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Proving That E-Collaboration Is The Future

Further proving that electronic collaboration is the future of mortgage lending, Country Bank, a Massachusetts-based mutual savings bank with over $1.4 billion in assets, has chosen Simplifile as its TILA-RESPA Integrated Disclosures (TRID) collaboration solution. “One of the biggest issues with TRID will be how lenders and settlement agents will communicate changes to various documents on a timely basis,” said Country Bank Loan Servicing Officer Robert Olivier. “Simplifile’s Collaboration and Post Closing portal provides the ideal solution for us to collaborate on these changes to meet the required timeframes. It’s extremely well-designed and easy to use, which is a huge benefit for both our staff as well as our settlement agents.”

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Simplifile’s suite of services including Collaboration, E-recording, and Post Closing will connect Country Bank to its settlement agents and allow both parties to securely share, validate, audit, track, record, and collaborate on loan documents, data, and fees to ensure compliance.

“We already partnered with Simplifile on their e-recording solution for our servicing needs,” Olivier added. “We were very pleased with the increase in efficiencies we achieved using that product and the support that Simplifile provided to us. They have been very responsive to our needs and are committed to making sure that the Collaboration and Post Closing portal will help ensure that Country Bank is in compliance with the TRID regulations.”

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Through Simplifile, Country Bank will also have the ability to share changes, updates, deficiencies, and statuses with their settlement agents in one system, facilitating a fully auditable, more transparent process from loan application through automated delivery of the final title policy.

Simplifile Collaboration and Post Closing are both free services to settlement agents.

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.

Advancing Collaboration

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As the mortgage industry deals with life after the financial meltdown, we are finding that the industry is going to be more regulated then ever before. How do lenders deal with this new world? According to the executives at Simplife, electronic collaboration is the answer to ensuring success in the emerging mortgage market. How is that possible? Nancy Alley and Paul Clifford explained their industry viewpoint in a conversation with our editor. Here’s what was discussed:

Q: Paul, You have been in the financial services industry for over 16 years. You have really been a pioneer in the e-recording business. How has e-recording evolved over the years?

PAUL CLIFFORD: E-recording has certainly come a long way. E-recording is the process of submitting documents, whether signed in ink or electronically, for recording online and having them reviewed, recorded, and returned back to the submitter electronically. It transforms a process that could take several days or even weeks down to minutes. When you talk about the evolution of e-recording, it started out cutting-edge but has now become a common practice. In fact, close to 70% of all originations occur in a county where the recording can be done electronically.

Why has this happened? Thanks to laws like UETA, ESIGN, and URPERA, a contract cannot be denied validity, legal effect, or enforceability solely because it was formed using an electronic signature or an electronic record. Once the legal construct was in place, we just had to drive adoption. As you can imagine, the usage grew steadily as counties came online.

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Over time, there has been much less fear and confusion over what e-recording is, and instead, more and more people embrace and advocate for the tremendous benefits that come with e-recording adoption.

Q: If we stay on that topic, Simplifile has a vast network of over 17,000 closing and settlement companies in addition to over 1,233 counties with nearly 9 million e-recording transactions recorded annually. How has Simplifile been able to gain so much traction?

PAUL CLIFFORD: It has been an ongoing process. Simplifile has diligently worked for the last 15 years educating and promoting e-recording. We have worked on a national basis within all markets across the country having local representation and consistently attending over 220 events annually. This has given Simplifile an intimate knowledge of all of the complexities within each market around the country and how to best portray those nuances in simple ways. In the end, we are committed to the advancement of industry standards and best practices by taking many leadership positions in both PRIA and MISMO. Simplifile is committed to supporting our clients and always doing our very best to make sure our service is making their lives better.

Q: Nancy, for more than 20 years you have dedicated your career to driving innovation and leveraging technology in the mortgage industry. What brought you to Simplifile?

NANCY ALLEY: I have a long history working with Software as a Service models to move the mortgage industry to a totally electronic environment. So, my tenure in electronic mortgage collaboration is perfectly aligned with Simplifile’s value proposition. What I found most interesting is that Simplifile brings the side of the equation that often gets overlooked: the settlement agent. I was intrigued by the tremendous gains we could achieve as an industry if we could connect the settlement agent into the process electronically. Thinking ahead to August 1, I can’t think how organizations could remain compliant without electronic collaboration. Our new services, Collaboration and Post Closing, were designed to deliver on the promise of a world where agents and lenders connect transparently.

Q: You talk about how Simplifile “connects lenders, settlement agents, and counties,” why is that important in today’s market?

NANCY ALLEY: It’s critically important. With the TILA RESPA changes, being able to connect lenders to their settlement agents is more important than ever to get the fee collaboration and transaction details right. The movement of data, documents, and correspondence needs to be controlled, tracked, and audited to ensure a compliant process. In addition, the transaction doesn’t end at the closing table. Trailing documents continue to be an industry pain point. Lenders need to know where the documents are and what has happened to them after closing. If you are going to solve this frustrating problem, you have to embrace an electronic strategy that drives total transparency.

Q: When it comes right down to it, with any technology, adoption is the key to success. Why do you think Simplifile has gotten such great adoption in the past and how can lenders benefit from this?

NANCY ALLEY: I can’t stress enough the importance of meeting users where they already work every day. You have to start with the familiar, which means taking technology that is already in use and expanding the functionality. If you can do that, you can create a great value proposition that makes it easy for the user to take that next step. Our Collaboration and Post Closing services allow lenders and settlement agents to share, receive, and validate documents from time of application through delivery of final documents, and that’s a huge benefit. Delivering this benefit through an existing application that settlement agents, one way or another, are in every day streamlines their adoption; they don’t need new credentials to remember, and they don’t have to add or manage another vendor to start collaborating with their lenders.

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The other key to broader industry adoption is offering both partners and customers options to work with you, and you need to appeal to all sizes and types of customers. Some users want a lights-out process, so you have to offer flexible integration options. Others are seeking a ready-to-go user interface while others may prefer a hybrid of both to help them meet the August 1 deadline and plan for the future. You have to work with everybody and make it easy for them to work with you, as well. It has long been the philosophy of Simplifile to work with organizations of all sizes and in the way they desire to interact with the system.

Q: Why does Simplifile think they can help the mortgage industry?

PAUL CLIFFORD: Simplifile has the relationships and adoption already in place. The concept and technology is proven. We also have the integration expertise to make it easy for the industry to realize the value of this process. When you compare Simplifile to others in this space, we have post-closing visibility, which really is a missing piece for other providers. It’s also a big deal that we are independent and have a multi-tenant system with a single login. There are clear advantages to having been a pioneer in this space because now we can offer all of those years of experience to the mortgage industry.

Q: What can we expect from Simplifile in 2015 and beyond?

PAUL CLIFFORD: At Simplifile we have become experts at translating many-to-many relationships with complex data requirements into a simple-to-use platform. We are excited to leverage our pervasive presence in the settlement space, so lenders can collaborate seamlessly through our agnostic platform; thus, creating a comfort that they will be compliant to all of the new regulations.

Going further, Simplifile will also be providing the lenders in the industry with their first real-time view of their trailing documents. That’s very important. We will make it possible for mortgage lenders to automatically have their trailing documents returned after closing through our post-closing offering. Just that piece alone solves a major industry pain point.

Also, Simplifile is working to help all of the counties in the country embrace electronic recording. We currently cover 70% of the population, and 33% of the counties nationwide. We are committed to having every county, no matter how big or small, integrated so that everyone in the industry may benefit from a comprehensive electronic network.

Ultimately, Simplifile will continue to innovate and offer services that make sense for the mortgage industry.

INDUSTRY PREDICTIONS

Paul Clifford thinks:

1. New Integrated Disclosures will pave the way for rapid adoption of fully electronic mortgage transactions.

2. Transparent collaboration and post close platforms with auditability will help revive the private mortgage investor market.

3. Smaller settlement companies will leverage technology to navigate the changes ahead.

INSIDER PROFILE

Paul Clifford is President of Simplifile. As President, Paul manages all aspects of Simplifile’s corporate strategy. Recognized as an e-recording industry founder, Paul frequently presents at state and national industry trade shows and conferences. Prior to founding Simplifile, Paul served as the Director of Corporate and Strategic Planning for iLumin Corp., where he was responsible for researching, modeling, and creating strategic business plans and projects, including an automated mortgage transaction initiative for Freddie Mac and Fannie Mae.

INDUSTRY PREDICTIONS

Nancy Alley thinks:

1. There will be more confusion to come before there is any clarity.

2. Data standards are a big part of the solution for our space.

3. Electronic collaboration is required to conduct business.

INSIDER PROFILE

Nancy Alley is VP, Strategic Planning at Simplifile. She brings more than 24 years of financial services and mortgage industry experience to her role as the Vice President of Strategic Planning at Simplifile. She has dedicated her career to driving innovation and leveraging technology in the mortgage industry. As a Co-Chair of the eMortgage workgroup at the Mortgage Industry Standards Maintenance Organization (MISMO), Nancy is actively involved in driving adoption of industry standards.

Progress In Lending
The Place For Thought Leaders And Visionaries

Simplifying The Closing Process

You Can Download This Entire Article As A PDF HERE

TME-Alec-CheungIn April, the Consumer Financial Protection Bureau (CFPB) released a report titled Mortgage Closings Today that summarizes the key challenges generating consumer frustration around the mortgage closing process. Their assessment is based on data collection efforts that included reviews of consumer complaints, analysis of closing packages, industry interviews, an RFI calling for consumer and industry comment, and more. The purpose of this analysis was to shape their approach to achieving their long-term vision of a mortgage closing in which the consumer is “an empowered, knowledgeable homebuyer experiencing a more efficient, consumer-friendly process.” The CFPB’s resulting view is that electronic closings (eClosings) combined with the reduction and simplification of the documents in a closing package is how they can best achieve this vision, and I believe this approach is right on target.

To add further to their perspective, I thought it would be interesting to look more closely at best practice methodologies in customer experience design and management to see what guidance they could offer in the re-thinking of mortgage closings. Having spent over a decade working for a customer service outsourcer, I know that the field of customer experience management (CEM) has some very well-developed practices. One newer reference that I particularly like is The Ten Principles Behind Great Customer Experiences by Matt Watkinson. Watkinson recently received Management Book of the Year accolades for 2014 by the UK’s Chartered Management Institute. Of the ten principles he espouses, I found five that are easily relevant to the design of a more consumer friendly mortgage closing.

Satisfy Customer’s Higher Objectives

The highest objective in getting a mortgage is the actual purchase of the home – the acquiring of that proverbial American Dream. That’s why those in our industry fixate so intently on on-time closings. Financing and move dates have been carefully lined up so that buyer and seller can respectively turn over the keys and move in and out in sync. Anything that delays this carefully orchestrated timing will most certainly leave the consumer unhappy. The use of technology to reduce errors or discrepancies and simplify the signing of documents helps minimize this risk. Unexpected closing delays are most often caused by last minute corrections that require a restatement of all the closing paperwork. The CFPB’s new rule requiring lenders to provide consumers with closing documents three days in advance is intended to give consumers more time to review documents, partly so that errors and discrepancies can be caught. But the rule has the potential to also hurt consumers. Even if errors are caught before closing, if it’s within three days and the errors are beyond tolerance ranges, the close date must be re-scheduled.

There are other equally important objectives to a mortgage closing that consumers often don’t fully appreciate, either because they don’t sufficiently understand the financial implications of committing to a mortgage, or because they are rushed so fast through the paperwork that they don’t have time to contemplate their actions. Here is where eClosing technologies alone are not enough. To truly enhance the consumer’s understanding and empowerment, closing documents need to be simplified and reduced in number. The new Loan Estimate and Closing Disclosure are monumental first steps in this direction. I am hopeful (and eager to see) that these important forms will do a better job of helping consumers understand the details of their mortgage and what they are financially committing to, but the effort can’t stop there. Even though a majority of the closing documents are owned or regulated by other stakeholders, the CFPB has to continue taking a leading role in reshaping the format and nature of closing documents.

Leave Nothing To Chance

A well-designed customer experience takes into account every possible detail from beginning to end. As Watkinson notes, “We care about details, because they show that the business cares about us.” In fact, it’s the attention to detail that often makes the difference between an acceptable and superb experience. The CFPB has described some of the measures it thinks would improve consumer understanding, empowerment and efficiency at closings. These include ideas such as prescribing a specific order in which documents should be viewed, providing explanatory information up front to describe the meaning and importance of the documents in the closing package, and online access to educational resources if they have questions about terms or terminology. A closing process designed from the consumer’s point of reference, and with attention to every detail will create a much more understandable and positive closing experience.

Make It Effortless

Any time you can make things simpler, more convenient or faster, customers are likely to be happy. In the world of customer service and support, the latest research suggest that reducing the amount of effort a customer has to make in order to resolve problems is a much stronger driver of long-term customer loyalty than the conventional wisdom of exceeding customer expectations or “delighting” customers through above-board service. This simple insight has profound implications in the world of service and applies equally well to customer experience design. Obtaining a mortgage is not something consumers should take lightly. They certainly SHOULD put forth effort to review the terms and obligations of the mortgage, to understand what title insurance is and what it does and doesn’t protect, to rationally assess their own financial ability to repay the mortgage, and more. There are, however, ways to reduce some of the process effort so that closings are easier. Electronic signing is one such example. A “click-to-sign” signature process helps complete documents quickly and easily. So does the use of a “Next” button to move the consumer through documents efficiently, stopping at all areas that require signature or initials. Some consumers may prefer not to read large volumes of documents electronically. Providing an easy-to-find print button would be a welcome convenience.

Make It Stress-Free

The CFPB reports hearing from consumers who say they “often felt pressured to sign documents during the allotted time in order to avoid risking delays or even losing the house.” Furthermore, the CFPB found that “the timing of delivery was the most commonly cited challenge… appearing in 43 percent of [consumer] responses.” For this reason, the sending of documents to consumers in advance is one of the most important improvements the CFPB believes it can make. This is what drove the CFPB to hold firm with their requirement for lenders to provide borrowers with the new Closing Disclosure form at least three days prior to closing. However, we have to remember that having additional time is only one aspect of reducing stress. Just because consumers have more time to read the documents doesn’t mean they will understand them any better. This is why form and document re-design is needed. At a minimum, we have to look at ways to provide consumers with access to expert resources or information when they need it. To this end, Watkinson describes several techniques that can be used to reduce stress, including:

>> Considering the consumer’s level of competence – Consumers have different levels of comfort and familiarity with financial terms and legal language. Where possible, easy access to definitions or additional resources should be provided.

>> Clarifying the reason for the task – Consumers often don’t understand the purpose of many of the documents in a closing. Not knowing what you are signing certainly creates additional stress. Providing simple and clear explanations of what each document is and why it is important can help alleviate the consumer’s concern. Typically, the settlement agent is the one providing these explanations. If consumers are instead reading documents on their own, a “read this first” reference guide could be quite helpful.

>> Providing responsive feedback – Not knowing how long a process will take or what comes next can be unsettling for many. This kind of stress can be alleviated by providing a visual indication of progress made. For example, each time a document is completed, a check mark can be displayed along with a countdown of how many additional documents remain until completion.

Set and Meet Expectations

Notwithstanding the hyperactive refinancing market of recent years, where some consumers refinanced mortgages multiple times within a few years, most homebuyers go through a mortgage closing only a handful of times in their lives. It’s therefore rather difficult to know or remember what to expect in the process, especially for first-time buyers. Setting expectations up front about what the consumer is going to go through during closing, and then meeting those expectations, will go a long way in creating a positive closing experience. In an eClosing, this can be done by providing an overview document which is presented to the consumer first, before moving ahead with the actual review and signature of documents. The overview document should explain, for example, what happens in the closing process, the kind of documents the consumer will be reviewing, where to go for help, and more.

* * *

This is an exciting time for those of us in the field of paperless or electronic workflows. Thanks to a healthy push from the CFPB, the vision of a complete eMortgage, which initially formed many years ago, but then stalled due in no small part to the financial meltdown, is likely to get back on track. All of us – vendors and lenders, alike – should look to the principles of great customer experience design to help make us as successful as possible.

About The Author

[author_bio]

Alec Cheung
Alec Cheung is Vice President of Marketing at eLynx where he is responsible for product management, corporate marketing and corporate communications. Alec is a seasoned B2B marketer with 14 years experience in software and outsourced business services. He is passionate about customer experience and service delivery. Alec earned a BA in Economics and an MBA degree from UCLA.

Technology Can Promote Compliance

Technology can certainly promote compliance. For example, WFG National Title Insurance Company (WFG National Title)agents are now using the company’s Compliance Management System (CMS), an electronic platform allowing those agents to educate themselves about key compliance requirements as well as assisting them in the design of new compliance policies and procedures. WFG National Title is a growing national title insurance underwriting company and a full service provider of title insurance and real estate settlement services for commercial and residential transactions nationwide.

According to WFG National Title’s Executive Vice President, Joseph Drum, Esq., the company has made the rollout of the system a priority over the past several months. The project has been spearheaded by, WFG’s Chief Compliance officer, Donald O’Neill, Rick Diamond , SVP of IT and agency operations and Kelley Shellhaas, assistant Midwest underwriting counsel for WFG.

The CMS is an online platform WFG agents can use to educate themselves about compliance requirements and to develop the comprehensive compliance management programs lenders and their regulators are requiring. The key components include:

>> More than two dozen templates for policies and procedures that agents can customize and brand as their own;

>> Detailed guidance to help agents design and implement compliance programs consistent with best industry practices and regulatory requirements;

>> Technology solutions agents can use to manage, monitor and update their compliance policies and procedures;

>> Training material (in development but coming soon) agents can use to educate the staff members who must understand compliance policies and apply them.

Nick Henderson is the CEO of Omaha, Nebraska-based title agency Title Core, LLC. His business has made the WFG CMS a part of its compliance program. Henderson notes that the system’s flexibility is important at a time when compliance requirements and lender needs may change again: “The system is focused, really, on lender compliance requirements, even above and beyond ALTA’s Best Practices recommendations,” he said. “The overriding philosophy is that this new compliance environment is a journey that lenders and their partners will need to take together. The lender may add additional requirements, so the fact that this CMS is not purely a set of templates, but rather, an effort to examine my agency’s strengths and highlight possible areas of improvement is extremely important.”

“There is not another CMS in the title industry as comprehensive and effective as ours,” said Drum. “The CMS doesn’t provide off-the-shelf compliance programs appropriate for all agents; those one-size-fits-all programs don’t exist. But it will provide the building blocks agents can use to create compliance programs that match their business needs and meet the standards their lender clients have set.”

According to Diamond, “When lenders or their auditors ask for proof of compliance efforts – and if they haven’t yet, they will – agents using the CMS will be able to provide the documentation lenders require and the reassurance they need.”

“The regulatory environment in which title insurance agents operate has changed dramatically and will continue to change,” added Drum, “and our CMS will evolve as well. We’ll be updating it regularly based on feedback from lenders, regulators and agents, with ongoing input and support from WFG’s Compliance department staff.”

O’Neill pointed out that the CMS reflects the heightened priority WFG National Title is giving to its role in assisting its partners in their efforts to meet compliance requirements. “WFG is serious about compliance and the CMS will play an important role in how we assist our partners and clients in that regard. Compliance has become every bit as important to WFG as the original three C’s (communicate, collaborate and coexist) that are reflected in our corporate logo and define our philosophy.”

“We are serious about supporting our agents, in ways large and small, to help them succeed,” said Drum. “WFG exists for that purpose and the CMS reflects our commitment to both priorities ? strengthening compliance and supporting our agents.”

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.

Hybrid E-Loans: The Way To Go

Have you ever thought that the evolution of our industry towards e-mortgages is a bit like watching your children grow up? Growth comes gradually through incremental change. The changes are often quite memorable, but they come in small steps as opposed to radical and disruptive ones. It isn’t until you look back at old pictures that you see clearly how much they have grown.

The FHA’s recent acceptance of electronic signatures on mortgage loan documents is a good example of this analogy. The FHA’s revised policy has been years in the making, thus making the announcement something quite noteworthy. Yet, it is an incremental change, another single puzzle piece that has finally fallen into place.  We can now look back and appreciate that all government agencies that influence mortgage in any way are on board with electronic signatures.

While that’s great, what’s next? Will there be a larger, more demonstrative advance we can make? I believe the CFPB’s commitment to driving e-mortgages could be the catalyst that brings about faster evolution – the adolescent growth spurt, so to speak, that could move us forward in a big way. I also believe that process flexibility – one that is a hybrid of paper and electronic – will be important because even with the weight of the CFPB, it won’t happen in one fell swoop. There will be parts that are going to be awkward for a while as we collectively figure out how to make all phases fully support electronic workflows.

The Flexibility of a Hybrid Approach

The vast majority of documents in a closing package can already be electronically signed. The legal acceptance has been in place for over a decade and the technology capability has been proven. Other factors are what continue to hinder the broader adoption of e-mortgages. One is the difficulty in integrating various systems across multiple workflow participants. There are numerous parties involved in the mortgage process and every one of them must get comfortable with the legality of electronically signed documents, and every one must modify their workflows to accept the electronic delivery of documents. The inertia of existing processes is very difficult to overcome.

A second challenge is the development of an effective approach to e-notarization. This is another example of where process proves to be much harder than technology. Electronically notarizing a document is not technically difficult, but the guidance on what is allowable varies from one county to the next. Furthermore, the specific method in which e-notarization is conducted can vary. There are many approaches from mobile notaries to electronic closing rooms. Which way is better? What will work the best?

This combination of inertia and an unclear path forward results in very slow change. If forced to evolve by an external agent (i.e. the CFPB), having some flexibility in process will make the change much easier to accommodate. Being able to accommodate both paper-based and electronic transactions and gradually transitioning more from the former to the latter will ease the journey to a total e-mortgage. Here’s what a hybrid evolutionary path that supports both processes along the way might look like.

The first step is to transition all disclosures to electronic delivery and signature. With the IRS now accepting 4506T forms, there is no reason to delay the use of electronic formats in the pre-close phase where interaction with the loan applicant is the primary activity. During this initial phase, all other workflows remain paper-based.

Second, establish linkages with the various “back end” mortgage process participants. Once you decide to approve a loan and you move into the closing phase, there are numerous other parties to exchange data and documents with: title underwriters, appraisal companies, settlement agents, escrow agents, etc. Whether through multiple system integrations or via a centralized pre-integrated communication hub, enabling an electronic workflow in the closing phase is an important next step.

Third, convert to an e-note. There is still a frequent misconception that the note needs to be notarized. This is not the case. Transitioning from a wet-signed note to an e-note is feasible but will almost certainly involve a phased migration. Does loan type affect which can go e-note? Are certain investors more prepared for e-notes as compared to others? During this period of time, having the flexibility to handle different but concurrent workflows is important.

Finally, tackle the e-notarization challenge. This is still the most difficult to solve. Separating out documents that require traditional notarization is an important workflow step that must work efficiently while this phase is being designed. Supporting multiple options is also important in order to accommodate the constraints or limitations of certain counties or jurisdictions.

The path to the e-mortgage is getting clearer every year. We still have much road to travel, but being able to transition in phases will make the challenging parts of the journey easier to get through.

About The Author

[author_bio]

Alec Cheung
Alec Cheung is Vice President of Marketing at eLynx where he is responsible for product management, corporate marketing and corporate communications. Alec is a seasoned B2B marketer with 14 years experience in software and outsourced business services. He is passionate about customer experience and service delivery. Alec earned a BA in Economics and an MBA degree from UCLA.

New Counselor Portal Emerges

The National Community Reinvestment Coalition Housing Counseling Network (NCRC HCN) is a national HUD approved housing counseling intermediary and a direct housing counseling service provider.  NCRC HCN has selected IndiSoft’s RxOffice Premium Counselor portal for case management options and a recently enhanced document management suite.

“NCRC HCN’s efficiency and productivity will improve with the use of our easy-to-manage workflow management system,” said Sanjeev Dahiwadkar, CEO and president of IndiSoft, a technology development firm that specializes in systems for the financial services industry. “To best meet the needs of homeowners, NCRC HCN needs technology that will allow their counselors to customize and increase workflow while being able to communicate with homeowners via email and other methods. The RxOffice platform is proven to provide the transparency, connectivity and reporting capability to agencies counseling homeowners.”

RxOffice Premium Counselor portal will facilitate the management of multiple services for NCRC HCN, including customizable automated workflow, which includes submitting cases to servicers and emailing auto-populated loan packages to homeowners. Additionally, a direct-to-consumer portal allows homeowners to create and submit applications to their counselors via an NCRC-branded consumer portal.

By using the RxOffice Preminum Couselor portal, NCRC HCN can better track the time each counselor spends on activities giving management a clearer perspective of the number of hours needed for counseling services. The portal’s reporting capabilities includes being able to generate various grant reports such as HUD9902, etc.

“We plan to use IndiSoft’s RxOffice Premium Counselor to enhance our efforts to provide consumers with the housing-related counseling they need, as well as HECM and homeowner education,” said David Berenbaum, NCRC’s chief program officer. “The portal is customized to our workflow and will automatically email auto-populated documents to homeowners. It also allows us track and serve military veterans more effectively.”

Progress In Lending
The Place For Thought Leaders And Visionaries

Mortgage Industry Advancement

Download This Article As A PDF HERE

For years PaperClip has been helping the securities and insurance industries go paperless. PaperClip follows the paper filing metaphor of Cabinet, Drawer, Folder, Document, Page and Annotations. Replacing the paper filing system with an electronic mirror version, training and adoption comes quickly. Projects involving elaborate workflow rules are lengthy deployments, hard to follow especially in the financial services industry and simply the wrong place to focus; workflow belongs in the data system, why, because that’s where all the data is. Now Mike Bridges, President of PaperClip, speaks out about how the mortgage industry can adopt straight through processing in a quick and easy way.

Q: You’ve spent the last 20 years in the electronic document manage business across Life Insurance, Securities and Mortgage industries. How are they the same and how are they different?

MIKE BRIDGES: They are the same because everyone wants to reduce or eliminate paper within their process and company. If paper is your choice to receive, process and store, it’s costing $1.30 per page cradle to grave. The financial services industries in the early nineties knew they wanted to get rid of the paper and those who had the staff and the budgets implemented enterprise wide workflow and document management solutions. Institutions implemented expensive solutions with the promise to stop paper at the mailroom and gain efficiencies by elaborate document workflows. By the early 2000s, the majority of those systems were pushed out of the workflow and took on the role of document archiving. Now in 2014, the trend is overwhelmingly outsourcing to an online provider. SaaS vendors offer application expertise, economy of scale, code maintenance, DR&BC and a path of innovation.

Their differences are not that great. They all have either a captive or independent distribution channels; ninety plus percent execute their process with paper, receive paper from their trading partners and close with paper. Mortgage transactions have the most documents and third-party interactions compared to Life Insurance or Securities. Securities as an industry really solved their problem in the early 1970s with the creation of the “Depository Trust & Clearing Corporation.” New York City before the DTCC would literally messenger around town, stock certificates and checks. The DTCC did two things, stored all the paper certificates securely around warehouses; not much different than how the county maintains the property title, and through computer trading, allowed one net settlement account transfer at the end of the trading day. The Securities industry has made and continues to make progress in transactional business, but when you step outside of trading, they’re right back to paper.

The Mortgage industry over the past few years has found a new respect for electronic documents and their budgets are reflecting it. Still dominated by paper, the new flood of compliance and litigation collecting documentation and using it effectively requires document management.

Q: We hear all the time that it’s not about the technology; it’s about how fast people can change. Over the last decade, what have you seen as some of the most significant adoption or change?

MIKE BRIDGES: In the past 10 years one of the most significant adoptions is probably the fact that we’ve reached the point where organizations will accept an imaged page of paper and allow the shredding of the original paper, clearly making the image page the archived exact copy of record. Working with over 500 financial services companies, electronic document management is a staple. These players understand you convert paper as early as possible and manage image files.

Another example of imaging use is Check21. The Life Insurance industry started accepting check images for payment processing five years ago. Producers have been sending check images for years with the application, which carriers would accept to start the underwriting, but they still required the paper check to be mailed. Today, many carriers will accept the front and back scans of a check and will process the check image as an ACH transaction into their bank account; the sender then returns the check marked void or shreds it.

Technology compliance has dramatically changed the industries. With the movement of computing resources to the cloud or SaaS hosting, this data move has placed more pressure on that Service Provider. In the past the ISV (Independent Software Vendor) developed software and the customer would deploy it (i.e. the data was their responsibility). Now, the data is the Service Providers’ responsibility. Most recent are the new HIPAA regulations clearly defining the Service Provider as a “Business Associate.” This means the Service Provider could be subject to HHS/OCR fining authority. This type of thinking is beginning to show up in new government regulations and will continue.

E-Sign Point-of-Sale solutions have been the big focus for the last decade. The end goal was “Straight Through Processing” (STP), the complete elimination of paper or the need of paper to complete a business transaction. Some have found success when they apply STP to a slice of the process, in other words, just taking a bite of the elephant. Weak adoption continues to plague the effort for several good reasons. Data collection, who’s keying in all the data into an application or worse, a browser, is the main problem. I’m not referring to contact info; I’m talking about the data models (MISMO, LBTC, ACORD, etc.) which require over 200 fields of information to be captured for the most basic transaction. Some of these transactions can require thousands of fields to be completed; let’s remember MISMO has over 3,000 defined terms and ACORD is not that far behind. The fact that this data is typically collected from diverse sources (Appraisals, Credit, Lender, LOS, etc.) which causes their challenge to flip to integration with trading partners. This has suffered because the ISV community could not wait for the Technology Standards groups to produce the best road map. Many times these standards discussions where dominated by the 800-pound gorilla in the room and politics ensued; and the end result was flawed standards.

Q: Given the progress of imaging and STP, why does the use of paper continue to grow every year?

MIKE BRIDGES: It is funny that the use of paper continues to grow given the impact of the Internet. I recently read that the overall growth is one percent every year through 2017- much better than the 6% growth of the 90s. Some experts contribute the increase to the practice of “TransPromo.” This refers to a transaction document that consists of a promotional message that is positioned alongside essential transactional information. I think the financial services industries are seeing the growth in new compliance standards. Remember, each new rule requires some documentation of evidence, more paper.

Q: Will we ever see STP work end to end?

MIKE BRIDGES: No, back to the number one problem. Where is all the data coming from? The Life Insurance industry five years ago turned to “Call Centers.” These centers would call the applicant and ask many reflexive questions to complete term applications and produce an ACORD 103 message and filled in forms. These are not simple solutions, Carriers maintain over 1,000 reflexive questions for call center activity. Again, any sophisticated products that require professional guidance typically end up on paper applications.

The Mortgage industry leverages an ISV community and a process called “Scatter/Gather,” let the subject matter experts collect the data and send it back to the requestor. This of course requires data exchange standards. Today the standards process is fundamentally flawed. This is why successful ISVs continue to develop or acquire technology that builds out the STP or End-to-End process. This approach removes the needs for standards and integration since the ISV is in total control. An effective standards model or vendor can only grow the ISV community and the opposite will produce several large ISVs. Ultimately, the market will choose the winners but unless we get an effective way to exchange data, it’s no contest.

Q: If current standards are flawed, what could be an alternative?

MIKE BRIDGES: What I really mean is that the exercise of Standard Organizations to send everyone home with a standard to develop themselves will result in many different implementations. Twenty five percent of ISV staffs do nothing but work on customer standards integration.

What I learned many years ago in the Power Plant Generation industry is that their data model was the most effective way to exchange and use data. I first introduced this model at an AIIM conference (Association of Image and Information Management) in 1996. Members of NAILBA heard the speech and we began to introduce the concepts into their technology meetings. Their work produced the Electronic Document eXchange (EDX) Standard 1997. Their real work focused on a data dictionary of defined terms. Several vendors implemented EDX and today LBTC Surveys report 80% of their documents exchange as images. My company moves over 4 million documents per month between 500 plus companies.

NAILBA Tech’s next project was to create a data dictionary for their current data messages and end the resource drain of integrating with all the non-standard standards. Before that effort started, NAILBA outsourced its standards to ACORD. Currently, ACORD has started working groups to design a data dictionary model.

Since 2010, MISMO has been focused on building a business Logical Data Dictionary (LDD) and Reference Model to ensure semantic clarity and promote interoperability. If done well, this could be the break ISV’s needed-finally everyone is calling the same thing, the same thing. I know we’re watching this closely. Exchanging data and documents is one of our core businesses.

Q: With great adoption of STP, how will that impact imaging?

MIKE BRIDGES: Demand for imaging, Electronic Document Management (EDM), will continue to grow. Only EDM can accomplish the goal of being paperless. LOS or AMS solutions may store electronic documents commonly called vaulting. The truth is that EDM users need to service all their business operations (e.g. Accounting, Human Resources, Compliance, Legal, Commissions, Marketing, etc.). EDM (SaaS) must meet the requirements to be accepted as their books and records. E-Signed transactions or XML files are just another electronic document to EDM. EDM SaaS providers function as a Disinterested Third Party (D3P), which provides safe harbor from those involved in the transactions, including the point of sale vendor. The Securities industry requires it; one of their many regulations says “if the electronic document is the exclusive document, a copy shall be stored with a D3P.” In addition, the D3P signs an agreement allowing access to the documents and data without the custom’s consent. EDM is more than a vault by an order of magnitude but there is no question, EDM integration and communications are a requirement. EDM SaaS provides the best practices married with technology compliance, disaster recovery and business continuation requirements as well.

Q: Since you mentioned it, how do you see technology compliance changing in the near future?

MIKE BRIDGES: Enforcement is the only thing that’s really going to impact technology compliance. I do know we have the tools today to secure our systems, but unless organizations like FINRA, HHS/OCR, CFPB and State Regulators put it on their checklist, identity thief will continue to grow. The most vulnerable are those DIY people storing electronic documents on their internal file servers to people using free websites for storage or secure their emails and file transfers. When the enforcement arm gets going, it will be quick and the collection of fines will be welcomed by their respective treasuries.

Two-factor authentication is becoming popular for granting access to Non Public Information (NPI), but I don’t think the public will find it user friendly. Many of the regulations today allow the consumer to opt-out of secure transmissions when putting their NPI on the Internet; this waiver does not relieve third parties. The business community storing and exchanging third-party NPI must comply, “vendors must remain above reproach.”

Internet Protocol Lockout Service is another trend some companies are pursuing. This lockout or isolation service provides public access from within a distinct geographic location. I’m a company that only conducts business in the United States or a given State and isolate my inbound/outbound traffic to only the US or my State.  Stop all other traffic before it reaches my firewall. This approach greatly reduces the risk of outsiders trying to do mischief or Denial of Service attacks or worst, a desktop takeover.

Apathy remains our largest challenge. We have the tools and until enforcement arrives, systems will sit there like stacks of money on a park bench with nobody watching.

Industry Predictions

Mike Bridges thinks:

1. Processing paper cost $1.30 per page, going electronic cost $0.30 per page. We can process electrons better, faster and cheaper than we can process atoms.

2. A vibrant vendor community is directly related to the quality of their standards.

3. If you ignore Technology Compliance, either the bad guys or the good guys will find out; either way you’ll regret it.

Insider Profile

Since 1995, Mike Bridges has served as President, Vice President of Marketing & Sales, Director of Professional Services,and Consultant for PaperClip Software. In his current role, he is responsible for strategic direction, operations, and corporate communications. Prior to joining PaperClip Software, Mike was the Executive Vice President and co-founder of CMF Design System, a custom software and systems integration firm. Mike received a Bachelor of Science from Rowan University and served as a Captain in the United States Marine Corps.

Progress In Lending
The Place For Thought Leaders And Visionaries

Cyber Security Begins With A Plan (Part Five)

*Cyber Security Begins with A Plan (Part Five)*
**By Mike Bridges**

MikeB***As we continue to talk about cyber security plans, we have to talk about The Red Flag Rule, which requires many businesses to develop and implement a formal, written Identity Theft Prevention Program for the purposes of detecting the warning signs, or “red flags”, of identity theft throughout their day-to-day operations. Here’s what else you need to know:

****The first step is to identify the relevant red flags you might come across that signal that people trying to get products and services from you aren’t who they claim to be. The second step is to explain how your business or organization will detect the red flags you’ve identified. The third step is to decide how you’ll respond to any red flags that materialize. Do you use service providers who might detect any of the red flags you’ve identified? For example, if you hire a company to handle your Part Two Call Center activities talk to them to see that they’re following your Program or have their own that complies with the Red Flags Rule.

****Cyber Insurance

****Most corporate liability insurance policies do not cover losses due to cyber-attacks, errors or omissions. Cyber insurance is designed to mitigate losses from a variety of cyber incidents, including data breaches, network damage, and cyber extortion. The Department of Commerce has described cyber insurance as a potentially “effective, market-driven way of increasing cyber security” because it may help reduce the number of successful cyber-attacks by promoting widespread adoption of preventative measures; encouraging the implementation of best practices by basing premiums on an insured’s level of self-protection; and limiting the level of losses that companies face following a cyber-threat.

****Data Encryption

****Last but not least, encrypt at rest, in transit and include a process for data and hardware destruction. Your greatest hope for protecting NPI is encryption. Most laws and regulations will ignore encrypted data if compromised; they call this “Safe Harbor.”

****We all have the responsibility to protect and account for the use of NPI. Whether you’re paper or electronic based with your processing, the laws and rules remain the same. Top down, these are the points to focus on:

****>> Encrypt everything

****>> Get Cyber Insurance

****>> Train and educate your employees

****>> Comply with laws and regulations

Since 1995, Mike has served as President, Vice President of Marketing & Sales, Director of Professional Services,and Consultant for PaperClip Software. In his current role, he is responsible for strategic direction,operations, and corporate communications. Prior to joining PaperClip Software, Mike was the Executive Vice President and co-founder of CMF Design System, a custom software and systems integration firm. Mike received a Bachelor of Science from Rowan University and served as a Captain in the United States Marine Corps.

New Paperless Trends Emerge

*New Paperless Trends Emerge*
**Data Shows Advances**

files***In its ninth Path to Paperless study Xerox Mortgage Services found that even with compliance demands front and center, 63% of respondents noted having electronic document solutions in place, compared with 55% in 2012, which underscores the commitment to adopting paperless technologies in the near term. Here’s what else they discovered:

****The survey showed other positive trends in the acceptance and implementation of electronic initiatives, including:

****>> 78% of respondents’ companies are implementing technology to handle the flux of the industry.

****>> 45% feel their LOS’s imaging capabilities are lacking – they either use the capabilities but do not consider them sufficient or do not use them due to considering them insufficient.

****>> 76% of respondents prefer solutions that accommodate paper-sourced, imaged and electronic documents, and 75% value solutions that work seamlessly throughout the entire loan lifecycle.

****>> 80% of respondents cited decreased turnaround and processing time per loan, and 78% cited decreased processing costs per loan as benefits of going paperless.
2013-path-to-paperless-data

****You can request a copy of the Path to Paperless Survey HERE to see how your paperless technology initiatives compare to your peers. The survey results represent a cross section of industry executives and functions ranging from origination, underwriting, closing and more.

Progress In Lending
The Place For Thought Leaders And Visionaries

Cyber Security Begins With A Plan (Part Four)

*Cyber Security Begins With A Plan (Part Four)*
**By Mike Bridges**

MikeB***As we continue to talk about creating a cyber security plan, we have to touch on infrastructure and systems management.The potential privacy impact is assessed when new processes involving personal information are implemented, and when changes are made to such processes (including any such activities outsourced to third parties or contractors), and personal information continues to be protected in accordance with the privacy policies. For this purpose, processes involving personal information include the design, acquisition, development, implementation, configuration, modification and management of the following:

****>> Infrastructure

****>> Systems

****>> Applications

****>> Websites

****>> Procedures

****>> Product and services

****>> Databases and information repositories

****>> Mobile computing and other similar electronic devices

****Minimum Third Party Audits

****Whether you outsource or insource, a minimum third party audit you should conduct is a Penetration Test conducted by a reputable group. These Penetration Test (Pen Test) attempt to break through your security and provide feedback on areas you should correct. If your information is accessible via the Internet, it is highly recommended that you conduct Pen Testing annually.

****Public Privacy Statement

****Companies that maintain NPI must publish to the public your commitment to secure the same. If any information is used outside of the processing you are providing (e.g., selling mailing list names collected) you must disclose that practice in your public notice.

****Clean Desk Policy

****Clean Desk and Clear Screen (CDCS) Policy ISO 27001/17799 are simple steps intended to protect NPI when you are not present in the office. Clear desk and clear screen policy are used to reduce the risks of unauthorized access to, or loss of, or damage to, information. This requirement should be contained in the user access authorization document.

****>> Ensure that appropriate facilities are available in the office in which, depending on their security classification, computer media (disks, tapes, CDs) and paper files can be stored and locked away, including lockable pedestals, filing cabinets and cupboards.

****>> Sensitive information should be locked away in a fireproof safe (and the security adviser will have to access the fire resistance of the safe in terms of the sensitivity of the information inside it and its location in order to ensure its survival for long enough to be rescued).

****>> Personal computers, computer terminals and printers should be switched off when not in use and should be protected by locks, passwords and the like.

****>> Everyone should be required to use password protected screen saver that automatically fires up after only a few minutes (between three to five is reasonable) of inactivity.

****>> Incoming and outgoing mail collection points should be protected or supervised so that letters cannot be stolen or lost, and faxes and telexes should be protected when not in use.

****>> Photocopiers should be switched off and locked outside working hours; this makes it difficult for unauthorized copying of sensitive information to occur.

****>> All printers and fax machines should be cleared of papers as soon as they are printed; this helps ensure that sensitive documents are not left in printer trays for the wrong person to pick up.

****We’ll talk more about this next week. Stay tuned.

Since 1995, Mike has served as President, Vice President of Marketing & Sales, Director of Professional Services,and Consultant for PaperClip Software. In his current role, he is responsible for strategic direction,operations, and corporate communications. Prior to joining PaperClip Software, Mike was the Executive Vice President and co-founder of CMF Design System, a custom software and systems integration firm. Mike received a Bachelor of Science from Rowan University and served as a Captain in the United States Marine Corps.