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Smart Lending Strategies

Eric Kujala, Enterprise Sales Manager at Capsilon Corporation, which provides comprehensive cloud-based document and data management solutions for the mortgage industry, recently joined the PROGRESS in Lending Association Executive Team. He is a real visionary individual with strong feelings about how the industry can and should improve going forward. Capsilon did a recent study that found that 70 percent of mortgage lenders report that they expect total loan product costs to continue to rise in 2017. So, how do lenders embrace smart automation to stop this trend? Here’s what Eric told us:

Q: How did you get started in the mortgage industry?

ERIC KUJALA: I joined Flagstar Bank as a loan officer in 2002 and became a VP of the Direct Lending branch soon afterwards. We took our branch paperless in 2005 using shared drives, and that was my first experience implementing technology to improve the loan production process. Flagstar then adopted the DocVelocity document and data management platform to speed loan production, and in 2008 I was asked to drive implementations of DocVelocity at our wholesale lender customers. I loved introducing DocVelocity to Flagstar’s wholesale lenders because I’d already experienced first-hand how the technology optimized our workflow at my branch, and knew how thrilled our wholesale lenders would be. With DocVelocity, our average days to close fell from 33 days to 17 days.

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In 2013 I joined Capsilon Corporation, the makers of DocVelocity, as one of its first enterprise sales executives because I really believed in the technology and knew it could solve many of the problems the mortgage industry faces in regards to optimizing loan production while ensuring quality. Since then, I’ve been helping large mortgage companies speed loan production, improve the overall quality of loans, and reduce loan production costs with Capsilon solutions. And, 10 years later, I’m happy to report that Flagstar Bank is still a Capsilon customer! I’m especially proud that our earliest customers still rely on our products today.

Q: You mentioned loan quality a couple times. The industry has been discussing loan quality for years. Is this still an issue?

ERIC KUJALA: You’re right. Most lenders have been focusing on loan quality for years, but few have examined their entire operations to understand how they can improve data integrity. Despite the availability of technology solutions that can greatly increase a lender’s ability to ensure the integrity of the data used to make underwriting or purchase decisions, many lenders have been reluctant to take advantage of this technology. Instead, they rely on humans to “stare and compare” across documents to verifying loan information for accuracy and completeness. This reliance on labor is time-consuming, costly, and error-prone. Lenders who rely on this approach are plagued with inaccurate, inconsistent, or incomplete data that increases compliance risk. Many lenders then throw more labor at the problem.

The approach is changing because lenders now realize that the only way to ensure loan quality and achieve compliance in a cost-effective way is by leveraging technology. I’m now seeing lenders, including most of my customers, moving quality control to the front of the loan process by leveraging technology that extracts loan data from the appropriate documents as they come in, and using this extracted data for automated review and analysis of the loan file as soon as possible.

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Data extraction technology makes it easy to compare data in the system with data on the original documents, and spot anything that requires additional validation early in the process. I believe this trend of using technology to ensure data integrity is positive for the entire mortgage industry because technology can help lenders improve the consistency and quality of loan information throughout the lifecycle of a loan, while reducing the cost of validating loan data.

Q: What is the “hot topic” that’s top-of-mind with lenders today?

ERIC KUJALA: Once lenders had time to adjust to the new way of doing business under TRID, and began to see the negative effect that lengthening close times had on borrower satisfaction, industry conversation shifted to the customer experience. I think this conversation really began to take off with Quicken Loans’ introduction of Rocket Mortgage in late 2015, and it was amplified along with Quicken Loans’ seemingly ubiquitous Rocket Mortgage marketing campaign beginning with their 2016 Super Bowl ad. Rocket Mortgage became the catalyst that forced lenders to evaluate their digital strategies, and the hot topic of conversation shifted from regulation to the innovative technologies required to enable a digital mortgage experience.

Today, automating the borrower application experience and/or the closing process are central to the digital mortgage definition. But what I hear from many of my customers is that this definition is much too narrow. My customers think the definition needs to be expanded to include the automation of steps throughout the entire mortgage manufacturing process, from loan setup to underwriting to post-close audit. Automating these production steps will accelerate origination and contribute to the exceptional customer experience borrowers have come to expect from technology-enabled financial transactions. What good is a great front-end experience if the experience with the rest of the process falls short?

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We conducted a survey at last year’s Mortgage Bankers Association’s Annual Convention and Expo that probed this very topic. The results of the survey, which polled more than 100 executives from leading mortgage companies, indicate that lenders are already expanding the definition of the digital mortgage to include key “back-end” steps in the mortgage manufacturing process.

In that survey, the lenders were asked if automating the consumer experience during the application process or automating key steps in the loan production process is most important to their companies. 45 percent of the respondents stated that automating key steps in their company’s loan production process is most important, 37 percent stated that automating both the consumer experience and their loan production processes are equally important, and only 15 percent stated that automating the consumer experience during the application process is most important.

Those results tell me that the industry realizes that in order to accelerate loan origination while delivering an exceptional customer experience, key steps throughout the entire loan manufacturing process must be automated, not just the application step.

Q: Where do you see mortgage technology headed?

ERIC KUJALA: I really believe the future is in automation, and I’m really excited about some of the newer technologies that are enabling the automation of the mortgage process. I’m hearing a lot about robotic process automation, machine learning, and other advanced technologies that some lenders are already adopting in small ways.

Today, our industry is too reliant on manual labor. It’s one of the reasons that loan production costs are reaching all-time highs, and personnel expenses represent roughly 2/3 of total per-loan production costs. The entire loan process is a series of checks and re-checks that require manual labor. And with the increased regulatory scrutiny of the past several years, many lenders have hired additional personnel to ensure loan integrity, further increasing loan production costs.

This approach, with its reliance on labor, is not sustainable. Lenders need to adopt automation technology to speed loan production and decrease loan production costs. Lenders that leverage this technology will gain a huge competitive advantage.

Q: Where do you think this automation technology will have the most impact?

ERIC KUJALA: Automation technology is the key to dramatically reducing loan production costs, and every step in the process can benefit from intelligent automation. Let’s take a look at a critical step – underwriting. Today, underwriters rely on checklists to evaluate loans. The process is slow and error-prone, and critical calculations often are done manually, where errors can be costly. Using automation technology, checklists are completed in a consistent manner, and the technology flags only those checklist items that don’t “pass” and require manual review.

Using automated data extraction (ADE) technology, underwriters are able to complete checklists in seconds, cutting the time it takes to evaluate loan files by up to 80 percent. ADE technology automatically extracts critical data from loan documents, compares values across documents in a fraction of a second, runs the data through pre-defined rules engine, performs calculations, and provides alerts on any values that fall outside of established parameters or tolerances.

This exception-based model eliminates the costly and time-consuming “stare and compare” approach to verifying data across several documents, and reduces the multiple touches used today to ensure data integrity. This allows the underwriter to focus on loans that require more careful scrutiny, such as loans with non-occupant co-borrowers, loans on investment properties, loans with borrower self-reported income, and other loans with unique characteristics.

Automation also ensures that calculations are done quickly and correctly. Without automation technology, underwriters must manually enter data into a spreadsheet, a loan origination system (LOS), or some other system to perform the numerous financial calculations used in the credit process. And mistakes made while keying data into evaluation tools could result in faulty underwriting decisions that might negatively affect a lender’s ability to sell loans to investors or, even worse, lead to loan buy-backs. With automation, underwriters save time and eliminate errors with technology that performs required calculations in a standardized, repeatable way—something auditors require.

As I mentioned, every step in the mortgage production process can benefit from automation technology. Today, most functions are guided by checklists, and each function checks and rechecks what the previous function has already checked! Most of the items on these checklists can be reviewed and validated with automation technology, dramatically increasing the velocity of loan production.

Q: What can we expect to see from Capsilon?

ERIC KUJALA: I said earlier that the industry really needs to transition from a labor-centric process to a technology-driven one, similar to a digital factory. Capsilon is fully committed to delivering the technology that will power this modern digital mortgage factory. Technology that transforms the speed, user experience, and economics of the mortgage process.

At the heart of the mortgage process are documents and data. And document and data management is in Capsilon’s DNA. Our DocVelocity platform has been the leading cloud-based enterprise mortgage document and data management platform for more than a decade.

We’re building on this heritage and leveraging our patented document recognition and data extraction engines, and the power of the cloud, to turn volumes of mortgage documents into intelligent, searchable digital assets necessary to convert the slow, inefficient mortgage process into a high-velocity digital mortgage factory. We use intelligent process automation to eliminate up to 80 percent of the labor involved at each step of the mortgage production process.

Capsilon is building the digital mortgage platform the industry needs, and I’m super-excited to deliver the technology that will power my customers’ digital mortgage factories, increasing the velocity of loan production while slashing loan production costs.

Industry Predictions

Eric Kujala thinks:

1.) The mortgage production process will transition from the 80% manual (20% automated) process it is today to an 80% automated process within 5 years.

2.) There will be new entrants to the mortgage lending space who will be technology-focused and will forever change the way mortgage transactions are handled.

3.) The broker comeback will continue.

Insider Profile

Eric Kujala started at Flagstar Bank as a home loan advisor in 2002 with responsibility for originating new residential mortgage business for Flagstar Bank’s Direct Lending department. In 2003, he was named team leader in the department, and in 2004 he was appointed assistant vice president, responsible for the entire Direct Lending sales team. He was promoted to vice president in 2006. In 2008, he joined DocVelocity, the flagship product of Paperless Office Solutions, Inc., a wholly owned subsidiary of Flagstar Bancorp, where in 2013 Flagstar Bank sold the subsidiary to its long term partner Capsilon Corporation where he is currently their Enterprise Sales Manager. Eric has been an integral part of the Capsilon team which in 2016 led to Capsilon’s partnership with Francisco Partners, a growth equity firm in San Francisco, CA.

Progress In Lending
The Place For Thought Leaders And Visionaries

Optimal Blue Partners With New POS To Transform The Mortgage Process

Optimal Blue has partnered with Capsilon Corporation to provide a unique digital mortgage experience with highly accurate, real-time product eligibility and pricing content. Here’s the scoop:

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The Capsilon digital mortgage platform leverages the power of the cloud and intelligent process automation to evolve the existing mortgage production process into a modern digital mortgage factory. By integrating Optimal Blue’s real-time product eligibility and pricing content directly into the upcoming Capsilon mortgage point-of-sale solutions, joint clients will be able to improve overall compliance, create numerous process efficiencies, and deliver an engaging origination experience.

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“Capsilon is transforming the mortgage industry with intelligent process automation that increases the velocity and accuracy of every step in the loan production process,” said Sanjeev Malaney, CEO of Capsilon. “Our partnership with Optimal Blue provides the data connectivity, integrated pricing workflows, and process automation lenders require to accelerate the loan production process and improve customer satisfaction.”

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Optimal Blue’s eCommerce platform consumes product and pricing content from a network of investors, provides intelligent selection and customization of that content as desired by lenders, and distributes the personalized results to technology providers via RESTful APIs – wherever, whenever it matters most.

“Our goal is to further unite the industry with our digital marketplace and break down the traditional vendor silos that have held back industry success,” said Optimal Blue CEO Scott Happ. “Strategic integrations with digital mortgage technology leaders such as Capsilon will move the industry forward.”

About The Author

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.

Lenders Expect Costs To Rise In 2017

Capsilon announced that 70 percent of mortgage lenders report that they expect total loan product costs to continue to rise in 2017, according to a recent survey conducted by the company.

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The survey was conducted during the Mortgage Bankers Association’s (MBA’s) Annual Convention and Expo 2016, which took place October 23 through October 26 in Boston. Surprisingly, only seven percent of respondents reported that they expect total loan production costs in 2017 to be “somewhat lower” or “significantly lower” than in 2016.

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The survey, which polled more than 100 executives from leading mortgage lenders, also revealed that more than nine out of ten of the respondents are somewhat or very interested in technology that automates key steps along the mortgage loan process, and 86 percent expect to spend more in 2017 versus 2016 on technology to reduce loan production costs by enabling a digital mortgage process.

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In enabling the digital mortgage process, the lenders were asked if automating the consumer experience during the application process or automating key steps in the loan production process is most important to their companies, if they are both equally important, or if neither is important because their companies are not planning to enable a digital mortgage process. The results showed that 45 percent of the respondents stated that automating key steps in their company’s loan production process is most important, 37 percent stated that automating both the consumer experience and the loan production process are equally important, and 15 percent stated that automating the consumer experience during the application process is most important. Only three percent said that their companies are not planning to enable a digital mortgage process.

“The survey results clearly indicate lenders expect loan production costs to continue to rise, and they are looking to technology to reduce costs with automation,” said Sanjeev Malaney, chief executive officer of Capsilon. “In developing their digital strategies, lenders are right to focus on automating key steps in the loan production process, as this is where technology can deliver the speed, data integrity, and cost savings they need to gain a competitive advantage.”

Consistent with these findings, when asked what issues their companies are most concerned with, 73 percent of the respondents stated implementing the right technology, 51 percent cited rising loan production costs, 36 percent stated improving customer experience/customer satisfaction, and 16 percent cited longer loan turn times. Risk of regulatory penalties, hiring and retaining employees, and complying with TRID were each cited by fewer than ten percent of the respondents. (Total percentage is greater than 100 because respondents were asked to cite two issues.)

Progress In Lending
The Place For Thought Leaders And Visionaries

How Do We Change The Mortgage Process For The Better?

A lot has been made of complying with this rule or that rule, but in the rush to comply I think the big picture is sometimes lost. The big picture should include changing the whole mortgage process for the better instead of just trying to stay ahead of this rule or that regulator.

So, how do you do that? “We focus on the backend processes,” answered David Sohm, COO at Capsilon. “We want to speed that up and keep the communication open. Things change all the time. The most recent change was TRID. TRID was supposed to speed up the process and make the process easier to understand, but it has actually extended the process.”

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Capsilon is provider of cloud-based document management solutions for mortgage lenders and investors. Sohm is responsible for managing the company’s growth plans and overseeing alliances and corporate development.

Sohm has more than 15 years of successful president/chief operating officer experience in software and Software-as-a-Service (SaaS) markets, in both public and private companies. He has been directly responsible for the evaluation, selection and integration of multiple acquisitions and mergers (both buy and sell). He has developed and executed worldwide product support, sales, distributor and marketing plans to achieve company growth and profit goals.

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“In the end, if the number of touches can be reduced, that speeds things up. For example, knowing which documents are required and which docs are missing is important. Also, there needs to be a secure place to exchange information so you’re not just exchanging important info through the air,” noted Sohm.

A lot of the heavy lifting required to change the process for the better is done by the LOS because it’s the system of record. So, what contributions are LOS vendors making to improve the space? “There are a lot of ways that people are trying to simplify the process, but beyond that you also have to engage at the right times,” answered Abhinav Asthana, a senior product manager and global head of mortgage consulting at Wipro Gallagher Solutions (WGS), a Wipro Ltd. Company, which is a provider of end-to-end technology products and services for mortgage, consumer, and commercial lenders in the United States and abroad. WGS’ technology products include its flagship NetOxygen Loan Origination Systems (LOS) and mobile lending technologies.

“We at WGS are manufacturing a loan for the borrower so the customer has all the input. So, the touch points should be more skewed toward the borrowers vs. the backend of the process. Today when a borrower starts an application, the loan officer is in constant communication with the borrower, asking for more and more items. While the LO is working the loan, or when the loan is being worked by the underwriter, the borrower is in the dark. The borrower doesn’t know what’s going on. The back office is working the loan, but the borrower doesn’t know what’s going on. You need to inform the borrower upfront and let them know what’s going on and what comes next.”

As vendors talk about advancement and what they are doing to propel mortgage lending into this century, the rubber really hits the road with the lender. If the lender doesn’t adopt new technologies, nothing changes.

“I got in the mortgage industry in 2003 and there was a lot of talk about e-mortgages,” remembered Dan Jones, vice president, technology at Churchill Mortgage Corporation. “Look at where we are today. The industry moves slow. Also there was a lot of talk about younger borrowers wanting everything electronic, but we are finding that they also want to speak to you on the phone.”

Jones has been with Churchill since July of 2003 and has previously worked as a small business technology consultant, Systems Analyst for a national manufacturing company and Data Specialist for an international computer manufacturer. Jones’ experience in customizing and installing Churchill’s multi-branch loan origination platform and integrating their pricing engine, lead management, database marketing, imaging workflow and e-commerce efforts has provided a unique holistic perspective and hands on knowledge of every aspect of the mortgage banking process. In these efforts, he helped spearhead an LOS implementation during Churchill’s transition from Broker to Correspondent Lending in 2003, and played a key role in Churchill’s implementation of a newer LOS.

“If you have to boil the mortgage process down, you have to automate the experience,” Jones pointed out. “Its not just about how you interact with the borrower, it’s about total transparency. Getting a mortgage can be an intimidating process that consumers don’t understand. Going forward we at Churchill are working on automating the collection of information so the need for the borrower to provide and share documents like bank statements, W2s, etc. goes away. The need to traffic in these documents is going away. As this becomes electronic it will streamline the whole process. That’s where every lender should be going.”

About The Author

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.

Investment To Help Capsilon Reshape Mortgage Lending

The cause of paperless lending just got a helping hand. Capsilon has received an investment from Francisco Partners, a technology-focused private equity firm. The growth investment will provide Capsilon with a capital partner to support product innovation and keep pace with growing demand from mortgage lenders, investors, and servicers.

“We are extremely excited to announce this investment by Francisco Partners, and we look forward to their support as we advance our vision of dramatically reducing the cost of loan production through automation,” said Sanjeev Malaney, CEO of Capsilon. “Capsilon will use the capital to expand our product portfolio, and we will leverage Francisco Partners’ technology and financial services end-market expertise to expand our customer footprint.”

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Capsilon partners with companies that originate, analyze, and trade mortgage loans to understand their process workflows and deliver award-winning technology that solves critical business challenges. Capsilon’s flagship product, Capsilon DocVelocity, helps mortgage companies reduce costs and ensure compliance by automating key steps along the mortgage lifecycle.

“Sanjeev Malaney and his team are transforming the mortgage industry from labor-based to technology-driven,” said Jason Brein of Francisco Partners. “We are thrilled to back Capsilon as it automates the process of accepting, organizing, and extracting intelligence from mortgage documents.”

GCA Savvian Advisors, LLC acted as exclusive financial advisor and Wilson, Sonsini, Goodrich & Rosati, LLP acted as legal advisor to Capsilon Corporation. Raymond James & Associates acted as exclusive financial advisor and Kirkland & Ellis, LLP acted as legal advisor to Francisco Partners. The transaction is subject to customary closing conditions. Financial terms of the transaction were not disclosed.

About The Author

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.

Speed Up Closings In A Post-TRID World

Capsilon has released a free white paper, “The New Paradigm for Mortgage Loan Closing,” which discusses the effect that TRID has had on the mortgage closing process and provides advice to lenders on how they can speed time-to-close, eliminate errors, and contain costs under TRID by leveraging the right technology. Here are some highlights:

Since the TRID rule took effect on October 3, 2015, lenders have experienced lengthening time-to-close, increased labor costs, and difficulty collaborating effectively with settlement partners. Plus, a high percentage of loans contain TRID violations, which can lead to heavy fines and reluctance on the part of investors.

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“The New Paradigm for Mortgage Loan Closing” highlights how technology can automate key steps in the closing workflow and give lenders control over the new closing process. With the right technology solution, lenders are able to securely collaborate with settlement partners to validate and finalize fees, automatically perform TRID tolerance checks, and speed the process of assembling and distributing final closing packages for electronic signatures. By leveraging automation, lenders are able to reduce labor costs, eliminate errors, and close compliant loans faster.

Click here to download a complimentary copy of “The New Paradigm for Mortgage Loan Closing”.

Capsilon provides cloud-based document and data management solutions that enable mortgage lenders, investors and servicers to increase productivity and lower costs, while ensuring compliance. The company’s flagship product, Capsilon DocVelocity®, is a document imaging and data capture platform built specifically to address the needs of large mortgage companies. Headquartered in San Francisco, Capsilon serves many of the mortgage industry’s most innovative companies, including two of the 10 largest residential mortgage lenders in the United States. For more information, visit www.capsilon.com.

Progress In Lending
The Place For Thought Leaders And Visionaries

An Innovator Gets Recognized

We at PROGRESS believe that recognizing innovation will cause others to innovate, hence the Innovations Awards Program. We hope that you will apply. But our awards aside, Capsilon has earned the prestigious Gold status in the Golden Bridge Awards for its Capsilon DocVelocity platform. Here’s what this means:

The coveted annual Golden Bridge Awards program encompasses the world’s best in organizational performance, innovations, products and services, executives and management teams and more, from every major industry in the world. Organizations from all over the world are eligible to submit nominations including public and private, for-profit and non-profit, largest to smallest and new start-ups.

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Capsilon was recognized with a gold award for its recently introduced automated data extraction (ADE) technology, a new capability of its flagship product, Capsilon DocVelocity. The ADE technology offers mortgage lenders an innovative alternative to current labor-based approaches to access, validate and evaluate critical loan data by extracting the data required by mortgage companies to enable rich data-driven audits. The breakthrough technology is used by some of the nation’s largest mortgage companies for automated loan evaluation that eliminates costly labor, speeds loan turn times, and helps manage compliance.

The extracted data is automatically transformed into Mortgage Industry Standards Maintenance Organization (MISMO)-compliant data points for consumption by automation engines and saved in the DocVelocity electronic loan folder for quick reference at any time during the life of the loan. Links to the original document from which the data is extracted are always maintained, so it is simple to track back to the “source of truth” for the data.

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More than 40 judges from a broad spectrum of industry voices from around the world participated and their average scores determined the 2015 Golden Bridge Business Awards winners. The winners were honored during the awards dinner and presentation on November 16, 2015 in San Francisco attended by the finalists, industry leaders and judges.

“To win Gold status in the Golden Bridge Awards in the ‘Innovations in Technology’ category is especially meaningful because our mission is to automate key steps along the mortgage lifecycle through technical innovation,” said Sanjeev Malaney, chief executive officer of Capsilon. “Our automated data extraction technology enables large mortgage companies to automate labor-intensive, time-consuming loan evaluation and audit tasks, improving loan quality while accelerating time to close and reducing total loan production costs.”

APPLY HERE TO BE NAMED A TOP INNOVATION BY PROGRESS IN LENDING

About The Author

[author_bio]

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.

What A Difference Three Days Make

The TILA-RESPA Integrated Disclosure rule (TRID) is scheduled to take effect on October 3 after nearly two years of industry-wide hand-wringing. And, while the industry has had ample time to prepare for the changing regulations, lenders and settlement partners continue to be particularly concerned about the so-called “3-day rule,” and how this review period might lengthen time to close.

In short, one of the requirements of TRID is that lenders must provide borrowers with the Closing Disclosure (CD) three business days before closing the loan. Unless the CD is hand-delivered, the time period will typically expand to six or seven days in advance of closing (three days in transit, three days for review, plus one day to cover a Sunday or Federal holiday, if applicable). This three-day review period has been a catalyst for lenders to re-evaluate their current loan processes to identify ways they can “buy back” time so as not to lengthen the time to close. Gone are the days when last-minute changes to loans were routine, and settlement agents were printing final disclosures minutes before arriving at the closing table. In fact, many industry insiders are expecting a one- to-two week delay in closings once TRID takes effect, and are predicting that closing dates may be pushed out even longer until the industry can adjust to the changes to deliverables and their related timelines.

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How can the industry cope with the three-day review period without adding a week or more to the time to close? As lenders re-evaluate their loan processes, forward-thinking lenders will realize that technology that automates key steps throughout the loan process, including TRID tolerance checks, is critical to satisfying the three-day review period without lengthening time to close. The right technology automates key steps along the loan production cycle, from onboarding to post-close compliance checks, reducing labor by up to 80 percent. And, as a result, lenders who leverage technology to speed the loan process will enjoy a compelling competitive advantage in delivering faster, on-time closings.

For example, automated document recognition technology automatically identifies, names and indexes more than 250 common loan documents, speeding the onboarding of loans by as much as 90 percent. This technology also provides a missing documents report to alert lenders of any missing documents to ensure that lenders are onboarding complete, compliant loans. As another example, data extraction technology replaces the manual “stare and compare” model of humans visually scanning numerous documents to compare data across document to ensure data integrity. Instead, technology is able to automatically extract critical data from loan documents, compare values and run the data through rules engines, flagging any values that fall outside of established parameters and require review by a human. This exception-based approach reduces labor costs while ensuring a consistent, repeatable process that eliminates human error.  This automation saves valuable hours and days – time that can be allocated to complying with the three-day review period, and more.

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Finally, electronic transaction and electronic closing capabilities, including E-Signatures, expedite the delivery and signing of mortgage-related documents, including borrower disclosures, saving the time required to print, assemble and ship physical documents. Not only do electronic transactions streamline the process and save valuable time, but they appeal to a new generation of consumers who have become more comfortable with electronic transactions in their everyday financial lives.

While TRID will ultimately improve the loan process for borrowers, it is likely to disrupt the loan life cycle for lenders, including lengthening time to close. Lenders can re-capture precious time along the loan life cycle by leveraging technology to automate key steps in the loan process, completing key tasks up to 80 percent faster. Rather than accepting that complying with TRID, including the three-day review period, will lengthen close times by a week or more, lenders should re-evaluate their entire loan process to understand where they can introduce technology to buy back hours, and days, from key steps in the loan manufacturing process – hours and days that are better allocated to the three-day review period, as well as other timeline-based deliverables.

About The Author

[author_bio]

Sanjeev Malaney is co-founder and chief executive officer of Capsilon, a provider of comprehensive cloud-based document management solutions that enable mortgage lenders and investors to increase productivity and lower costs, while ensuring compliance. The company’s flagship product, DocVelocity, is an imaging solution that provides document capture, collaboration, delivery and retention, eliminating the inefficiencies inherent in paper-based processes. For more information, visit the company’s website at www.capsilon.com

Capsilon

Capsilon builds enterprise technology specifically for the mortgage industry, enabling lenders to improve loan quality while reducing production costs and turnaround times. Capsilon DocVelocity is a secure cloud-based document and data management platform that supports the full life cycle of a mortgage, from loan origination to servicing, by enabling document and data capture, document and data validation, collaboration, loan evaluation, transaction, delivery, and retention. To learn more, visit http://go.capsilon.com/pil.

Progress In Lending
The Place For Thought Leaders And Visionaries

A Wakeup Call

website-pdf-download

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.