Enterprise Risk Week 6 University of Phoenix

United Mortgage is a mortgage company locates in Fayetteville, North Carolina. Primary objective is to offer mortgage financing to the community., 80% percent of United Mortgage loans are Government loans extent to soldier station in Fort Bragg North Carolina. United Mortgage is a small mortgage company. Concentrate in offer VA financing to soldier in Fort Bragg, first time homebuyer, second home, and investment mortgage loan. . Pine Valley Mortgage offers different programs to please the customer needs.

The main goal is to offer the lowest fixed rate and the personal services homebuyer deserve. Building long lasting relationship with current and past customer. How we measure the risk between one buyer and an other goes by credit, debt income ratio, work stability, able to have some savings, any previous bankruptcy, foreclosure or judgement. By taking caution we are avoiding and preventing ahead of time a possible foreclosure.

Recommend a preventive solutions that incorporates risk mitigation

The best tool is to open the channels of communication with employees and communicate and keep the update with the new regulation and guidelines regarding mortgage financing.

2) Any discrimination to extend credit because race, color, religion, age its consider a violation

They are 3 categories of control in relationship to risk.

1) Preventive Control: Can reduce the risk that united Mortgage can encounter. In order to prevent mortgage fraud united Mortgage have a new policy to required every single homebuyer to sign a 4506T (tax transcript) with the purpose that the tax return to be review prior to submit to the underwriter. If there is fraud committed united Mortgage rather stop the file before that gets to the underwriter hands and affect the business relations and good name of the company And file charges against the person who infringed the law. Preventive control eliminates and reduces the risk to be involved in scandals of mortgage fraud.

2) Detective Controls once the risk is identified take action to it. Provide a mortgage fraud class. How to identify mortgage fraud.

3) Corrective Controls are used to mitigate and to correct the problem in this situation to educated the Loan officer how to identified mortgage fraud.

Pine Valley Mortgage must implement certain goals. The company is audit once in a while by the Banking commission to make sure that the RESPA guidelines are met. Making sure that the appropriate form are disclosed and sign by the homebuyers. If there any violation united Mortgage will receive a report, which is, turn to the Branch Mananger with the intention that in the second review United Mortgage improve the weakness. This constitutes a high risk due to fine to the banking commission violation.

In the COSCO framework, ERM consist of eight interrelated components, which are derived from the way management runs an enterprise and integrated with the management process

1. Internal environment, in relationship to enterprise Risk Management as defined by OSCO, describe united Mortgage as the organization in relationship to the risk, credit risk. The internal Environment it important due that is related to the culture of Pine