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Question 320

A financial institution engaged in mortgage lending has embarked on a business process improvement initiative to eliminate the activities that hinder growth to ultimately improve the success rate of its mortgage business. As a benchmark for identification, the institution is keen on improving any business process that has less than a 75% success rate. The institution has appointed a business analyst (BA) to review the business transactions for the processes of origination, payments, and closures, as well as identify opportunities for improvements and recommend solutions.

The BA has collected the following information over the last three months pertaining to these business processes:

"¢ All the business processes are at their maximum capacity in terms of the current number of transactions.

"¢ Each business process has a certain number of rejects and the reasons for rejection include documentation, verification, collateral, and funding. Funding rejects occur when the bank's customers have failed to make payment of their mortgage processing fee or mortgage closure payment.

The BA has also recommended the use of documentation checklists as a solution to eliminate the documentation rejects.

If an additional recommendation to reduce Verification Rejects by 50% were to be introduced into the mortgage origination process, what is the potential success rate of the mortgage origination process?

    Correct Answer: D

    To calculate the potential success rate of the mortgage origination process after reducing Verification Rejects by 50%, we start with the number of verification rejects, which is 38. Reducing this by 50% gives us 19 verification rejects. The current total rejects for this process is 135. Subtracting the reduced verification rejects (19) from the original number (38) gives us a decrease of 19 rejects. Therefore, the new total rejects will be 135 - 19 = 116. The number of total successes will now be 450 - 116 = 334. The potential success rate is calculated as (334 / 450) * 100, which results in approximately 74%. Thus, the correct option is 74%.

Discussion
MAB14Option: A

The BA has also recommended the use of documentation checklists as a solution to eliminate the documentation rejects. If an additional recommendation to reduce Verification Rejects by 50% 315+55+17 = 387 387/450 = 0.86 = 86%

Dave_QA

Documentation checklists is recommendation. Question stands after table. So I would go with 74% D. My opinion: if fact of documentation upscale should be considered in equation it's a bit deceptive question! The sad thing is we fail even knowing and understanding the concept of the question and know/understand the solution! Even if so, to be exact : it's 315 + 55 + 19! 19 = 50% *38 (38/2). 389/450 = .86444; 86 % Same result but upscale for Verification Rejects is 19 not 17 as referred.

Chyka

Also the question after the table says,"If an additional recommendation to reduce Verification Rejects by 50% were to be introduced into the mortgage origination process" so 55 is inlcuded.

DoomsdayNairOption: D

D. 74%

Dave_QA

A: Verification Reject (reduced by 50%) = (38/2) = 19 influences on Total Success which is raised by 19 = 315 + 19 = 433. 433/450 = 0.742222 --> 74 %

OlivierPaudex

You can also calculate it from the number of transactions. 450 - 55 - 19 -27 -15 = 334. 334 / 450 = 74%

SunlordOption: D

The answer is D. The recommendation is to bring about the reduction in verification rejects by 50%, hence from 38 to 19. There's no need adding that back, that should reduce the total rejects from 135 to 116, thereby increasing success rate to 334. Hence 334/450 = 74%

Nandu2023Option: A

1. The BA has recommended the use of documentation checklists as a solution to eliminate the documentation rejects. 2. additional recommendation to reduce Verification Rejects by 50% were to be introduced into the mortgage origination process => 450 - ( 0+19+27+15) =389 % = 389 /450 = 86.4 ~ 86%

JeffduOption: A

The answer is 86%. Both recommendations has to be included because of the word "additional"

WolfedaleOption: D

(315+(38/2))/450

RabbitsfootOption: A

This was a 2 part recommendation. (Almost went with D.74%) (1) Eliminate all documentation rejects, which would be a reject reduction of 55. (2) Reduce verification rejects by 50%, which would be a reject reduction of 19 135 (total rejects) -55 -19 61 (total rejects) 61/450 = 13.55% 100-13.55 – 86.45 (Success Rate) = A

Iron79Man

the rejection rate of every check point should be calculated to have the right answer.

TheBusBusOption: D

Answer is 74.22%, approximately 74%...

SquibOption: A

it is 86% [315 + 55 + 38 (.5)]/450