically selecting an audit sample subset of records in response to said selection of the particular type and sampling criteria; and

automatically generating an audit checklist of questions appropriately customized for the selected audit type by automatically forming the audit checklist from those questions keyed to the particular audit type.

24. The method of claim 23, wherein each question in the set of questions comprises a data field and an audit type field, the audit type field identifying the different types of audits for which that question is appropriately included on the audit checklist.

25. The method of claim 23, wherein questions are added or inactivated each time a legal requirement, investor requirement or policy reason requires it.

26. The method of claim 23, further comprising the step of:

specifying whether current or historical legal regulations and investor-specific parameters are to be applied in creating the audit checklist.