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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.

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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.

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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.
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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.

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Take Things To The Next Level

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Sanjeev-MalaneyThe wake of the housing crisis bore an avalanche of regulatory changes, which has resulted in soaring compliance risks and operational costs. Lenders are increasingly concerned about data integrity and quality control during the loan process, and this focus on data integrity has significantly increased total loan production costs. Given the increased costs associated with complying with ever-changing regulatory requirements, total loan production costs are not only soaring, but in many cases rising compliance costs have made loan origination unprofitable.

As today’s lending environment becomes more complex, traditional document management models pose a significant hurdle for maintaining quality control and controlling costs throughout the lifecycle of a loan. Also, legacy LOSs have failed to keep pace with the amount of automation required to cope with the rising cost of loan origination. Increasingly, lenders are being forced to reevaluate their operations to ensure that their document and data management operations have sufficient automation and adequate data integrity controls to satisfy compliance requirements without increasing costs.

As lenders increasingly turn to technology to automate much of the loan life cycle, they are in fact moving toward a straight-through processing (STP) model. The concepts of straight-through processing (STP) were originally developed to describe debt and equity trading and payment transactions that are conducted electronically without the need for re-keying data or manual intervention. Although the goal of “same day settlement” that the STP model promised equity trading has not been realized, the concepts of STP are applied in financial markets today to improve the certainty of settlement, minimize operational costs, and reduce systemic and operational risk. The mortgage industry can realize similar benefits, and others, by applying the concepts of STP to the loan origination process. When the STP model is applied to mortgage loan origination, much of the loan process is automated, resulting in up to an 80 percent reduction in labor. With STP, loan turn times are reduced, costly labor is eliminated and compliance is easily managed.

Today, many key steps in the loan lifecycle are labor-intensive and error-prone. The practice of “stare and compare,” for example, in which a human being looks back and forth across two or more documents to verify that the information is consistent across document types, is time-consuming and costly – and errors are common. Since the STP model reduces up to 80 percent of manual labor, human intervention is required only when something that is flagged by an automation engine needs to be validated. Using this exception-based processing model not only speeds the loan lifecycle, but also helps lenders better optimize the time of their most knowledgeable staff members.

As another example, loan data could be extracted and put through a rules engine to automate pre-funding and post-close quality control. Only if the loan application has a data point outside of the rules parameters would it then be sent to a human for review. This standardizes the process, increases productivity, lowers cost and minimizes quality risks.

Historically, it’s been feasible for lenders to send only a small percentage of loans through a quality control process, despite the growing pressure from regulatory oversight for more control and thoroughness. Typically, quality control is performed by in-house staff or an outsourced third party late in the origination process, or even after a loan closes. This drastically reduces the ability to take cost-effective corrective actions, and leaves the lender vulnerable to compliance risks. With the STP model, quality control moves to the front of the loan process and it becomes feasible to perform quality control for 100 percent of loans.

As the mortgage industry continues to evolve, and data integrity and quality control move front and center, lenders need to rethink the traditional ways of doing business. In the past, a focus on quality control meant increasing total loan production costs to the point of unprofitability and slower loan turn times. However, with the adoption of STP as a way of introducing quality control throughout the loan lifecycle, lenders are able to shorten loan turn times and ensure data integrity by using technology to automate most of the loan process. This not only reduces labor costs, but also eliminates compliance risks and buy backs that result from data integrity issues. In today’s competitive and regulated environment, adopting an STP model gives lenders a sustainable competitive advantage.

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
SanjeevMalaney

Bringing Mortgage Quality Control To The Next Level

The wake of the housing crisis bore an avalanche of regulatory changes, which has resulted in soaring compliance risks and operational costs. Lenders are increasingly concerned about data integrity and quality control during the loan process, and this focus on data integrity has significantly increased total loan production costs. Given the increased costs associated with complying with ever-changing regulatory requirements, total loan production costs are not only soaring, but in many cases rising compliance costs have made loan origination unprofitable.

As today’s lending environment becomes more complex, traditional document management models pose a significant hurdle for maintaining quality control and controlling costs throughout the lifecycle of a loan. Also, legacy LOSs have failed to keep pace with the amount of automation required to cope with the rising cost of loan origination. Increasingly, lenders are being forced to reevaluate their operations to ensure that their document and data management operations have sufficient automation and adequate data integrity controls to satisfy compliance requirements without increasing costs.

As lenders increasingly turn to technology to automate much of the loan life cycle, they are in fact moving toward a straight-through processing (STP) model. The concepts of straight-through processing (STP) were originally developed to describe debt and equity trading and payment transactions that are conducted electronically without the need for re-keying data or manual intervention. Although the goal of “same day settlement” that the STP model promised equity trading has not been realized, the concepts of STP are applied in financial markets today to improve the certainty of settlement, minimize operational costs, and reduce systemic and operational risk. The mortgage industry can realize similar benefits, and others, by applying the concepts of STP to the loan origination process. When the STP model is applied to mortgage loan origination, much of the loan process is automated, resulting in up to an 80 percent reduction in labor. With STP, loan turn times are reduced, costly labor is eliminated and compliance is easily managed.

Today, many key steps in the loan lifecycle are labor-intensive and error-prone. The practice of “stare and compare,” for example, in which a human being looks back and forth across two or more documents to verify that the information is consistent across document types, is time-consuming and costly – and errors are common. Since the STP model reduces up to 80 percent of manual labor, human intervention is required only when something that is flagged by an automation engine needs to be validated. Using this exception-based processing model not only speeds the loan lifecycle, but also helps lenders better optimize the time of their most knowledgeable staff members.

As another example, loan data could be extracted and put through a rules engine to automate pre-funding and post-close quality control. Only if the loan application has a data point outside of the rules parameters would it then be sent to a human for review. This standardizes the process, increases productivity, lowers cost and minimizes quality risks.

Historically, it’s been feasible for lenders to send only a small percentage of loans through a quality control process, despite the growing pressure from regulatory oversight for more control and thoroughness. Typically, quality control is performed by in-house staff or an outsourced third party late in the origination process, or even after a loan closes. This drastically reduces the ability to take cost-effective corrective actions, and leaves the lender vulnerable to compliance risks. With the STP model, quality control moves to the front of the loan process and it becomes feasible to perform quality control for 100 percent of loans.

As the mortgage industry continues to evolve, and data integrity and quality control move front and center, lenders need to rethink the traditional ways of doing business. In the past, a focus on quality control meant increasing total loan production costs to the point of unprofitability and slower loan turn times. However, with the adoption of STP as a way of introducing quality control throughout the loan lifecycle, lenders are able to shorten loan turn times and ensure data integrity by using technology to automate most of the loan process. This not only reduces labor costs, but also eliminates compliance risks and buy backs that result from data integrity issues. In today’s competitive and regulated environment, adopting an STP model gives lenders a sustainable competitive advantage.

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
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Vendors Have To Offer More

If technology vendors are going to be successful, they have to expand their footprint. For example,  Capsilon has added Cenlar FSB, Deutsche Bank and PennyMac to its Capsilon DocVelocity Network Delivery solution, which enables lenders to securely deliver fully compliant loan packages to leading financial institutions and government-sponsored enterprises (GSEs) according to their prescribed formats and protocols.

With the addition of these three institutions, Capsilon DocVelocity users can now deliver a single loan, or group of loan packages in a batch delivery, to ten flagship institutions. The additon of Cenlar FSB, the nation’s leading loan servicing provider, represents the first full-service loan servicer in the Capsilon Network. Supported major investor institutions now include Chase, Citibank, Deutsche Bank, Flagstar Bank, PennyMac and Wells Fargo. The supported government institutions include Fannie Mae, Freddie Mac and the Federal Housing Authority. With a single click, loans are sent directly to these institutions according to their specific formats and protocols, ensuring accurate, on-time delivery of loan packages.

Capsilon DocVelocity ensures accurate delivery through a number of quality control features that provide enhanced selection, mapping, translation and tracking of mortgage documents. DocVelocity automatically selects the correct documents, names them and places them in the stacking order required by the recipient institution. This reduces compliance risk and eliminates up to 90 percent of labor costs associated with the complicated task of  selecting, naming and sorting the correct documents needed to assemble a loan package for delivery.

“The Capsilon DocVelocity Network Delivery capability is used by some of the largest mortgage lenders in the country, and the expansion of the Network stems from the requests of these large lenders,” said Sanjeev Malaney, chief execultive officer at Capsilon. “Lenders doing business with Cenlar FSB, Deutsche Bank and PennyMac are now able to use the Capsilon DocVelocity Network Delivery capability to securely expedite the delivery of high quality loan packages that meet all formatting and transmission requirements of these leading institutions.”

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.
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Sharing A Vision For Mortgage Lending’s Future

Recent regulatory changes have forced lenders to reevaluate their operations to ensure that their document management operations have adequate data integrity controls to satisfy compliance requirements.  Data extraction and validation is the cornerstone of data integrity, and lenders must harness technology to move their operations toward a data-centric model. Here’s a look at a possible future:

Capsilon’s vision defines a new standard for the future of mortgage document management – a standard that brings the concept of straight-through processing (STP) to the mortgage industry, where a technology-enabled model is used to extract data from loan documents to move quality control to the front of the loan process.

The concepts of STP, originally developed to describe electronic debt and equity trading and payment transactions without the need for re-keying data or manual intervention, are now applied in financial markets to improve the certainty of settlement, minimize operational costs, and reduce systemic and operational risk. The mortgage industry can realize similar benefits, and others, by applying the concepts of STP to the loan origination process. This STP model automates much of the loan process, reduces manual intervention, and speeds processing while ensuring loan quality.

The practice of “stare and compare,” in which a human being looks back and forth across two or more documents to verify that the information is consistent across document types, is time-consuming and error-prone, not to mention costly. Plus, using this approach, it’s only feasible for lenders to send a small percentage of loans through quality control. Capsilon’s vision incorporates an exception-based processing model in which human intervention is required only when something that is flagged by the automation engine needs to be validated.

For example, loan data could be extracted and put through a rules engine to automate pre-funding and post-close quality control. Only if the application has a data point outside of the rules parameters would it then be sent to a human for review. This standardizes the process, increases productivity, lowers cost, and minimizes quality risks.

“The pressure on mortgage lenders to QC one hundred percent of their loans, while keeping the cost per loan in check, has never been greater,” said Sanjeev Malaney, CEO of Capsilon Corporation. “With Capsilon DocVelocity, large lenders now have the enterprise-level features and the capabilities they need to automate much of the loan origination process, from loan intake to post-closing, using automation engines coupled with exception-based processing to speed time to close while ensuring data integrity.”

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Managing Risks To Data Integrity And Security

You Can Download This Full Article As A PDF HERE

Sanjeev-MalaneyToday’s lending environment is far different from that of even just a few years ago. Heightened regulations, increases in unannounced audits by the CFPB and an ever more-complex economic environment have forced originators to change the way they do business. But even with the myriad of changes that have taken place over the past several years, there’s one threat to lenders that has remained constant: the inability to maintain data integrity.

The mortgage industry has long struggled to ensure the quality, transparency and auditability of loan information. Lenders struggle with data entry errors, conflicting information that requires risky judgment calls and untold hours spent trying to complete and reconcile data after a loan is funded. As a result of the part “bad” data played in the recent financial crisis and recent litigation, quality initiatives are taking hold across the industry. Regulators are working to ensure that proper oversight is in place to authenticate loan information throughout the loan process.

Some common practices and beliefs contribute to a lender’s inability to ensure data integrity and security, including the reliance on paper-based processes, the mistaken belief that the LOS is the source of truth for loan data because it is the system of record and the use of insecure methods to share loan documents with others involved in the loan transaction.

Paper-based processes should be a thing of the past

While the printing, copying, and shipping of paper documents should be a thing of the past, for many lenders, it is still at the heart of the origination process and contributes to the inability to maintain data integrity. A typical loan captures thousands of pieces of data, and the potential for error is huge.

The reliance on paper also poses a huge security risk. Visit any lender with a paper-based process, and it is obvious that keeping confidential information secure is a losing battle. Paper files with confidential borrower information are stacked on desks and on tables in clear view of anyone who might be visiting the office. Account numbers, social security numbers and other personally identifiable information is in the clear, available to anyone who might have bad intentions.

Once the loan is funded, it is still very common for a lender to retain all paper loan files in a storage unit or warehouse, to be searched through manually whenever necessary. By doing this, however, they put the files and confidential borrower information at great risk. Anyone who has access to the files has access to a treasure trove of confidential borrower information. If the warehouse or storage facility is broken into or damaged by fire or inclement weather, there is no insurance policy that can keep the confidential information from criminals or that can replace the lost information. Third-party document storage services are often seen as good alternatives, but are expensive and often located far from the lender’s office, resulting in an inconvenient, inefficient, and costly search and retrieval process.

Moving to a paperless process improves data integrity and increases overall data security. Today’s imaging and document management solutions replace paper mortgage folders with electronic loan files that are processed electronically from beginning to end. Using a modern document imaging solution, lenders eliminate the manual entry of loan data which introduces inaccuracies, and lenders have a reliable online workflow that results in better protection for loan information, as well as higher productivity, reduced costs and higher quality loans.

In addition, paperless technology guarantees an easily accessible audit trail for a loan file, enabling lenders to collect information quickly and have all corresponding communications relevant to that loan available within seconds. In the case of an audit, rather than scrambling to gather paper files that may be difficult to locate, lenders have complete electronic loan files available to them with a couple mouse-clicks.

Your LOS is not the source of truth for loan data from documents

While relying on paper exposes vulnerabilities in and of itself, the central issue affecting data integrity is the potential for inaccuracies when data is entered, or overwritten, in a lender’s loan origination system (LOS). Many lenders mistakenly believe that an LOS is a “source of truth” for loan information. In fact, an LOS is primarily a “system of record”, capturing, storing and listing information, which can be mistyped or manually changed over the lifecycle of a loan.

While the best source of data associated with the loan is the original documents used in the loan process, LOSs don’t provide the lender with the appropriate tools to easily locate the data on the original document and compare it with what is in the LOS.

Today, lenders invest a lot of time and resources playing the “stare and compare” game, in which a human being compares information across multiple loan documents to spot discrepancies, and also compares the information on the source documents to the information in the LOS. Whether the lender uses in-house staff or outsourced labor to complete the task, this practice is time-consuming, error-prone and costly. In most cases, this quality control (QC) is done late in the process, or even after the loan has closed, limiting any possible corrective actions. With more comprehensive document management technology, lenders are able to implement QC throughout the lifecycle of a loan, not just at the end, which leads to better quality loans and better business decisions.

An advanced document imaging and collaboration platform also provides the ability to extract data from loan documents and to validate that data across any number of loan documents, while always maintaining a link to the original source document. This technology makes it easy to compare data in the LOS with the data on the original document and alerts the lender of discrepancies in the data, as well as missing data or missing documents immediately.

Maintaining the link to the source document is critical. An LOS system can extract data for rules engines and other purposes but loses the connection between that data and its source document. If multiple versions of the same document are submitted for a loan, which version of the document served as the source for the data value that is in the LOS? With best-of-breed document management technology, the lender is always able to link from the data to an electronic image of the source document, so the source can be verified and is never in question.

What’s more, a comprehensive audit trail is created for any changes made to the data values, while always maintaining a link to the source documents. An LOS creates an audit trail of changes made in the system, but, again, the link to the original document is lost.   If a regulator were to request an audit, lenders should have the confidence that the tools they use to run their businesses will help see them through an investigation rather than send them to a warehouse to sift through stacks and stacks of yellowing documents and possibly never find the source document required to validate a business decision.

Sharing Isn’t Always Good

During the life of a loan, many parties are involved in the transaction including lender representatives, real estate professionals, title insurance agents, closing officers, and many others. Moreover, each of these parties is accustomed to different workflows, technologies and protocols when handling loan files. Today, much of the communication between these parties is done via fax, email, or the transport of paper files back and forth. The insecure channels used by the parties to collaborate on loans not only introduce the risk of human error, but significantly increases the security risk of lost or stolen files.

A document management platform gives lenders the ability to securely collaborate with co-workers and third-party service providers as the loan moves through the process. An LOS system may provide collaboration capabilities, but not secure “workspaces” where lenders can invite co-workers, or trusted service providers, to exchange documents and collaborate through the loan process. Using a document management platform for secure collaboration also speeds the transaction because electronic communication is instantaneous, and days aren’t wasted resending lost or poorly transmitted faxes or mailing paper documents back and forth. Emailing faxing, and shipping documents that contain sensitive information in the clear should be a thing of the past, and a best-of-breed document management platform offers a secure, more efficient alternative.

The mortgage industry has seen more changes in the past several years than in the past few decades. As a result of these changes, lenders must be prepared to change the way they do business by investing in technology that ensures loan data integrity and security.

By using a software solution designed to ensure data integrity, lenders improve the consistency and quality of loan information throughout the lifecycle of the loan, not just after a loan closes, when it is often too late to remedy. Technology also increases the security of loan information, as it replaces paper-based processes with secure, electronic channels for document management and collaboration. In today’s increasingly competitive and complex lending environment, the focus should be on delivering high-quality loans. With a focus on data integrity and security, lenders will be better able to meet both their operational objectives and financial goals.

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
SanjeevMalaney

Solving the Challenges of Maintaining Data Integrity for Mortgage Lenders

Data integrity, ensuring the completeness, accuracy and consistency of data used throughout the origination of home loans, is one of the greatest challenges facing the mortgage industry today. Many lenders find that the inability to maintain the accuracy of loan data during the origination process negatively affects their workflow processes, compliance efforts, and ultimately, their profits. Yet 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 yet to take advantage of this technology. As a result, they are plagued with inaccurate, inconsistent or incomplete data that they are betting their companies on.

Without the proper preventive measures in place, lenders struggle with data entry errors, conflicting information that requires risky judgment calls and untold hours spent trying to complete and reconcile data after the loan is funded. As a result of the part “bad” data played in the recent financial crisis and recent litigation, quality initiatives are taking hold across the industry. And regulators are working to ensure that proper oversight is in place to authenticate loan information throughout the loan process.

While the printing, copying, and shipping of paper documents should be a thing of the past, for many lenders, it is still at the heart of the origination process and contributes to the inability to maintain data integrity. A typical loan captures thousands of pieces of data, and the potential for error is huge. While relying on paper exposes vulnerabilities in and of itself, the central issue is the potential for inaccuracies when data is entered or overwritten in a lender’s loan origination system (LOS). Many lenders mistakenly believe that an LOS is a “source of truth” for loan information. In fact, an LOS is primarily a “system of record,” capturing, storing and listing information, which can be mistyped or manually changed over the lifecycle of a loan.

While the best source of data associated with the loan is the original documents used in the loan process, LOSs don’t provide the lender with the appropriate tools to easily locate the data on the original document and compare it with what is in the LOS. The only way to maintain data integrity is to use data capture technology that has been optimized for the mortgage industry to catch discrepancies automatically. This technology makes it easy to compare data in the system with the data on the original document, and alerts the lender of discrepancies in the data, as well any missing information or documents, immediately.

Not too long ago, it was acceptable to rely on internal staff or outsourced labor to double check loan information for completeness and accuracy. The practice of “stare and compare,” by which a human being looks back and forth across two or more documents to verify that the information is consistent across document types, is time-consuming and error-prone, not to mention costly.

Technology moves quality control to the front of the process by automatically validating the data across loan documents. Rather than send an application to an underwriter, the data could be extracted and put through a rules engine for analysis. Only if the application has a piece of information outside of the rules parameter would it then be sent to a human underwriter for review. This standardizes the process, increases productivity, lowers cost and lowers production risks. The technology would also keep a historical record of any changes made to the data, automatically creating and maintaining an audit trail to assist with compliance requirements.
Without preventive measures in place, including data capture technology, lenders are at risk of making lending decisions (or purchase decisions) based on inaccurate and potentially misleading information. Funding a loan or purchasing a loan based on inaccurate data puts the lender at risk if the loan falls into default down the line. In addition, selling loans based on faulty data greatly increases the risk of buybacks and hurts a lender’s credibility. Today’s lending environment necessitates loan quality through sound underwriting that is supported by technology to streamline business processes and ensure compliance.

By using a software solution designed to ensure data integrity, lenders improve the consistency and quality of loan information throughout the lifecycle of the loan, not just after a loan closes, when it is often too late to remedy. In today’s increasingly competitive lending environment, the focus should be on the data, not the documents. Ultimately, it’s the data that facilitates a high quality business process that meets the lender’s operational objectives and financial goals.

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