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Freddie Mac Expands eMortgage Solutions With DocMagic’s eVault Technology

Freddie Mac has implemented DocMagic’s  SaaS-based eVault technology and SmartREGISTRY platform. DocMagic’s eVault provides a secure electronic repository for storing documents and performing automated eNote certification to Freddie Mac eMortgage lenders via Loan Selling Advisor.  By automating the eNote certification process, Freddie Mac will speed the funding process, thereby improving liquidity in the mortgage markets and reducing lender’s warehouse line costs.

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“Freddie Mac is committed to streamlining the mortgage process for lenders and borrowers, and has been a leader in purchasing eMortgages since 2006,” said Andy Higgenbotham, Freddie Mac’s Single Family Chief Operating Office. “We rolled out our automated certification process in 2015 to speed up the funding process, thereby improving liquidity in the mortgage markets and reducing lender’s warehouse line costs. We are now expanding this process to include the DocMagic platform.”

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DocMagic’s eVault provides safe and secure storage for sensitive loan documents. It also automatically parses and validates data in a SmartDoc eNote against data in the user’s core system of record. Additionally, DocMagic’s SmartREGISTRY platform enables holders of eNotes to securely transfer these electronic documents to other eVault systems, such as those used by investors, conduit aggregators and servicers. Ultimately, it facilitates real-time access, delivery, storage and much needed control of electronic loan files.

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“Freddie Mac has been a long-time visionary and champion of eMortgages over the years and has made great strides with their unwavering commitment to automation across the supply chain,” stated Dominic Iannitti, president and CEO at DocMagic. “Now, with the successful rollout of SmartDoc eNote data validation prior to funding, this demonstrates the advantages and a clear-cut ROI of going completely ‘e.’ We look forward to ongoing collaboration with Freddie Mac and to further adoption of the digital mortgage process.”

Notable is that that Freddie Mac encourages the use of ‘SMART’ (securable, manageable, archivable, retrievable, transferable) eNotes because static documents do not contain source data, and thus make it difficult, costly and time consuming to confirm the data on documents match.

DocMagic established a process that guides lenders on how to begin using SmartDoc eNotes. The company’s eVault technology is integrated with its Total eClose platform, which is an eClosing solution that creates a 100 percent paperless digital mortgage process — from origination through eClosing, eWarehouse lending, investor eDelivery and eServicing.

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 One Launches Complete eClosing Solution For Members

Lenders One Cooperative, a national alliance of independent mortgage bankers, has launched Lenders One eClosing by DocMagic, a complete eClosing solution for borrowers, lenders and investors. The eClosing solution provides an entirely paperless workflow that integrates every component of the closing process and guides users through each step.

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Launched for Lenders One members at the Lenders One Summer Conference in Salt Lake City, Lenders One eClosing by DocMagic is evidence that eMortgages and eClosings are no longer a future-state vision. When using the solution, the average loan closing “at the table” can be reduced from 60 minutes to 15 minutes, helping to dramatically improve the borrower experience.

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The solution includes the following features:

>> Integrated with all of the major LOS platforms to generate e-enabled documents.

>> An embedded compliance engine that automatically audits documents and data against applicable industry laws and regulations to help ensure compliance throughout the loan lifecycle.

>> eNotary technology for in-person electronic notarization or remote online notarization where permissible.

>> The ability to deliver a MISMO SMARTDoc eNote with direct connectivity to the MERS eRegistry.

>> A secure, certified eVault which provides long-term storage and eDelivery to warehouse banks and investors and features a date-stamped and time-stamped audit trail to help show proof of compliance at all times.

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“Our eClosing technology puts Lenders One members at the forefront of the eMortgage evolution, a sought after capability made possible through our collaboration with DocMagic,” said Michael Kuentz, CEO of Lenders One. “Importantly, the eClosing solution incorporates feedback received from our members and service providers, helping ensure we address their needs. Our comprehensive eClosing solution provides our members with options to choose full eClose or hybrid eSign/ink-sign workflows. The technology adapts to the lender’s production environment and compresses the overall timeline to loan sale, generating material savings for lenders facing historically high loan production costs.”

“Effective implementation of eClosing begins with a well-defined eMortgage strategy, and by working in concert with Lenders One, we are helping originators set up their eClosing production lines at a pace, and in a manner, that is consistent with their overall business goals,” said Dominic Iannitti, President and CEO of DocMagic. “The deep working relationships that Lenders One has established with its members are critical, and through our combined strength we are accelerating the eMortgage journey for progressive lenders nationwide.”

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 Are Moving Forward

In covering the mortgage space for more years now I’ll admit, I’ve always been concerned about how slowly this industry moves. In recent months however, I have heard of lenders making some technology moves.

For example, to modernize its mortgage lending operation, Tinker Federal Credit Union (Tinker) has selected the entire product suite from Mortgage Cadence, an Accenture (ACN) company.

With the full Mortgage Cadence product suite, including Loan Fulfillment Center, Borrower Center, Imaging Center and Document Center with integrated eSign capabilities, Tinker will be able to provide its customers with an entirely paperless and seamless end-to-end mortgage process, from application to closing.

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“We owe our members the most convenient, transparent and intuitive lending experience available on the market today – and Mortgage Cadence’s product suite makes this a reality for us,” said Connie Wall, Tinker’s senior vice president of Lending.

Borrowers today expect a highly automated digital experience layered with the human-to-human connection that creates a highly personalized yet efficient experience. By enabling lenders to streamline the delivery of loans to their borrowers through a fast, easy and intuitive platform, the Mortgage Cadence suite of loan origination technology solutions will empower Tinker to deliver on its brand promise of providing customers with an exceptional borrower experience.

“This is exactly the kind of collaboration we had in mind when we founded Mortgage Cadence in 1999,” said Trevor Gauthier, Mortgage Cadence’s President and Chief Operating Officer. “Tinker needed better technology, seeking a comprehensive platform to serve its needs well into the future. I’m very pleased that Mortgage Cadence will be that platform provider and excited about the success we expect Tinker to enjoy for years to come.”

Tinker Federal Credit (TFCU) is the largest credit union in Oklahoma, with over 360,000 members and more than $3.6 billion in assets. For over 70 years, the institution has been helping its members achieve their goals and realize their dreams. As a not-for-profit, member-owned financial cooperative, TFCU returns profits to its members through financial education, competitive loan and dividend rates and low or no fees on service.

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Similarly, Pacific Union Financial, LLC, a government lender has partnered with Ellie Mae to leverage Ellie Mae’s Encompass. This new technology will enable joint customers to deliver loan data and documents in a streamlined, efficient, and secure manner.

This new process helps facilitate loan data and document delivery directly from Encompass to Pacific Union instantaneously. Joint customers will experience a seamless, simplified workflow to help ensure that the information is accurate, organized, and securely transmitted. Going forward, the process with Encompass will eliminate the need to download and upload loan data in multiple locations, and instead provide a seamless transfer of data and documents directly from Encompass to Pacific Union Financial.

“Through our partnership with Ellie Mae, we will improve our efficiency by offering a secure, seamless data and document delivery workflow from their system of record,” said Warren Little, Chief Technology Officer at Pacific Union Financial. “We look forward to working with Ellie Mae to offer digital mortgage solutions that enhance customer service and business operations.”

“At Ellie Mae, our mission is to provide our lenders and partners with a true digital mortgage, which encompasses everything from consumer interest through loan delivery,” said Parvesh Sahi, Senior Vice President at Ellie Mae. “We are excited to partner with innovative lenders like Pacific Union Financial, who share our vision of leveraging automation in order to improve the process while also ensuring the highest levels of compliance, quality and efficiency.”

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Pacific Union Financial, LLC is a full-service mortgage company located in Irving, Texas, with fulfillment centers in Texas and California and over 50 branches across the country. We originate and purchase residential mortgage loans through Wholesale, Retail, and Correspondent channels in addition to servicing a $26 Billion portfolio. Pacific Union Financial offers white glove service for borrowers with best to bruised credit.

And lenders aren’t just looking to swap out cote systems, they have their eye on a more digital process. For example, DocMagic, Inc., a provider of fully-compliant loan document preparation, regulatory compliance and comprehensive eMortgage services, announced that Deutsche Bank has successfully implemented and is actively utilizing its proprietary eVault technology.

“Deutsche Bank has an international footprint in multiple forms of lending and servicing, and having a company of their size select our eVault to safely and securely store sensitive loan documents speaks volumes about the bank’s confidence in our technology,” said Dominic Iannitti, President and CEO of DocMagic, Inc. “We are very pleased to partner with Deutsche Bank on a long-term basis to help achieve its servicing goals with our eVault.”

Using the DocMagic eVault, Deutsche Bank’s document custody group is now empowered to take full possession of electronically originated assets for clients as the loan market continues to transition to a paperless process. DocMagic establishes a legally compliant method to securely move original electronic files from one custodian to another, while preserving unique authoritative digital ownership.

Further, the eVault ensures authentication of original documents passing between owners, irrespective of how many duplicate electronic files there may be of the same record. The repository system within DocMagic’s eVault relies upon digital tamper-proof seals and a detailed, well-documented audit trail that ensures compliance and provides detailed reporting.

DocMagic also made available to Deutsche Bank the ability to leverage a unique dual-option solution that accesses its on-premise eVault installation to provide a gateway to seamlessly and securely connect to MERS via any browser, as well as by way of a direct VPN connection.

As a result of partnering with DocMagic, Deutsche Bank is now well-positioned to easily, compliantly and securely service loans housed in the eVault, creating newfound efficiencies and a competitive advantage for the bank. By providing eVault services to Deutsche Bank’s clients, they further cement themselves as a leader, innovator and provider of excellence. DocMagic’s eVault has been thoroughly vetted and is officially approved by Fannie Mae, Freddie Mac, and MERS to compliantly support eVaulting services.

So, lenders are moving forward when it comes to embracing technology. Are they moving fast enough? In my opinion, no. However, progress is progress. Things are improving. My only hope, as always, is that lenders would move faster.

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.

eSign Milestones Continue

DocMagic, Inc., a provider of loan document preparation, regulatory compliance and eMortgage services, announced that it has processed more than 300 million mortgage-related electronic signatures.

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This milestone achievement is the direct result of increased adoption of several DocMagic technologies that feature its eSigning platform, which can be accessed as a software-as-a-service (SaaS) or on-premise enterprise platform. Each of DocMagic’s digital platforms reports a significant increase in volume, which the company attributes to lenders’ growing need to prove a TRID-compliant, 100 percent paperless mortgage process.

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“Borrower demand is driving the increase in eSignings, and lenders are choosing DocMagic to get a consistent, compliant eSigning solution that spans the original LE [Loan Estimate] to the final CD [Closing Disclosure],” said Dominic Iannitti, president and CEO of DocMagic. “Lenders know DocMagic is the go-to choice for compliance. We reached 300 million eSignatures because we have solved lenders’ number one burden for the past two years—electronic evidence of TRID compliance—while enabling them to stay competitive and enhance the overall borrower experience.”

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DocMagic reports significant volume increases for SmartCLOSE and Total eClose, two award-winning technologies that enable lenders to comply with TRID and UCD (Uniform Closing Dataset) guidelines. SmartCLOSE is a collaborative closing portal offering one system of record that assures accuracy, completeness, consistency and compliance of the data before final documents are drawn and the borrower electronically executes the documents using DocMagic’s integrated eSign technology. Total eClose, a complete paperless, digital closing solution with integrated eSignature and eNotarization capability, provides continuous compliance checks to assure all documents are complete, current, consistent and compliant.

“A lot of existing DocMagic customers adopted our eSign technology because it’s so much easier to access and use than other platforms,” said Iannitti. “We were already integrated with the vast majority of LOS systems, so providing eSigning functionality was a logical extension of our service. We also added new integrations, which brought onboard new eSigning customers. Having an eSign technology that can draw new customers while expanding use among existing customers shows the ubiquitous need for the functionality DocMagic’s technology provides.”

Integration Furthers eLending

PathSoftware today announced that Path, its configurable, multi-channel, cloud-based mortgage loan origination software (LOS), is now fully integrated with DocMagic, a provider of document production, automated compliance, and eMortgage services.

The new web integration provides a direct, secure connection between users’ loan files and DocMagic’s family of products and services. This enables users to order, generate, manage, receive and deliver TRID-compliant documents, such as loan estimates, closing documents and disclosures, with just a few mouse clicks—virtually eliminating the chance of errors and exposure to security risks, while avoiding the time constraints of manually rekeying information.

This integration also enables users to access DocMagic’s Total eClose platform, a digital mortgage solution that contains all of the components needed to facilitate a completely paperless digital closing. In addition, the integration also accesses DocMagic’s eSign technology so borrowers can electronically sign all documents in a secure, compliant manner.

Path was designed to simplify and streamline mid- to enterprise-level, multi-channel loan origination. All loan data, lock data, products, pricing, automated underwriting system findings, loan estimate and closing disclosure documents emanate and are reconciled within one system. In addition, the LOS’s configurable workflows, with role-based functionality, provide visibility into every loan at every stage—so financial institutions can ensure their business rules are followed.

“Smart companies like PathSoftware know that TRID compliance, risk reduction and cost control are huge concerns for lenders, and they’re building value by offering solutions to those issues through their technology and that of their partners, like DocMagic,” said Dominic Iannitti, president and CEO of DocMagic. “We’ve had an excellent partnership with PathSoftware’s parent company for many years. We’re proud to continue supporting them as they introduce new and better solutions to their customers and the industry.”

“DocMagic has long been a leading provider of fully-compliant loan document preparation solutions, differentiating itself by the way it handles data and runs compliance checks,” said Doug Mitchell, director of sales and support at PathSoftware. “Our integration with DocMagic will not only make ordering compliant documents significantly easier for our joint clients, it will also significantly reduce time and cost, and eliminate the need for data re-entry, which can inadvertently cause errors and lead to compliance issues.”

The PathSoftware LOS integration also gives mutual clients the option to take advantage of DocMagic’s Premium Reps & Warrants Guarantee offering. The guarantee covers high cost points and fees calculations, TRID-related audits, customer modifications of documents, document selection, and the Loan Estimate (LE) and Closing Disclosure (CD) under DocMagic’s SmartCLOSE product.

Follow The Leader

I have been critical of the industry’s inability to move forward on eMortgages, or what is now called a Digital Mortgage, without other lenders going first. Today there is great buzz around going digital so I’m shifting my earlier concerns. To every lender today I say: Please follow the leader and go digital. My hope is that we have reached a tipping point where not going digital is more of a risk compared to finally making that transition to digital mortgages.

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In order for lenders to make this transition there first has to be clarity around the term Digital Mortgage. “There is still quite a bit of confusion in the marketplace as to what a digital mortgage is actually comprised of,” noted Dominic Iannitti, President and CEO at DocMagic, Inc. “Put simply, a truly comprehensive digital mortgage involves zero paper whatsoever, from start-to-finish. That means from the time the loan is originated at the point-of-sale to when the loan is closed and the eNote is delivered to the investor, nothing is papered-out. This includes fully paperless eClosings for borrowers, which absolutely must contain eNotarizations. Also, another important component of the digital mortgage process is an integrated mobile strategy.”

Recently DocMagic, Inc. completed North Carolina’s first 100 percent paperless eClosing. The DocMagic-driven eClosing was completed on Friday, May 5th at North State Bank and was carried out in the presence of borrowers Jason and Karen Boccardi, the North Carolina Secretary of State, a closing paralegal, an eNotary, and members of the media who documented the historical event.

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Attorneys from the Hunoval Law firm attended via interactive video. The entire eClosing took only about 20 minutes to complete.

“Millennials in particular want the ability to start the origination process on a phone/tablet, check status, eSign documents and complete the closing process,” added Iannitti. “That technology needs to be integrated with the document preparation provider, eClose technology vendor, LOS, as well as other third party vendors.”

DocMagic’s Total eClose, which contains all the components to facilitate a fully compliant, 100 percent paperless digital closing, served as the single platform that enabled the entire transaction in North Carolina. eNotarization was facilitated by long-time DocMagic strategic partner World Wide Notary (WWN).

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In fact, DocMagic facilitated four of the five statewide-first eClosings, as well as the CFPB’s eClosing pilot program. The North Carolina eClosing was part of a state sponsored eClosing Pilot Program that was established in 2016 by North Carolina Secretary of State Elaine F. Marshall to create a best practices guide for mortgage lenders seeking the heightened security, speed and efficiency of eClosings.

“For the record, a comprehensive digital mortgage is really just a new term for an end-to-end eMortgage process,” stated Iannitti. “The reality is that most of the digital mortgage technologies that are currently available for lenders are hybrids, so paper is unfortunately still involved. However, the technology to go fully digital is here today. The biggest hurdle is still educating all the players on the benefits, the technology solution exist today. The CFPB was very helpful in evangelizing for lenders and vendors to embrace eClosings, which is now well on its way.”

Valerie Saunders, Vice President at NAMB – The Association of Mortgage Professionals and President at Title ClearingHouse of Jacksonville, agrees that a digital mortgage is a mortgage that is transacted 100% electronically, including digital signing and electronic notarization, with no semblance of paper, whatsoever. And while there is still jockeying among some over the definition of the term Digital Mortgage, nobody disputes the return on investment associated with adoption.

“Digital mortgages are a lot faster and more efficient than traditional mortgages,” pointed out Saunders. “It’s also a lot easier for lenders and settlement service providers to manage and keep mortgage files secure without all that paper.

“As far as the consumer goes, paperless mortgages allow more time for borrowers to review the documents they’re executing prior to affixing a signature. In a typical transaction, unless the borrower specifically requests it, the first time they’re seeing those documents is when they’re at the closing table. With a digital mortgage, borrowers can take the time to digest the information and ask questions well in advance of closing.”

That doesn’t mean that there are no hurdles to adoption. “I think the major hurdles are cost and necessity,” noted Saunders. “We need to remember the role that states and counties play in electronic mortgages. In order to transact a fully paperless mortgage, states need to allow for both electronic recordings and electronic notarizations, and counties need to be technologically equipped to accept those electronic documents.

“Technology is the foundation of a digital mortgage, so it plays a major role in how that experience is going to play out. That said, lenders and settlement service providers also play a key role in assuring that the digital mortgage experience doesn’t replace a personalized experience.”

Put simply, the digital mortgage is about the customer interaction. “Customers will interact how they want on their timetable,” noted Josh Friend, the founder and CEO of InSellerate, a Costa Mesa, California-based CRM provider that helps companies maximize their sales leads and convert them into closed customers. “The second part of the digital mortgage is the use of big data. Tax returns, pay stubs, w2s, etc. is all in the cloud. You need to leverage platforms so that documentation can be downloaded through the web without the borrower having to provide that. Third, is the technology required to take in and process all the loan data. You want to make the mortgage process easier.”

InSellerate is a specialized customer relationship management system that delivers incremental sales and revenue by optimizing consumer direct lead channels, increasing prospect conversion and maximizing sales opportunities through an automated nurture program. With InSellerate, companies can immediately connect to leads while the prospects are actively in the decision-making process, manage their sales team real-time for maximum efficiency and ROI, and build strong customer relationships through trigger-automated nurture marketing campaigns. InSellerate is SSAE 16 certified and built to satisfy the most closely regulated businesses, including community banks with mortgage subsidiaries.

“The cost to originate has increased,” noted Friend. “Having accurate closing fees upfront will allow us to be more accurate at closing. The digital mortgage will also lower buybacks significantly. From the view of the consumer, if they can go online, see accurate pricing, fill out the documents and submit the trailing documents online, that would be a big benefit.”

So what will it take for digital mortgages to finally go mainstream? “You need to tie the business and technology together,” concluded Dr. Rick Roque, President and Founder of MENLO, a firm that advises mortgage lenders on their M&A strategies. “You have solid technology, but there are failures in how to apply that to the business process. It takes a unique intersection in how the business process can be designed and reimagined with the use of technology.

“Lenders have to look at the net tangible benefit. Lenders may go after the latest technology, but don’t look at how it can be operationalized. A digital mortgage is not a switch that just gets flipped. It’s a progression.”

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.

Ensuring Total UCD Compliance

DocMagic, Inc. has announced that its technologies are now capable of supporting both phases of the upcoming UCD (Uniform Closing Dataset) requirement. The company’s technology solutions, which have been certified by Fannie Mae and Freddie Mac for both phases of the UCD file delivery mandate, enable lenders to start immediate testing of full UCD delivery—well in advance of the phase one 2017 deadline and the phase two 2018 deadline—as has been recommended by both GSEs.

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The Uniform Closing Dataset (UCD) is a common industry dataset that allows information on the Consumer Financial Protection Bureau’s (CFPB’s) Closing Disclosure to be communicated electronically.

On September 25, 2017, the GSEs will require lenders to deliver borrower data and the Closing Disclosure in the UCD file. Later, in 2018, the second phase of the mandate will require seller data to be included as well. However, according to a joint statement issued by the GSEs, both Fannie Mae and Freddie Mac are recommending that lenders start to “submit files with both Borrower and Seller data, if available, in order to test their processes and become familiar with the messaging from each GSE’s collection system.”

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DocMagic’s technology solutions allow lenders to fulfill the GSEs’ recommendation by generating and compliantly delivering UCD files that include both borrower and seller data to the GSEs. DocMagic can also accept UCD XML data from third parties and deliver it to the GSEs. In addition, the company offers an API for direct, seamless connection to the GSEs’ technologies.

“At DocMagic we went above and beyond attaining the initial GSE UCD certification because we want our customers to have the option to implement the GSE-recommended testing, which allows them to implement phase two requirements now,”  says Tim Anderson, director of eServices at DocMagic.  “Phase one addresses the XML file for the borrower CD and associated data, but the GSEs have definitively recommended that lenders complete everything before the phase one September 25, 2017 deadline. We find that lenders that are serious about sustained profitability and growth tend to follow GSE recommendations and take action ahead of time. Now with DocMagic, all of our lender clients have that option.”

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To assist lender clients in preparing to meet the entire UCD mandate, DocMagic recently launched its ‘UCD Control Center,’ a one-stop, go-to resource for everything lenders need to know about the UCD requirement.  It offers tools, documentation, interactive communication for Q&A, webinars, updates, and most importantly the ability for lenders to test for the entire UCD mandate ahead of the complete 2018 deadline.

The company says its goal is to have the bulk of its clients fully prepared to meet the requirements for both phases this year.

“Our customers and partners rely on us to do everything we can to assure they transact the safest, most compliant loans—and helping them prepare for a major new mandate like the UCD requirement is no different,” said Dominic Iannitti, CEO of DocMagic. “Lenders, settlement providers and other organizations must prepare now or run the precarious risk of being unable to sell their loans.”

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.

The State Of Innovation

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Over 100 mortgage executives came together to attend PROGRESS in Lending Association’s Seventh Annual Innovations Awards Event. We named the top innovations of the past twelve months. After that event, we wondered what would happen if we brought together executives from the winning companies to talk about mortgage technology innovation. Where do they see the state of innovation? And what innovation is it going to take to get our industry really going strong? To get these and other questions answered, we got the winning group together. In the end, here’s what they said:

Q: Some say innovation has to be sweeping change. Others say innovation can be incremental change. How would you define innovation?

LEONARD RYAN: I would define innovation as more of a process improvement over current methods. Sometimes major breakthroughs happen after a lot of thought on process improvement. Today when we talk about innovation, it often means computer programs and their contribution to making the mortgage process faster, more secure, less complicated or instant. Thirty years ago an innovation was printing a 1003 on a laser printer. That would hardly qualify today since that is now an everyday process. In terms of your awards, it seems the more significant the process improvements, the more likely to be recognized.

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REBECCA MAYERSON: No change in mortgage banking can be sweeping due to the layers of regulation and compliance by federal, state, GSE, and big banks. So innovation must be incremental due to the risk/reward.

TIM ANDERSON: Incremental. Because the mortgage business is a highly regulated one consisting of a multitude of participants each adding a step and receiving their cut of revenue to get from point A to Z it is a hard business to affect sweeping change. Still too many players, steps touching too many different disparate systems in the process to affect sweeping change or significant impact by itself.  Because of this I don’t see a company developing something like the iPhone coming into the mortgage space with a whole new app or mobile device that is singularly going to revolutionize this business.

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The GSE’s because of their critical role in financing and market share (aggregator) have been the ones to affect real change in this business. If you look at their Uniform Mortgage Data Program, (UMDP) it’s a phased in approach at developing systems to better evaluate critical data elements to reduce risk. They moved the traditional post-closing pre-funding QC process to pre-closing QC and leveraging their new technology and regs like TRID (with three day delivery rule) to support this trend. Also because the mortgage process has very distinct processes with siloed departments dedicated to the mortgage manufacturing process, (POS, origination, processing, underwriting, closing, secondary marketing, servicing) each re-entering the same data that introduces a lot of steps, divisions, (overhead, operational costs and risk) vendor players and participants all have to agree to change their processes and automate to affect real change and ROI in this business.

CURT TEGELER: Innovation can be both sweeping and incremental. Innovation must be persistent and a mindset. It is a necessity to remain relevant in any industry and to enhance the products and services we offer. This involves implementing new strategic ideas, creating dynamic products and improving existing services. In having an innovative approach, you are increasing the probability of success and development in your business.

CRAIG ZIELAZNY: Innovation is creating an impactful solution to a problem. The innovation process can’t be boiled down to just listening to customers, though. Only through continuous and meaningful engagement can you identify real problems and execute effective solutions. It doesn’t become an innovation until the unmet need has been overcome by an appropriate and well-executed solution. Rarely is innovation the product of an individual person experiencing an “aha” moment. Ideas are easy, execution is hard and it is what makes any idea tangible.

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RICK TRIOLA: I think we all want sweeping change that solves problems quickly and delivers on the promises technologists have made and that consumers all want, but unfortunately we don’t see that, at least not in our industry. Most innovation fails because it never gets to the end user because the innovation can’t get passed through all the gatekeepers and entrenched stakeholders.

For example, the mortgage industry had the opportunity to adopt eSignatures as soon as the Federal ESign Act was signed into law in June 2000. Instead of leapfrogging over the antiquated paper processes and skipping a generation by heading directly to digital lending, too many players decided to invest instead in scanning and faxing devices and processes. Borrowers, buyers, sellers — everyone — would have loved the opportunity to just eSign instead of papering out and couriering documents all over the place, but instead our industry took more than a decade to move in the right direction.

We wish innovation would sweep down on our industry quickly, but the extensive eco-system here combined with and entrenched and outdated status quo results in new innovators being forced to ‘stand down’ while the industry accepts incremental change.

JOHN VONG: In other industries, change and innovation can happen simultaneously and dramatically. However, because the mortgage origination process is very complex, innovation in our industry tends to be more incremental and less sweeping. Take, for example, e-mortgages. As an industry, we’ve been talking about doing e-mortgages since 2000. It’s seventeen years later and less than one percent of originations are e-mortgages. One of the key reasons for this was that there were differing and competing priorities from parties within the mortgage origination and closing ecosystem including lenders, investors, warehouse banks, county recorders, notaries, and GSEs, among others, and not everyone was on the same page about digitization. Customized closing processes throughout the country is another impediment to innovation. Finally, the average borrower gets a new mortgage or a refinance infrequently compared to other common financial transactions, so they are willing (or at least have been in the past) to put up with inefficiency and inconvenience.

Q: How would you define the state of innovation in the mortgage industry? Is it thriving or in a state of decay?

CURT TEGELER: Innovation in the mortgage industry is stronger than ever. The industry is so far behind in technology innovation that it can only advance from here. There are countless opportunities to embrace innovation and the industry is becoming more and more digital. Every phase of the mortgage process is evolving, from the consumer experience to the lender experience.

CRAIG ZIELAZNY: As is the case in all industries, there are firms which innovate and those that don’t but rather choose to follow. The firms which continually innovate maintain close ties with their clients and the market, always searching for a better way to do something or to solve a seemingly unsolvable problem. The state of a firm’s innovation status is largely a function of the culture and the value placed on listening to clients and doing the math to unearth needs which are not clearly identified by the client.

RICK TRIOLA: Despite the fact that I feel our industry moves too slowly in general, we’re actually at a very exciting place right now. While we had the technology to do end-to-end digital lending a decade ago, lenders weren’t ready and consumers weren’t pushing for it. Today, consumers are ready at the same time investors and regulators are pushing for it. Even loan officers we’re talking to are excited about doing digital.

And they want to share all of the benefits of digital with borrowers, that means closing the loan from anywhere. We know this is possible because we have now completed tens of thousands of online notarizations and cracked the code around the ‘last mile’ friction of having to appear in person.

I believe that over the next few years, we’ll see a great influx of lenders moving into fully digital lending and realizing cost and time savings at the same time they offer better experiences to consumers. In 5 years, no one will deliver a mortgage on paper.

TIM ANDERSON: I think now that we have gotten past TRID this has freed up resources and initiatives to implement some change and innovation. I give Quicken Loans a lot of credit as well because everyone now wants their version of Rocket Mortgage and push to better qualify and verify the loan quicker and faster with initiatives like FannieMae’s Day One Certainty initiative and FreddieMac’ s Loan Quality Advisor tools to streamline the process. We are also seeing a major rise in finally implementing the Digital Mortgage and eClosings to complete the eProcess and deliver not only a better consumer experience but a replicatable, repeatable automated QC process that provides electronic evidence of compliance along the way.

REBECCA MAYERSON: Innovation is at the highest level in over a decade and surging. The need to lower expenses while improving the process for the customer while still protecting risk is driving innovation at a high speed.

LEONARD RYAN: Innovation in the mortgage industry is “making a comeback.” The mortgage crisis and subsequent regulations forced vendors with traditional products to spend resources on implementing those regulations. Only new companies or entrepreneurial minds during those times seemed able to develop substantial changes in process. However, I now see the start of vendors looking to make substantial changes to the process. I believe most of those changes will result in vastly reduced lender costs.

JOHN VONG: From the perspective of a technology provider, it’s thriving. Every loan origination system and service provider is enhancing its technology or developing new solutions.

From the lender perspective, however, cyclicality trumps innovation. When the rates are low and demand is high, lenders are often too busy to focus on technology and innovation. Instead they throw bodies at the problem. When volume declines, there is often a reluctance to invest. Instead, loan production is the top priority. That’s why it takes the mortgage industry a longer time to adopt or upgrade technology than other financial services sectors.

Of course, over the last few years, the risk management and compliance areas are an exception because lenders have more of an incentive to protect their companies from regulatory scrutiny after the meltdown.

Q: Lastly, if there was one innovation that you would say the mortgage industry desperately needs to happen over the next twelve months, what would it be?

REBECCA MAYERSON: Any of the Day One certainty steps that would allow All investors beyond Fannie to accept would be great for our industry.

TIM ANDERSON: A closing collaboration system that exchanges the data between the title system of record and lenders not only for TRID or final CD but the upcoming Uniform Closing Dataset (UCD) requirement coming September 25th. Most lenders look at these as separate compliance initiatives but the proper collaboration should start at time of application with the initial Loan Estimate, automatically check for compliance tolerances anytime the data or disclosures change, conduct a final reconciliation and comparison three days prior to Closing Disclosure and keep tracking 90 days after closing of any changes. This should not only include the CD but all the closing documents and then once approved be able to do a full eClosing to ensure data and document quality, integrity and compliance.

CURT TEGELER: Digital mortgages are significant for the mortgage industry. With millennials becoming a large percentage of homebuyers, being able to complete the mortgage process online is important. Bringing the lifecycle of the process from a lead to a buyer is crucial. Essentially, Realtors should have the ability to advertise and turn leads into homebuyers and borrowers digitally. Even a hybrid approach where the front-end process becomes digitized is a step in the right direction. With procedures and an evolving industry ahead of us, the ability to be move quickly is critical to long-term success, and this is done through being digital.

CRAIG ZIELAZNY: Ball games are rarely won because of home runs… It’s the team that strings together singles and doubles that will win. Our industry is no different. Each innovation will contribute to the overall improvement of the industry and the benefits delivered to the various members. If we listen to our customers and probe for a deeper understanding, we will all become innovators and help move the industry forward.

JOHN VONG: The existing traditional origination process is not geared to cater to Millennials, who have different expectations and are more tech savvy than previous generations. They don’t want to spend ninety days to get a mortgage with a traditional loan officer. Millennials want to go to online, fill out their basic information, and get instant decisioning, as well as shop for competitive rates. Traditional lenders need to significantly rethink the customer experience they offer if they want to be relevant to this growing customer segment. Moreover, both traditional and FinTech lenders are going to have to find ways to qualify non-perfect borrowers and do so in a more digital fashion.

RICK TRIOLA: From the lender’s perspective, we desperately need technologies that will reduce their costs and increase their profits in an environment with tightening margins. At the same time, they need tools that will help them compete more effectively as rates rise, refinances disappear and competition heats up.

There has never been a better time to adopt technology that will answer these needs. In my mind, it’s going to be all about online closings, anytime from anywhere, which exactly what eClose360 offers. In fact, we just ran the numbers for a new client and found that using the eClose360 platform would add $18 million in bottom line profits over the next 12 months. That’s the kind of innovation lenders need now.

E-Warehousing Picks Up Momentum

Texas Capital Bank has implemented DocMagic’s Total eClose solution.  This implementation enables the bank to function as an eWarehouse lender. They can now accept and fund eNotes from its lender customers that want to drastically speed up the process of closing and selling loans.

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Total eClose, DocMagic’s eClosing technology, is a single-source, centralized platform that provides all necessary components to enable a completely paperless digital closing. Texas Capital Bank is a provider of warehouse credit facilities to fund mortgage origination and acquisition.

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Texas Capital Bank recently funded its first eNote with a key lender client using DocMagic’s eMortgage technology suite. The eNote was instantly delivered to the bank, registered with MERS, and securely stored in DocMagic’s eVault. They completed the entire transaction electronically and transferred the eNote to Fannie Mae in minutes, rather than days.

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“DocMagic’s eClosing and eMortgage solutions have provided Texas Capital Bank with the tools necessary to incorporate the funding of eNotes into our everyday operational procedures,” said Donnie Martin, Executive Vice President at Texas Capital Bank.  “We believe the digital mortgage revolution and acceptance of eNotes will continue to grow.  We are pleased to have partnered with DocMagic to build out the infrastructure needed to support the eNote funding process at the bank, which in turn supports the trend towards digital mortgages.”

“It’s very rewarding to support Texas Capital Bank as they move forward and break ground as an eWarehouse leader,” said Dominic Iannitti, president and CEO of DocMagic.  “In this industry, it’s forward-thinking, tech-savvy organizations like this that thrive, set the pace and reach their goals. They understand the fundamental role that advanced technology plays in their—and the industry’s—progress. We look forward to collaborating further as we help drive true end-to-end eMortgage adoption.”

The Consumer Financial Protection Bureau (CFPB) has repeatedly encouraged lenders to implement eClosing technology and operational processes to make obtaining a home loan as easy as possible for borrowers.

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.

Vendor Attributes Revenue Growth To TRID

DocMagic, Inc. reported a 42 percent increase in revenue for 2016. The company credits its growth to the mortgage industry’s demand for products that enable TRID compliance, eSignatures and eClosings. This is the second consecutive year that DocMagic’s revenue has increased by roughly 40 percent.

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“Lenders have been looking for ways to assure TRID compliance since 2015,” said Dominic Iannitti, president and CEO of DocMagic. “Our user base has grown quickly. A lot of existing DocMagic clients saw the value of SmartCLOSE immediately. It has also been an entry point for many of our new lender clients.”

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SmartCLOSE enables lenders to interface with settlement providers and other relevant parties in a secure portal to share, edit, validate, audit, track and collaborate on documents, data and fees. In the past two years, DocMagic has completed numerous key integrations between lenders using SmartCLOSE, their loan origination systems, and new settlement service provider systems. More integrations are being developed.

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“The number of eSignatures completed has increased significantly since launching SmartCLOSE and Total eClose,” said Iannitti, referencing activity for eSignSystems, a division of DocMagic that provides digital transaction management and electronic storage systems. “Lenders appreciate that they can stay compliant while gaining the speed and convenience of a digital process.”

DocMagic anticipates its growth will continue in 2017. In February of this year, the company completed a successful pilot that enabled one of the country’s largest warehouse lenders to accept and fund eNotes, a transition that Iannitti expects to become a major industry trend in the next 12 to 18 months.

DocMagic’s growth plans include ongoing calibration of its infrastructure. To maintain its standard for high quality and service, the company added staff in nearly all functional areas, including senior software developers, project managers, implementation specialists, technical support representatives, integration staff and business development professionals.