A Wakeup Call

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TME-TGarritanoThe mortgage process is still a mystery to many. ClosingCorp, a provider of residential real estate closing cost data and technology for the mortgage and real estate services industries, released the results of a nationwide survey which reveals that approximately two-thirds of Millennials, adults between the ages of 18-34, who plan to buy a home are unaware of closing costs. The survey also found that across all adult age brackets, more than one-third of potential homeowners are “Not Very” or “Not At All” aware of closing costs.

“Much has been written about Millennials because they are the largest generation so far in U.S. history, and their longstanding impact on the real estate market and economy is going to be huge,” said Brian Benson, CEO of ClosingCorp. “Their buying behaviors are much different than previous generations, and of particular concern to the industry is that they are waiting longer to buy their first homes.

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This study emphasizes the need to better educate Millennials, and really all consumers in general, on the real estate closing process. While interest rates are often the driving force in initiating a real estate transaction, the realtor, lender, title and other settlement fees also have a significant impact on the down payment and cash outflow from the borrower perspective. Not understanding how everything is related can be a real impediment for first-time homebuyers who want to get into the market.”

The “ClosingCorp National Closing Costs Survey” of more than 1,000 adults, also showed that most people learn about closing costs from realtors, or by doing their own research. In fact, Millennial homeowners are more likely to learn about closing costs from a realtor as opposed to a lender by a ratio of nearly two-to-one.

“This study is very interesting in that it shows Millennials are more dependent on realtors than previously presumed,” said Benson. “We know they are more tech-savvy than their predecessors, so we believe this really highlights the complexity of a residential real estate transaction. Whether they are researching a home on their own or getting help from an interested third party, the bottom line is that people need access to the correct information, and it needs to be simple for them to understand. With the upcoming changes to the disclosure process being made by the Consumer Financial Protection Bureau this August, we as an industry should be stepping up our proactive education efforts to ensure homebuyers are fully prepared to make the most significant financial transaction of their lives.”

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Closing costs are paid when a real estate transaction closes and the title to the property is transferred to the buyer. They typically equal 2 to 5 percent of the total purchase price of a home. The fees are incurred by either the buyer or the seller, and typically cover everything from appraisal, inspection and attorney’s fees to home warranties.

I find all of this very troubling. Borrowers shouldn’t be in the dark about closing costs or other parts of the mortgage process. The best way to improve this is to automate the origination process with technologies like e-signatures. For example, Capsilon has launched a new version of its flagship product, Capsilon DocVelocity, that includes support for the electronic delivery, signing and vaulting of borrower disclosures and other mortgage-related documents.

This new version of DocVelocity gives users the ability to automatically assemble disclosure packages and email them to borrowers to sign electronically. Borrowers access the new DocVelocity Signing Table, an intuitive user interface for electronic signing of mortgage-related documents, to provide consent to receive electronic disclosures and to review and e-sign the documents.  Compliant with the Uniform Electronic Transaction Act (UETA) and the Electronic Signatures in Global and National Commerce Act (E-Sign Act), the new DocVelocity electronic transaction capabilities further Capsilon’s vision of straight-through processing (STP) of mortgage loans by reducing the labor associated with printing, assembling, packaging and shipping documents that need to be signed by borrowers.

The DocVelocity E-Vault, a secure location where legally binding, authoritative copies of electronically signed documents and their related transaction documents are stored and managed, is also new in this latest release of DocVelocity. Fully integrated with DocVelocity, the DocVelocity E-Vault protects assets using robust encryption, time-stamps documents and wraps them with a tamper-evident sea, maintains an audit trail for every stored asset and controls access to these documents with customer-defined user privileges.

These new E-Signing and E-Vaulting capabilities also help lenders demonstrate compliance by providing tracking and evidence of electronic delivery, proof that disclosures were delivered within the required timeframes and support for the authenticity and non-repudiation of electronic signatures.

In addition to the new electronic transaction capabilities, this new version of DocVelocity includes significant enhancements to the document management and document workflow capabilities of DocVelocity. These document management enhancements include a myriad of new capabilities to speed the workflow required for Capsilon’s vision of straight-through processing of mortgage loans. These enhancements include:

>> The ability to assign tags to documents to enable richer contextual information about documents. Document tags provide structured data that can be leveraged for automation.

>> A new document review workflow that gives users the ability to review and mark documents as “Accepted.” Once accepted, the document is locked and further changes to the name or contents are prevented.  This ensures the integrity of documents throughout the workflow.

>> The ability to mark a document as a “Decision Document.” This identifies which documents were used for making underwriting decisions, speeds workflow and ensures loan integrity.

>> Document-level security that enables role-based access control to documents. The ability to view, sort and deliver specified document types, along with a number of other actions, is granted only to users assigned to specific roles.

“The pressure on mortgage lenders to reduce loan production costs while maintaining loan quality and compliance has never been greater,” said Sanjeev Malaney, chief executive officer of Capsilon Corporation. “Our goal is to deliver the technology that lenders need to realize an exception-based model of straight-through processing of mortgage loans, where up to 80 percent of labor is eliminated. This new version of DocVelocity delivers on that promise with support for electronic transactions and improved document management and document workflow capabilities that speed loan turn times and reduce labor-related loan costs, while ensuring compliance.”

This new version of Capsilon DocVelocity is expected to be available to customers in the second quarter of 2015. Current DocVelocity customers can access the new product features as part of their SaaS subscriptions, though some new features and services are available at an additional cost.

The bottom line is that we all have to do our part to make the mortgage process better.

About The Author

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Tony Garritano
Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.