1. What is the Discrepancy Rate?

The Discrepancy Rate measures the percentage difference between actual and expected values in mortgage calculations. It helps identify variances between projected and actual financial outcomes in mortgage lending and servicing.

2. How Does the Calculator Work?

The calculator uses the discrepancy rate formula:

Where:

• \( \text{Actual} \) — The observed or measured value
• \( \text{Expected} \) — The predicted or target value

Explanation: A positive result indicates the actual value exceeds expectations, while a negative result shows underperformance relative to expectations.

3. Importance of Discrepancy Rate Calculation

Details: Calculating discrepancy rates is essential for mortgage quality control, risk assessment, and identifying areas needing improvement in underwriting, servicing, or financial forecasting.

4. Using the Calculator

Tips: Enter both actual and expected values in dollars. Both values must be positive numbers to calculate a valid discrepancy rate.

5. Frequently Asked Questions (FAQ)

Q1: What does a negative discrepancy rate indicate?
A: A negative rate means the actual value is lower than expected, indicating underperformance relative to projections.

Q2: How is this used in mortgage lending?
A: Lenders use discrepancy rates to compare actual loan performance against underwriting projections, identify pricing errors, and assess risk model accuracy.

Q3: What's an acceptable discrepancy rate in mortgage servicing?
A: Acceptable rates vary by institution, but typically rates within ±5% are considered acceptable for most mortgage metrics.

Q4: Can this calculator handle different currencies?
A: While the calculator displays dollars, it works with any currency as long as both values use the same currency unit.

Q5: How often should discrepancy rates be calculated?
A: Most mortgage servicers calculate discrepancy rates monthly or quarterly as part of routine financial reporting and quality control processes.