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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.

Featured Sponsors:

 

“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.

Lender Guarantees Speedy Closing

*Lender Guarantees Speedy Closing*
**Time Matters**

hour-glass***Time is money. A speedy closing is the goal of every lender, but new regulation is stretching out the time to process a loan. So, it’s interesting that Churchill Mortgage, a lender in the mortgage industry providing conventional, FHA, VA and USDA residential mortgages across 30 states, announced its “Purchase Guaranteed Close” program, promising qualified borrowers a timely closing of loans. Here’s what they promise:

****According to Ellie Mae’s latest Origination Insight Report, the average closing time for first mortgages in June 2013 was 47 days, a three-day increase from the previous month. In an effort to overcome this industry challenge of on-time closing fulfillment, Churchill’s “Purchase Guaranteed Close” program ensures the agreed-upon close date is met. The guarantee starts from the time the loan officer receives a full and complete loan application package from the borrower and, if the loan is not closed within the agreed upon date, Churchill guarantees a $1,000 credit to the borrower at the time of closing.

****“Our ‘Purchase Guaranteed Close’ program supports Churchill’s strong commitment to borrowers while providing peace of mind and confidence to sellers and real estate agents,” said Mike Hardwick, president, Churchill Mortgage. “Efficiently meeting the needs of those purchasing a home and guiding them into a new chapter in their lives is fundamental to restoring faith in the American Dream of homeownership.”

Innovative New Partnership Forms

*Innovative New Partnership Forms*
**Streamlining Processes**

partnering***PROGRESS in Lending has learned that ClosingCorp has partnered with TSS Software Corporation. Using ClosingCorp’s SmartGFE Calculator, customers of TSS Software’s TitleExpress receive title and settlement orders from lenders through the online calculator. Here’s why this is important:

****Assurety Title & Escrow is the first mutual user to leverage this new capability. “Simplifying the estimate to order process for title and settlement services is a big benefit to both title companies as well as their lender clients,” said Troy Hodgdon, president of Assurety Title & Escrow. “Through the SmartGFE Calculator, we provide lenders a simple way to get an immediate estimate and place orders for services whenever they need them. With the TitleExpress integration, we effectively manage these orders within our standard workflow. We believe this is the future of how origination transactions will be processed and are excited to be a part of this new era.”

****Lenders order services by visiting a title company’s website to access the SmartGFE Calculator. Accurate rates for title and settlement as well as recording fees and transfer taxes are provided by the calculator. After cost estimates are generated, orders for title and settlement are placed through the calculator online. The online orders from lenders are automatically submitted into TitleExpress with an electronic document containing the estimate.

****“This partnership lends itself to true innovation and the improvement of processes,” said Barbara Miller, president and COO of TSS Software Corporation. “ClosingCorp’s team understands the importance of true collaboration for the sake of moving the industry forward, and together we provide a service that enhances a lender’s business while enabling them to focus on their customers. Title companies with TitleExpress and the SmartGFE Calculator may provide this service to their lender clients.

****“Our primary goal with the SmartGFE Calculator was to offer both title companies and lenders a better way to provide and obtain quotes,” said Bob Hart, vice president of national account sales at ClosingCorp. “Our integration with TSS is the first phase of automating and providing transparency to the ordering of title and settlement services online. Partnering with TSS improves all stages of the process from quoting to ordering.”

Closing Costs On The Rise

*Closing Costs On The Rise*
**By Tony Garritano**

TonyG***As the cost of originating a loan has increased in 2013, consumers are shouldering more closing costs. In their quarterly study on closing costs, DocuTech found that the median closing costs in Q1 2013 increased by 0.4 percent from December 2012 to March 2013. Closing costs had decreased by 0.5 percent from April to November 2012. Here’s why:

****“Overall, settlement charges are still down from a year ago. However as reported by a recent study done by the MBA, the cost of origination has slightly increased,” said Scott K. Stucky, chief operating officer of DocuTech. “A large part of that increase is lenders spending more money on compliance costs due to changing regulations within the industry – with these costs now being passed onto the borrower.”

****In December 2012, the median settlement charge was 2.561 percent of the loan value. The charges continued to increase each month until it reached 2.940 percent in March 2013. These findings are a part of a quarterly effort to highlight how changes in the mortgage industry are impacting the cost for consumers to obtain a mortgage.

****“We are starting to see firsthand through our quarterly tracking reports of our nationwide lender base that it’s not just the typical originator, servicer or lender feeling industry change; the consumer is beginning to feel it in their wallet too,” said Stucky. “The uncertainty looming in the industry will continue to have a direct correlation onto the consumer until a level of confidence is reinforced and implementation dates take effect.”

****DocuTech tracks its closing costs through the strong integrations between its document compliance system, ConformX, and lenders’ loan origination software. The data files are transmitted from the lender to DocuTech through the loan origination system to generate the documents. Therefore, DocuTech has access to a significant amount of financial data regarding mortgage lending transactions including all of the fee and collateral information.

Magazine Feature: Fraud Prevention Demands A Collaborative Approach

*Fraud Prevention Demands A Collaborative Approach*
**By Alec Cheung**

closing-fraud-elynx***The mortgage process is unique in that it requires the collaboration and partnership of parties that are frequently unknown to each other. These transient, short-lived relationships create opportunities for fraud. Lenders frequently find themselves working with agents whom they have no prior business relationship with. Most often, these parties don’t know each other, yet lenders are expected to transfer large sums of money with the expectation that agents will disburse the funds appropriately.

****The risk in these relationships extends to title underwriters as well, who frequently find themselves issuing policies through unfamiliar agents. With limited federal- or state-mandated controls, lenders and insurers are left to their own devices to validate the integrity of closing professionals.

****Real Consequences

****Financial institutions and their business partners are actively searching for ways to reduce risk and mitigate fraud opportunities within the mortgage lifecycle. Though most mortgage fraud occurs during the application phase, the fraud that is perpetrated at the closing table has serious consequences. Closing fraud represents a fraction of the overall frequency of mortgage fraud, with estimates putting it at 15 percent of all occurrences. But what is telling is the average loss resulting from closing fraud is dramatically higher than any other type of claims loss. Recent studies have indicated that insurers have sustained over $7.3 billion in losses since 2003.

****Despite the rate of incidence, when closing fraud occurs it has devastating consequences to everyone involved including consumers, lenders, and title underwriters.

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  • According to a recent article in ALTA’s TitleNews, last year alone, three title underwriters stopped issuing new policies because of solvency issues caused by closing fraud.
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  • In New York, Washington Title Insurance Company became insolvent after reporting higher than normal claims.
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  • New Jersey Title Insurance Company stopped issuing new policies after a dramatic increase in losses from agent defalcations.
  • ****

  • TitleServ (agent company of New Jersey Title Insurance), abruptly closed in April, and lawsuits against the company indicate more than $18 million is involved in defalcation.
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  • Southern Title Insurance Company, an insurer in business for over 90 years, discontinued issuing new policies after discovering embezzlement by a single agent in Texas.  The company was placed in receivership.

****Boiling Over

****Unfortunately, the air is full of skepticism and distrust among today’s borrowers who have been affected by the downturn in the mortgage industry and other relevant issues like robo-signing. These borrowers are demanding government intervention in what they see as a broken process, where opportunities for fraud and theft are many.

****It’s going to be critically important for mortgage professionals to demonstrate they have the ability to protect the interests of the public. Regulatory influence is on the rise, and the Consumer Financial Protection Bureau (CFPB) is continuing to flex its muscle to protect consumers from harm. The CFPB’s mandate that organizations are responsible for their third-party servicers reveals a deeper need for more transparency among all parties involved in the process. This new, shared responsibility to protect consumers demands that these parties be more open with each other.

****Come Together

****The quickest and most practical way to arrive at an effective solution is to start from the premise that settlement agents are trustworthy. What the industry then needs is a national registry where any industry participant—a lender, a title underwriter, even another closing professional—can look up the profile of any settlement agent or search for agents that meet certain criteria. This is similar in concept to the Nationwide Mortgage Licensing System & Registry (NMLS) used to register financial services participants. A database like this would collect, consolidate and share information, incorporating local and state-based financial services regulation with independent data sources into a national closing professional platform that can be used throughout the mortgage industry. If executed at a national level, all parties involved in transactions would have visibility into the registry’s data and services.

****This Is Not A Hypothesis

****Companies are working on such solutions today, but approaches to date have faced significant resistance from the industry. At eLynx, we have been listening to the outpouring of frustrations from agents and are working closely with them, lenders, and title underwriters to gain an understanding of a more viable approach than what currently exists.

****Based off these shared insights, it’s important that all parties can be a part of the registry at no fee—any closing professional including independent agents, captive agents, and attorneys. In addition to data reported by registrants, the system will need to reach out to third-party sources to independently extend and validate information that will be stored in an agent profile. The profile data should include business insurance coverage, state and local licensing, prior judgments, watch list inclusions, and a host of other data that is used to verify the fidelity of an agent.

The Impact Of New Rules And Regs

*The Impact Of New Rules And Regs*
**By Tony Garritano**

TonyG***The Consumer Finance Protection Bureau was formed to help the borrower. So, how is the CFPB and other regulatory bodies doing as the industry is hit with a bunch of new rules and regulations? DocuTech found that the median closing cost among the company’s nationwide lender base decreased by 0.5 percent on a baseline from April to November 2012. These findings are the first of a quarterly tracking effort to highlight how changes in the mortgage industry are impacting the cost for consumers to close loans.

****In April, the median closing costs of all loans with disclosure and closing documents generated through DocuTech’s system was 3.112 percent of the loan value. Following a small uptick in May, reaching 3.176 percent, the median closing cost dropped each month settling into a low during November at 2.521 percent.

****“With the many fees and points associated with closing costs, as well as constant regulatory changes, the consumer is sometimes faced with higher settlement charges than they previously anticipated,” said Scott K. Stucky, chief operating officer of DocuTech. “With the quarterly disclosure of these statistics, we seek to reveal various trends in settlement charges to highlight the upfront costs associated with closing loans and how industry changes impact the consumer.”

****DocuTech is able to track the closing costs through the strong integrations between its document compliance system, ConformX, and lenders’ loan origination software. The data files are transmitted from the lender to DocuTech through the loan origination system to generate the documents. As such, DocuTech has access to a significant amount of financial data regarding mortgage lending transactions including all of the fee and collateral information.

****“A decrease in price when dealing with loans is never a bad thing,” said Stucky. “This steady decline should ease the industry’s level of uncertainty with the CFPB set to announce new rule requirements for the remainder of 2013.”

Automated QC And HUD-1 Reviews

*Automated QC And HUD-1 Reviews*
**New Service**

***FA Business Services, LLC has launched QC@Closing, its new, fully automated loan quality product that helps lenders identify and mitigate risk, save time and resources, and improve the consumer experience. Changing regulations and the risk of loan repurchase and penalties are forcing lenders to allocate more time and resources than ever before on loan-processing quality controls. Many lenders employ manual quality reviews of loan documents, which have limited success in reducing buybacks and can be costly and time-consuming.

****QC@Closing conducts an automated evaluation of the HUD-1 settlement statement and loan data, based on lender-defined rules, at a point in the closing process at which corrections can still be made. Possible risks and discrepancies are flagged for lenders in real time, so that they can identify and act upon them while still closing on time.

****“While many in our industry recognize the potential to improve compliance by manually auditing the HUD-1 settlement statement, getting this data in a consumable format has been the core challenge. With QC@Closing, we’ve been able to successfully extract and standardize the closing data so that it can be automatically evaluated against lender-defined rules that are tailored to each lender’s programs,” said Sally French Tyler, senior vice president of FA Business Services, LLC.

****“By helping to facilitate better and faster quality control measures at the most appropriate time in the closing process, we hope to show that settlement providers are an essential part of the solution, actively involved in improving confidence in lending for borrowers, lenders and secondary investors.”

****Specifically the QC@Closing tool:

****>> Consistently applies each lender’s rules at the closing table – across all geographies, business channels, and settlement agents;

****>> Analyzes closing data and loan information and automatically flags possible risks and compliance issues;

****>> Provides a flexible rules-management system, allowing lenders to apply standard or customized rules for each loan;

****>> Delivers real-time results on every HUD-1 revision, from pre-closing to post-closing; and

****>> Stores the actual closing data and results for five years, even after a loan is sold or acquired.