How are you doing your QC sampling? I’ll bet most of you are doing random sampling. How you do your random sampling is almost as important as the QC audit itself. For a lot of companies a true random sample is the easiest and best way to go. There are many different ways to choose your random sample. Some people will enter their entire months closed loans into Excel – then randomly choose a number – start at that line and choose every 5th loan after that. That works out nice for choosing smaller samples – but if you have to choose 15 or 20 loans it can start to get confusing. If i'm choosing files for one of our clients I prefer to use a “true” random number generator like this one. You number the loans and let the random number generator do the work for you. Take a look around the Random.org website – if you are a numbers geek (like me) you will find some really interesting facts about generating truly random numbers. Of course QPro has a simple random file chooser built in – so if you use QPro you don’t need to use any of the above steps – simply upload your loans into QPro and it will take care of the rest.
If you are currently QC’ing more than 10 files a month – you should really look into a Stratified Random Sample. A stratified random sample breaks your loans into groups – then chooses randomly from those groups. This may seem like an extra unnecessary step but what it gives you is control. You can now be sure that your quality control sample contains loans from all your loan programs. The stratification can go to whatever level you want – if you want to break your selection process down by LTV, Broker, Branch or Program it’s all there. Now you are achieving your necessary random sample and you are ensuring a really quality audit. An added bonus of stratified random sampling is that you can now sample more of your high risk products. The Stratified sample may sound complicated – but it doesn’t have to be. QPro has a stratified sample process built into it and we customize the stratification to your needs – for free. If you want to discuss stratified sampling shoot me and email at bkaage at csiqc.com (replace the at with @). Check out the QPro website for more info – even if you don’t use QPro we’d be happy to help you unravel the mysteries of Stratified Sampling. Have a great day and remember QC Analysts are there to save you money.
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In the mortgage industry context, a sampling methodology is a strategy that begins with a question:
What information does the QC manager need to learn from reviewing loans? Peter Drucker would
ask two more basic questions: What is the task? Why do it at all?
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