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The State Of Innovation

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

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

JEFF BRADFORD: Innovation can be incremental or sweeping. The key is that it is an improvement. It can be a small change to a process that improves efficiency or costs, or it can be disruptive and eliminate an entire category of services or processes.

DOMINIC IANNITTI: In order to gain significant traction and adoption in the mortgage industry, things generally happen in increments, mostly because so many parties have to weigh in and agree on how and when to effectuate change. A good example of that is the slow but sure industry adoption of eSignatures, eNotes and eClosings.

However, universal change and innovation can occur when a major compliance regulation is put into effect. The CFPB’s drive to implement the TRID rule created a fundamental shift of seismic proportions in both business processes as well as relationships. This affected so many entities across the mortgage supply chain. The CFPB essentially became a change agent that facilitated never-before collaboration between lenders and title companies. This not only helped the borrower but it also helped develop far greater transparency, much more efficient workflows, and better communication.

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So depending on the impetus, innovation can be swift or incremental. But I really define innovation as a process — the process of arriving at new ideas, concepts and approaches to doing things differently — and then bringing all the necessary parties together to execute on and attain adoption.

PAUL CLIFFORD: I don’t think it is either. Innovation isn’t tossing out the old paradigm completely, nor is it tweaking the old paradigm for incremental change. Innovation is taking what we “know,” our collective industry experience, and solving for old problems in new ways. We can’t forget our history, nor can we simply amend it.

MARC RICCIO: There is no definite explanation on how to create innovation, which is what also makes it so difficult to define. Considering something as being innovative means that it is one of a kind regardless of how it was achieved. What matters most in today’s industry, especially in the software world, is that creating innovation is mandatory in order to stay relevant and competitive. Without the ability to think outside of the box, there is little hope for survival.

BRAD THOMPSON: Innovation must be constant. It’s a given, really, for all technology companies, though especially ours. We’ve built our business around rapidly evolving mortgage platforms to meet the ever-changing needs of lenders and their borrowers. Regulations over the past several years, including TRID, are current examples, though many innovations were less reactionary and more visionary for us, such as the rollout of a true borrower portal in 2001 – it’s the combination of both reactionary and visionary innovations that allows lenders and technology providers to stay ahead of the market.

NICKIE BADALAMENTI-KALAS: Innovation does not have to be mutually exclusive to being either sweeping change or incremental change. It depends on the circumstances and specific market conditions in play. Innovation requires a company’s commitment to delivering dynamic solutions, technology, new processes, that proactively address current and future market conditions in a way that adds value to all interested parties.

SHARON MATTHEWS: Innovation comes in all formats, including small changes and large revolutionary advances. Being innovative simply means doing something differently than what has traditionally been done. It means not accepting the status quo as a given, but rather looking for new ways to do things. For every disruptor like the smartphone, there are many more that have been the result of multiple innovations over time that have improved the state of the art. Mortgage technology is a prime example.

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

BRAD THOMPSON: Innovation is thriving in the mortgage industry! Stronger than ever, in fact. Some of it is, of course, reactionary – TRID for example – yet the most interesting are forward-looking – like the work we’re doing around business intelligence and our next-generation borrower portal. Lenders require partners that are innovative, therefore, the best companies will be taking similar steps to stay ahead of industry trends.

MARC RICCIO: If you asked me this question 12 months ago, I would have replied it’s in a state of decay because of TRID. Although still weighing some vendors and lenders down, the worst part is over…and we have some exciting and innovation capabilities being released in the next 6-18 months. That being said, there are many new opportunities to embrace innovation. The Millennial generation will need housing, which will push lenders to embrace “their type of technology,” including tablets and mobile devices. We haven’t even scratched the surface with e-signature and paperless process capabilities. The future is all about speed, efficiency and economies of scale, and it will be driven by providing a seamless and optimizing loan process that provides personal service. The lenders who find a way to achieve this through innovation will be the winners.

DOMINIC IANNITTI: To use a well-known proverb, “Necessity is the mother of invention.” I cannot recall the last time I have seen so much innovation in the mortgage industry. Dodd-Frank imposed unprecedented regulatory oversight, introducing new processes and procedures, workflows, increasing compliance costs, along with greater risk while reducing bottom line profit and thinning margins. In order to survive, lenders must turn to eliminating old paper-based processes and automating more of the compliance verification and document process to ensure proof of compliance to protect themselves against future regulatory audits.

The increasingly regulatory intensive landscape the industry has faced ended up forcing a major business change from producing a paper trail, to document compliance in a loan file, to implementing a continuous automated, electronic data verification and compliance audit process. This resulted in ensuring that both the data and the documents which contain them are as current, complete and compliant as possible. Even Fannie and Freddie have moved from a post-closing review process to new pre-closing verification systems in order to verify data before final documents are drawn.

The short answer is that regulatory mandates to implement new compliance rules resulted in vendors developing better technology solutions to accommodate them. While it has been painstaking, I believe that the mortgage industry is about to turn a critical corner. We’re going to reach new heights of efficiency and the truly paperless eMortgage will gain critical mass sooner rather than later.

JEFF BRADFORD: I think innovation is thriving in the mortgage industry. The amount of venture capital that is pouring into the FinTech sector is huge. There are a lot of ideas being funded. We’ll see some of these turn into new services and products and enter the market in the next few years. Some may even disrupt the mortgage market. It will be interesting to watch.

NICKIE BADALAMENTI-KALAS: Personally, I know at Five Brothers we view the state of innovation as thriving. The influx of new rules and regulations has forced companies to develop innovation to respond to constantly changing market conditions. The key is developing a culture within the organization that is continually looking for ways to do things better, faster, and more cost effectively.

PAUL CLIFFORD: While it is thriving from a “spot solution” standpoint, I do feel we are still too reactive rather than proactive, preventing us from innovating at a broader, industry level.

SHARON MATTHEWS: Innovation in the mortgage industry is thriving without question. Every phase of the mortgage process is evolving, from the user experience at the point-of-sale, to eClosings, to post-close processes. We see better, faster and more cost efficient approaches coming to market in all these areas. Even data standards – not something typically associated with innovation – are helping to make possible the vision of a data-validated mortgage, in which quality and compliance are more easily assured from beginning to end.

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

SHARON MATTHEWS: It would be what we have termed the “Data-Validated Mortgage,” which refers to a loan whose individual data elements are in an accepted, standardized format and is made available in a way that is useful by stakeholders in every aspect of the business. The ability to assess loan documentation from pre-close to close and then extending through to post-close, especially in relation to TRID disclosures, is a game-changing capability affecting compliance, loan quality and investor salability. Leveraging the work performed by MISMO, eLynx and others, the Data-Validated Mortgage is an innovation whose time has come and is ready for adoption by the industry.

DOMINIC IANNITTI: Director Cordray of the CFPB has gone on record as stating that his number one goal moving forward is to implement a total eClosing and electronic Compliance Management System (CMS) that effectively addresses both compliance and consumer satisfaction. Our participation in the CFPB’s eClosing Pilot provided us with keen insight into helping streamline the overall consumer experience from the initial LE and eDisclosure to delivering the final CD and pre-closing package three days prior to consumption.

In order to ensure a truly consistent and compliant process, however, lenders need to document all consumer interactions. Using paper-based or even imaging-based systems aren’t going to cut it. You must start and end with electronically creating a completely paperless process to document consumer consent and understanding, acknowledgement, intent to proceed, receipt of delivery, etc. throughout the entire mortgage manufacturing process.

In future compliance audits, the CFPB is going to be checking the source and validity of the data so lenders are going to have to keep an electronic audit trail to document that as well. The only way to effectively accomplish that is to implement a true eMortgage process (eSign, eDisclosure, eClosing, eNotary, MERS eRegistry) and retain electronic proof and evidence of compliance (data, documents and electronic audit trail) that resides in an eVault along with reps and warrants to ensure total compliance with regs.

MARC RICCIO: I see the need for providing “picture” documentation that allows a borrower to zoom and click a picture of a borrower document with their cell phone or tablet. They need to be able to securely transmit the document to the lender to automatically be uploaded to the LOS and securely attached to the borrower record. The key is providing a secure delivery that requires no human intervention.

JEFF BRADFORD: Appraisals need to get better. Much better. It’s a big bottleneck for lenders trying to close loans when 50% of the appraisals submitted are returned for corrections. Innovation in the appraisal process, in the analysis and in the reporting are desperately needed. We live in a world, which revolves around technology and appraisers are still filling out forms manually. This has to change.

NICKIE BADALAMENTI-KALAS: With the influx of new rules and regulations, property preservation is not just about securing a lock or boarding up a window; it is about preserving the appearance of neighborhoods and maintaining homes as good as the house next door. The speed and accuracy at which servicers can get information from their property preservation company is a critical factor in making this happen. Mobile technology specifically applied to property preservation significantly speeds up this process while also improving data integrity and therefore will have a major impact on the industry over the next twelve months.

BRAD THOMPSON: The digital mortgage is absolutely crucial. Even a hybrid approach where the front-end process becomes digitized is a step in the right direction. With regulations and an ever-changing industry ahead of us, the ability to be agile is critical to long-term success, and being digital is essential to being agile.

PAUL CLIFFORD: Well, I don’t think it is a secret that we need to drive to data standardization and interoperability. The longer we remain a fragmented industry of stakeholders and systems, the longer our problems persist and multiply.

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Be Strategic

Lenders and vendors alike need to be smart and strategic. In some cases that means knowing what you do best and going out and acquiring someone who does something that you don’t do that great so you can be great all around. We can’t all be good at everything.

For example, Caliber Home Loans, Inc., a leading residential mortgage origination and servicing company, has entered into a definitive agreement to acquire substantially all of the assets of First Priority Financial, a regional residential mortgage lender with branches and originators serving California, Oregon, Washington, Idaho and Iowa. The terms of the transaction were not disclosed.

Headquartered in Fairfield, California and founded nearly 40 years ago, First Priority Financial has more than 370 employees focused on providing clients with competitive home financing and a broad range of loan products. The acquisition will expand Caliber’s geographic footprint in the Western United States. Following the acquisition, Caliber will have a servicing portfolio of approximately $90 billion, licenses in 50 states, and a salesforce of more than 1,000 across more than 250 retail locations throughout the United States.

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“With the addition of First Priority Financial, Caliber continues its strategy of expanding into high-growth, regional markets with attractive long-term opportunities,” said Sanjiv Das, Chief Executive Officer of Caliber. “This combination will help build on Caliber’s retail production channel, particularly in the attractive Northern California market. We believe First Priority Financial is the right fit for Caliber as they share our strong customer-centric culture and we welcome their talented team to the Caliber family. We look forward to working together to better meet the unique financing needs of homeowners across the country.”

“Since our founding in 1977, we have made it our mission to grow with our industry and adapt to an evolving market,” said Michael Soldati, Chief Executive Officer and President of First Priority Financial.  “With this transaction, we are excited to achieve another important milestone in our history and join forces with Caliber, one of the country’s leading mortgage providers, to offer our customers a broader suite of lending services. Caliber’s national scale, as well as its direct access to capital markets, exceptional customer service and advanced technology, make it the ideal partner for First Priority Financial. As part of a more dynamic organization, we are confident we will be better positioned to serve our clients and enable them to obtain the very best loan for their unique situation.”

The transaction is expected to close by early July 2016.

And we’re seeing smart acquisitions on the vendor side of the business, as well. For example, Black Knight Financial Services recently acquired eLynx. eLynx solutions help automate paper-intensive processes, improve workflow, reduce costs and support compliance with industry regulations. Black Knight supports many of the nation’s largest mortgage lenders and servicers with a comprehensive, integrated solution suite. With the addition of eLynx’s capabilities to Black Knight’s current offerings, Black Knight will now offer lender clients:

>>  A flexible document delivery platform, which securely facilitates interchange between consumers, lenders, title providers and other transaction participants either electronically or via proprietary, integrated print and mail capabilities;

>>  A private-labeled, mobile-friendly consumer portal to support process transparency; collect and deliver documents throughout the loan lifecycle; and schedule inspections and closings;

>>  Connectivity to an industry-leading network of settlement agents; and

>> Support for data-validated electronic mortgage, including electronic document delivery (eDelivery), eSignature, eClosing, and eRecording as well as electronically registering and submitting the mortgage note to an electronic vault.

“This is an exciting step for Black Knight as we announce our first acquisition as a publicly traded company,” said Black Knight Executive Chairman Bill Foley. “Over the last two-and-a-half years, we have successfully implemented our business plan to restructure the company and develop a strong cross-selling organization. It is now time to begin executing our acquisition strategy to accelerate our growth profile and fill out our product offerings.”

“Integrating the strengths of Black Knight and eLynx will give clients an even sharper competitive edge, and will significantly expand Black Knight’s opportunities to cross-sell our comprehensive solutions,” said Black Knight President and CEO Tom Sanzone. “We believe this combination will continue to drive process standardization and efficiency throughout the loan lifecycle, and will positively impact industry initiatives focused on TRID, consumer advocacy and eMortgage adoption.”

“We are excited to become part of Black Knight, a company well known for providing leading technology to the mortgage industry,” said Sharon Matthews, CEO of eLynx. “I am confident eLynx and Black Knight clients will benefit from the combination of our powerful technologies and mutual commitment to delivering innovative solutions to the mortgage industry.”

I think we’ll see more strategic acquisitions like this going forward.

About The Author

Tony Garritano
Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.

The Benefits Of A Data-Validated Mortgage

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In 2015, industry observers might have thought that CFPB’s “Know Before You Owe” rule, colloquially known as the TILA RESPA Integrated Disclosure (TRID), was the single most important issue facing mortgage lenders. To be sure, TRID dominated the headlines and the discussions over the course of the year. But TRID also exposed a crucial issue that has been percolating over the last seven or eight years, and it is one the industry must solve: How do we assure investors and regulators that the content of the loan file is exactly as it is represented?

What is required is a new approach to accessing the specific data points that support each mortgage loan. Think of the new approach as one in which every data element is standardized and understood within an industry-wide context: a “Data-validated Mortgage.”

What is a data-validated mortgage?

A Data-validated Mortgage is one that has escaped the bonds of paper that have constrained mortgages since the 19th century. Paper wasn’t a problem back in the days when it was the highest-tech medium available, but today’s electronic world requires that mortgage information be accessible outside of the paper document.

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A mortgage can be described as “data-validated” when information within the loan documents and from the mortgage process flow is utilized to do four things:

  1. Substantiate that an approved loan is consistent with the loan sent by the lender to the closing table, signed by the borrower and sold to investors
  2. Demonstrate loan quality to investors by providing greater transparency to the process, the data, and the compliance of the loan data and the documents in advance of a post-close review and audit
  3. Monitor regulatory requirements throughout the mortgage workflow, from pre-close to close to post-close, and highlight potential investor or regulatory errors
  4. Document evidence of compliance throughout each phase of the loan lifecycle

There are many implications to this simple description, and a number of things have to happen before the Data-validated Mortgage becomes possible. First, there is the matter of the information being locked in the paper documents the industry uses. It may seem like a simple matter to turn printed information into data, but it is not as easy as it sounds.

The mortgage business has evolved technologically, particularly over the last 15 or so years. But due in part to the legacy systems involved, it remains largely a document-centric industry. Printed or electronic print-formatted documents that have loan data embedded within them (think PDF or fax) are exchanged throughout the loan process, yet this data is not easy to manage. Lenders use loan origination systems to enter data and create documents; but once created, the data is unstructured and is no longer accessible outside of the document. For the data to become validated, it must be accessible independently of the document itself—and yet still follow the document through the loan process. For example, in a Data-validated Mortgage, while there is a loan document like the Form 1003 that can be printed, the document also exists in an electronic state as a digital, data-rich companion.

Portability and Siloes

Next, there is the matter of data portability. Data becomes portable when it can be shared, analyzed and put to good use by authorized participants to the process. In the Data-validated Mortgage, this is where the concepts of structure and standardization become tremendously important.

A Data-validated Mortgage requires data to be passed from one system (or person) to the next in the loan workflow. To do this properly, the data must have a structure that identifies the data’s context. So in addition to the raw data, each data element must also have a label. For example, “$350,000” isn’t very useful all by itself. Label it “Loan Amount,” and the recipient instantly understands its meaning. Structured data enables lenders, settlement agents, regulators and business partners to access and analyze the data to help improve quality, business processes, compliance and efficiency. However, structured data is only useful when everyone uses the same standards. Unfortunately, there is a basic problem that arises at this point, owing to a lack of standardization.

It took over 20 years for automobiles to develop standardized controls, with the clutch, brake and accelerator in the modern layout still used today. Early Model T drivers used a hand throttle, for example, and brake controls were located wherever the builder felt like putting them. Cars became far more useful in the 1920s when drivers could operate most of them pretty much in the same way.

The mortgage industry is going through a similar evolution. Problems have arisen when lenders use systems with proprietary, independently developed structures for data. As a result, mortgage data is generally “siloed” and accessible only by systems that can talk to one another. Even systems that have undergone integrations to become somewhat compatible with each other are seldom fully aligned. For example, servicers routinely must manually go through loans originated by others in order to board them from an origination system to a servicing platform. All this incompatibility makes data portability difficult, if not impossible – which is why data standards are critical to achieving the Data-validated Mortgage.

MISMO and the Uniform Data Reference Model

Thankfully, progress toward mortgage data standards is improving. The Mortgage Industry Standards Maintenance Organization (MISMO), a not-for-profit subsidiary of the Mortgage Bankers Association, has spent years working with lenders to create a standardized data format for mortgage lending. Instead of having every lender using its own method of handling loan information, MISMO enables all to be on the same page.

For a bit of reference, the mortgage crisis came at a time when about 100 data elements per loan were available to investors and rating agencies to evaluate risk. None of those data points could be digitally validated, by the way. Using MISMO, up to 10,000 individual fields of loan information can now be detailed, enabling very fine analysis to satisfy risk control and record keeping requirements for investors and other stakeholders.

After years of work and untold hours invested by committed industry professionals, MISMO has created a reference model that has become the de facto standard for residential and commercial real estate transactions, enabling data portability between systems that adhere to it. MISMO has also established both company-level and professional-level certification programs that help identify technology vendors and service providers that follow the MISMO standards.

One impactful example of the move towards standardized data portability is the GSEs’ Uniform Mortgage Data Program. The Uniform Closing Dataset (UCD) is the latest in a series of standards set by the GSEs, each focusing on a different part of the loan process. (In 2011, the GSEs released the Uniform Appraisal Dataset (UAD). That was followed in 2012 by the Uniform Loan Delivery Dataset (ULDD).) The UCD, which is based on the MISMO reference model, addresses data from the new Closing Disclosure. Lenders wanting to sell loans to Freddie Mac and Fannie Mae need to adhere to the UCD, which gives the GSEs the ability to use the data submitted with the loan to evaluate the integrity and quality of the loan prior to loan purchase. By basing the UCD on the MISMO reference model, the GSEs helped drive acceptance of the MISMO reference model and established it as the industry standard to follow.

In addition to data portability, a true Data-validated Mortgage requires connections for exchanging data between the various parties and systems associated with the loan. This allows lenders and partners to exchange data quickly and accurately. Ideally the connections are in the form of a network that links multiple lenders and partners. eLynx offers such a network now in the form of the electronic Closing Network (eCN). This enables all lenders and partners who connect to eCN to be connected to all of the member lenders and partners, seamlessly and instantaneously.

Long lasting benefits

Just as interchangeable parts and the assembly line revolutionized manufacturing in during the Industrial Revolution, the Data-validated Mortgage brings numerous benefits to mortgage lending.

First and foremost, it improves the integrity of the loan package and enables granular evaluations that ensure loan quality. Nothing is lost in translation due to systems’ inabilities to understand one another’s “language.”

Second, Data-validated Mortgages allow lenders to vastly reduce exposure in compliance issues by ensuring loans are within regulatory tolerances, including the UCD validation for loans submitted to the GSEs and the upcoming HMDA reporting requirements. These and other analyses can be readily automated during all phases of the loan process, from TRID through delivery, thanks to the Data-validated Mortgage.

Third, it supports greater and more efficient interaction with the borrower, which is a focus of the CFPB and a clear preference of today’s consumer.

Lastly (and perhaps the most important long-term benefit) is the transparency the Data-validated Mortgage brings to the loan process. As the investor community regains confidence in the integrity of mortgage information and its own ability to assess risk, there is a far greater future beyond today’s government-centric environment for the return of private capital in a large scale.

In addition to these tremendous benefits, the Data-validated Mortgage gives lenders the unprecedented ability to leverage the information they collect to understand market trends for business opportunities and improve their internal processes to boost service levels to consumers. They can also gain much greater ability to monitor vendor performance as mandated by the CFPB.

Are we in the midst of a data revolution in lending? Without question. While the overarching potential of achieving data mastery has yet to be fully revealed, the Data-validated Mortgage is emerging as a revelation unto itself – and one with unprecedented potential to transform the mortgage industry in numerous positive ways.

About The Author

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.

And The 2016 Winners Are …

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Prominent mortgage executives gathered last night to see who the Executive Team of PROGRESS in Lending named the top industry innovations of the past year. This honor is the Good Housekeeping Seal of Approval, the Gold Seal when it comes to recognizing true industry innovation. All applications were scored on a weighted scale. We looked for the innovation’s overall industry significance, the originality of the innovation, the positive change the innovation made possible, the intangible efficiencies gained as a result of the innovation, and the hard cost and time savings that the innovation enables industry participants to achieve. In alphabetical order, the top innovations are:

Bradford Technologies

Bradford-Technologies-2016-WinnerPROGRESS in Lending Association has named Bradford Technologies a top innovation. Appraisers today are tasked with providing even greater detail and analytical support for their adjustments and comparable selection in their appraisal reports. Lenders are demanding greater transparency and repeatable results using accepted methodologies. Redstone was developed by Bradford Technologies and released in 2015 specifically to address these challenges and to help real estate appraisers support their appraisal reports to lenders and the government-sponsored enterprises (GSEs). Redstone has been particularly useful in helping appraisers add statistical support to their appraisals and better defend their value conclusions.

DocMagic

DocMagic-2016-WinnerPROGRESS in Lending Association has named DocMagic a top innovation. In 2014, DocMagic began developing a comprehensive technology solution called SmartCLOSE to effectively address the CFPB’s launch of the TILA?RESPA Integrated Disclosure (TRID) rule. Sure, lots of vendors jumped on the bandwagon to create TRID solutions. Most of these are light solutions, lacking in functionality and cannot fully automate the new process from start to finish or ensure 100% compliance. SmartCLOSE brings lenders, settlement providers and other relevant parties together inside a secure collaborative portal to share, edit, validate, audit, track, and collaborate on documents, data, and fees.

eLynx

eLynx-2016-WinnerPROGRESS in Lending Association has named eLynx a top innovation. Expedite ID is a new solution from eLynx built on its certified MISMO-compliant Expedite services platform. Expedite ID combines the power of two existing solutions from eLynx — Inbox for consumer delivery and eCN for closing — and adds on new capabilities specifically engineered to enable lenders to address the CFPB’s Know-Before-You-Owe (KBYO) mortgage disclosure rule, i.e. TRID. It leverages eLynx’s extensive partner network to eliminate the need for lenders to go through the painstaking tasks of managing complicated integrations and organizing extensive training for their staff.

Five Brothers

5-Brothers-2016-WinnerPROGRESS in Lending Association has named Five Brothers a top innovation. The speed at which servicers can get information from their property preservation company is a critical factor in quality control. Mobile technology significantly speeds up this process. In 2015 Five Brothers introduced FiveLive, complete Field Services Management in the palm of your hand to its over 6,000 contractors. FiveLive is the workflow management system that automates virtually every step of the work order process in real-time. The FiveLive Mobile App brings a host of innovative technology capabilities to the job, making it faster, more accurate and more profitable.

Mortgage Cadence

Mortgage-Cadence-2016-WinnerPROGRESS in Lending Association has named Mortgage Cadence a top innovation. The Mortgage Cadence Configuration Migration Utility (CMU) is an advanced configuration promotion tool only available through the Enterprise Lending Center. This new, patent-pending utility enables the easy migration of ACE Actions, business rules, and formulas from one environment to the next – whether development, staging, or production. The utility also dynamically discovers differences between environments, then surgically migrates the specific configuration changes to the desired environment. With the need to fluidly adapt to constant regulatory and investor requirements, the CMU allows lenders to effectively manage complex configurations efficiently and reliably.

Simplifile

Simplifile-2016-WinnerPROGRESS in Lending Association has named Simplifile a top innovation. In 2015 the regulatory environment changed significantly, especially under the Consumer Financial Protection Bureau (CFPB)’s TILA-RESPA Integrated Disclosures (TRID) rule, the lender is responsible for accurate and timely delivery of key disclosures to the borrower. Lenders were under intense pressure to comply with these new rules and regulations. To address this extremely challenging regulatory environment, In 2015, Simplifile unveiled two new services: Collaboration and Post Closing. These innovative services electronically connect lenders and settlement agents, a streamlined connection that was needed more than ever with TRID taking effect in 2015. Simplifile Collaboration allows lenders to conveniently collaborate with their settlement agents in one place.

Specialized Data

Specialized-Data-2016-WinnerPROGRESS in Lending Association has named Specialized Data a top innovation. By law, every financial institution in the United States is required to have efficient strategic plans to prepare for business continuity, third party management, and incident response. Traditionally, financial institutions tend to push these operational risk management tasks aside to allocate more time towards return on investment tasks. To alleviate the frustrations associated with maintaining an effective operational risk management program, the company has created a suite known as RemoteComply. RemoteComply is an all-in-one web based suite containing solutions for business continuity planning, vendor management, incident response, and alert notification. The suite creates one centralized area to easily update and maintain all operational risk management criteria.

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Progress In Lending
The Place For Thought Leaders And Visionaries

Data Integration Streamlines TRID Compliance

eLynx has completed an integration with Landtech Data, a provider of systems used by real estate settlement services providers.  Landtech Data is also noted for creating the first real estate settlement system for desktop computers in 1981. The integration enables lenders utilizing eLynx’s Expedite ID compliance solution to exchange property, fee and loan data electronically with the 3,000 settlement service providers in 47 states using Landtech Data’s XML Real Estate Settlement System. This bi-directional exchange of data simplifies the collaboration required for lenders to generate the Closing Disclosure mandated by the TILA-RESPA Integrated Disclosure rules (TRID).

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LandTech users can now save significant time and effort by directly accessing eLynx’s Electronic Closing Network (eCN) from their desktops, eliminating the need to sign into the system separately. They can also receive lender fee data and send back settlement agent fees to the lender from within LandTech’s production solutions, further streamlining the process.

John Ralston, director of Title Services at eLynx, explained: “Direct integration is far and away the fastest, most reliable and most accurate option for lender-settlement agent collaboration and eliminates a major obstacle lenders face in complying with TRID rules: the timely sharing of data between lenders and settlement agents.”

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Landtech Data’s Director of Sales and Marketing Benjamin Bell noted, “With this integration, settlement agents using Landtech Data’s XML Real Estate Settlement System can automate collaboration with lenders and help them meet their new obligations under the TRID regulations.”

“By seamlessly sharing the data required to comply with TRID, lenders and settlement service providers can increase accuracy as well as reduce the cycle times, potential closing delays and costs associated with consumer disclosures,” said Ralston. “It virtually eliminates the need for manual data entry and the manual exchange of data. eLynx is extending this option to the entire eLynx registry of U.S. settlement service providers through integrations with Landtech Data and other title production systems,” he said.

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.

Ernst, eLynx Link Systems to Enable Faster, More Compliant and Accurate Closings

Ernst Publishing Company, a provider of technology and closing cost data information for the real estate and home finance mortgage industries for the past 26 years, and eLynx, the pioneer and leader in on-demand compliance services for Data-Validated Mortgages, have linked their software systems to enable lenders and settlement agents to close mortgage loans more accurately, quickly and compliantly, to the ultimate benefit of consumers.

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The alliance creates a tighter integration between Ernst’s Settlement Agent Gateway, a collaborative fee management system that guarantees TRID compliant fees for both lenders and settlement agents, and eLynx’s Electronic Closing Network (eCN). eCN gives lenders transparency and control of the closing process while significantly reducing the risk of loss due to fraud and non-compliance. Both platforms were built according to Mortgage Industry Standards Maintenance Organization (MISMO) data standards.

“This is a perfect fit for both companies and delivers a huge benefit to both eLynx customers and our own,” said Gregory E. Teal, president and chief executive officer of Ernst Publishing. “We’ve spent the last 26 years creating software and systems that provide guaranteed accurate mortgage closing cost fees to lenders. And eLynx’s eCN platform is one of the best vendor management systems for closing agents. Together, we now offer a complete solution that removes the compliance pain from the closing process at the same time it guards against fraud and improves the borrower’s overall experience.”

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“Today, eCN gives lenders the confidence to work with over 100,000 registered closing professionals, the largest verified network of closing attorneys, partners and agents,” said Andy Crisenbery, senior vice president of business operations for eLynx. “By incorporating Ernst’s closing cost data to eCN, lenders now have easy access to guaranteed accurate fees long before the deal approaches the closing table. This is a very strong alliance that offers significant benefits to loan originators and their partners.”

Progress In Lending
The Place For Thought Leaders And Visionaries

MISMO Gets It Right

Two people that I consider to be industry visionaries have been appointed to high-level positions within the Mortgage Industry Standards Maintenance Organization (MISMO). Specifically, the MISMO board of directors represents a cross-section of the real estate finance industry that manages and directs MISMO’s business and affairs. It consists of representatives from the residential and commercial mortgage industry who serve for staggered two-year terms. Here’s the scoop on its new appointees:

First, Simplifile’s Vice President of Strategic Planning Nancy Alley was appointed by the Mortgage Bankers Association (MBA), parent corporation of the Mortgage Industry Standards Maintenance Organization (MISMO), to the MISMO board of directors.

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“It’s an exciting time at MISMO and I am honored to join the board,” Alley said. “With the standard at the forefront of solving real industry business problems and regulatory challenges, I believe MISMO is a foundational piece of our future and I’m thrilled to be a part of it.”

Second, the Mortgage Bankers Association has also appointed eLynx President and CEO Sharon Matthews to the board of directors of MISMO. eLynx advocates strongly for the adoption of industry standards and is the only vendor certified as MISMO compliant in the TRID domain and at the Premiere Level in the information exchange domain.

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“I am delighted to be joining the MISMO board,” said Matthews. “It will be an honor to work with such a highly-regarded and influential group of leaders and visionaries. I look forward to helping in the evolution and growth of MISMO standards for our industry.”

MISMO is the technology standards body for the residential and commercial real estate finance industry. MISMO develops, promotes and maintains voluntary electronic commerce procedures and standards that allow participants in the mortgage process to exchange real estate finance-related information and electronic mortgages more securely, efficiently and economically.

Dave Stevens, CMB, President and Chief Executive Officer of MBA said in announcing the new board members, “In its most recent scorecard, the Federal Housing Finance Agency pledged active support for mortgage data standardization initiatives, including MISMO. The technology used to serve customers in housing finance continues to evolve and MISMO will play an increasing role in solving business and operational problems.”

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.

The Six Biggest Technology Challenges

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TME-Alec-CheungWhew! Can I just let out a long breath? Give everyone around me a high five and a fist bump? We’ve all just finished a long race! For the past year plus, lenders, settlement agents and mortgage and title technology vendors have expended a great deal of resources and effort in preparation for the CFPB’s Integrated Disclosures rule. And whether you’re feeling exhausted or elated — probably exhausted! — it’s good to at least be able to say we made it!

Now maybe I shouldn’t say we’ve finished this race. It’s probably more accurate to say that we’ve completed our training and preparation, and now we’re finally doing this for real. Just like there are different approaches to race training, there have been different approaches to preparing for TRID. Most everyone has tapped into technology in some form and to some degree in order comply with the new rule. For some, the use of new technology has been incremental, building on the systems and innovations they had already adopted. For others it’s been a major shift, representing a substantial change from their traditional mortgage practices and their supporting technologies. There are also some who have deferred technology changes as a result of TRID, preferring instead to wait until the dust settles, either because they just didn’t have the time and resources, or because they wanted to let the early adopters uncover the known unknowns. And make no mistake – there WILL be unknowns that pop up. TRID is too complex of a rule with far-reaching changes for every single nuance to have been predicted and foreseen in advance, even with 20 months – or make that 22 months! – of prep time.

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Here’s the thing though: Now that the deadline is behind us, we’re in it now. The race is live and no matter what approach you took, everyone will eventually get to the TRID finish line. That’s the point where the new processes and technologies that have been deployed are working and all the kinks have been worked out. So what then? If you’ve taken the time to train for and complete a hard race, ideally you don’t want to just finish and then go back to eating junk food again! It’s time to build on that momentum and keep making healthy progress. There are new challenges just around the corner. The technology and innovation that enabled us to meet the TRID deadline created a great deal of industry momentum. The best thing we can all do now is to keep that momentum going to push the envelope of technology and innovation in order to meet the next wave of change in stride, instead of being caught flat-footed.

Here are five significant technology areas – plus one demographic trend – that follow naturally on the heels of TRID. Each one is influenced by other factors and will evolve at its own pace, but with the right concerted effort, any and all of these will be where the industry progresses next in terms of technology-based evolution.

The Uniform Closing Dataset (UCD)

The Government Sponsored Enterprises (GSE) Fannie Mae and Freddie Mac recently announced that data for any loans they purchase must conform to the UCD standard. This standard, which is based on the MISMO 3.3 reference model, defines the structure and contents of the loan files uploaded to the GSEs. The requirement means all the data for loans they purchase needs to be MISMO 3.3 compliant. Some lenders made this transition as part of their TRID implementation; others will have to make the transition by the second quarter of 2017 if they don’t want to lose the GSEs as a secondary market for loans.

eClosing

The CFPB has targeted eClosings as the next big step in their Know Before You Owe initiative. The eClosing Pilot project, organized by the CFPB and including eLynx and two of its customers among other vendor/lendor pairings, was designed to identify technology options and best practices related to an electronic closing. The CFPB announced their results in August and several vendor participants have identified some lessons learned from the pilot project. The CFPB’s endorsement of eClosings doesn’t mean all closings will need to be eClosings, but most lenders and technology vendors will eventually benefit by supporting eClosings.

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Collaboration

One TRID-focused innovation was the direct integration between lenders and the title production systems used by their settlement service providers. As a result, it is now possible for many lenders and SSPs to exchange loan and fee data instantly and securely, eliminating the delays and compliance issues that come with having to enter loan and fee data manually. The underlying technology to do this is not trivial. It not only requires MIMSO-compliant data, but also a common cloud-based infrastructure or platform that can serve as a hub to interconnect all industry stakeholders. This can extend the benefits of real-time, secure collaboration demonstrated with TRID compliance to all business partners across the entire loan workflow.

Data Validated Mortgage

In addition to increased flexibility and efficiency, moving to a data-centric lending process will have an impact on loan quality and risk. The standardized data structure defined by MISMO will improve transparency in the loan data and ensures that everyone is basing decisions made during the loan process on the same data. It also makes it easier to verify and validate the data in the loan documents, for example comparing the data in the approved loan with the data in the closed loan. This will help lenders and the secondary market better assess loan quality and manage risk.

eMortgage

The all electronic mortgage has been on the mortgage industry’s radar for a decade or more. eMortgages have been technically possible but not widely used. One reason was that the technology innovation was outpacing the industry’s appetite to make changes, solving a problem that wasn’t painful enough to make the technology and process changes required. Now, many of the hurdles have been cleared as part of complying with TRID and other industry requirements. There are very real benefits to the eMortgage and with fewer hurdles lenders may decide the benefits outweigh the effort of getting to an eMortgage.

Millennials

While not a technology, Millennials represent a significant technology challenge to the industry. According to the National Association of Realtors, today millennials represent 32 percent of all homebuyers. The Brookings Institute projects that within ten years, millennials will form 75 percent of the entire workforce. They are tomorrow’s mortgage customers and they are very different than the mortgage customers of today and yesterday. They grew up with mobile devices in their hands and have grown to rely on their smart phones and tablets as their primary communications channels. Most have never known a world without the Internet and have come to expect information to be delivered directly into their hands anytime and anywhere. They will likely shop for a home and a mortgage online and once they decide to buy, they will expect technology and efficiency to be integrated into every facet of the transaction.

Clearly, paper documents and office visits will no longer cut it with this generation and lenders will have to adapt. Fortunately, lenders who have met the five preceding post-TRID challenges will have laid the groundwork for extending a paperless loan process to mobile channels. Lenders who haven’t will be challenged to meet the expectations of the millennial generations.

These 6 technology areas are what lenders need to be incorporating into their strategies and actively working towards now, even as we currently progress through the implementation period for TRID and sort out the issues that we uncover only through live production. Lenders who build on their momentum will continue to stay ahead of the curve. Even if you’re a lender that has temporarily deferred the use of technology for TRID, preferring instead to go with a manual approach for the time being, you can accelerate quickly and take advantage of the learnings gained through the first wave of deployments. The last thing we should do is give up the momentum that we’ve built as a result of TRID.

So let’s share some high fives and fist bumps. Enjoy a moment of celebration when integrated disclosures processes are operating smoothly and steadily. And then let’s keep on moving to the next thing. It feels good to finish one race, but even better when you can keep it going and knock out additional ones after that!

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.

Opinions Are Changing

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TME-TGarritanoI think that the mortgage industry is coming around to the idea that the electronic mortgage is not just the way the industry needs to go, it’s the way the industry has to go right now.

For example, eLynx has determined that there are substantive benefits across all stages of the mortgage cycle to moving towards digital, data-validated loan files. Origination, secondary marketing and servicing all gain from migrating away from paper-based methodologies that restrict accuracy and transparency, according to eLynx’s CEO and president, Sharon Matthews.

“Paperless mortgages will soon reach a tipping point, though not everyone realizes it,” said Matthews. “The entire industry uses loan systems that create electronic files that allow for the electronic movement of documents and data during the mortgage process. As the industry migrates to MISMO standards and the Uniform Closing Dataset, the benefits for all become clear,” she explained.

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“Origination benefits through the electronic delivery of Know Before You Owe (KBYO) disclosures and the better use of mortgage data to enable transparency for borrowers, GSEs and private investors alike. With higher quality data, investors can better evaluate loan portfolios well before commitment and delivery, which will lead to greater private mortgage capital infusions,” she said. “Servicers benefit by leveraging the uniform data when boarding loans, and for ongoing quality control and analytics that protect both lenders and investors, and augment the viability of mortgage investment vehicles,” Matthews continued. “Consumers benefit from lower origination costs using digital processes and delivery, as well as increased online capabilities, which Millennials and other younger borrowers demand today.”

eClosings are the final step and they are coming, said Alec Cheung, eLynx vice president of product management and marketing, who participated closely in the successful CFPB eClosing pilot that concluded this past August. “The pilot made it clear that eClosings can be successfully performed at scale and lead to a positive experience for consumers, as proven by borrower surveys,” said Cheung. “Process, not technology, is the determining factor. Borrowers did embrace electronic closings and technology is not the primary hurdle,” he noted.

“Process is where the last roadblocks remain but those are starting to erode. Investors have long hung on to paper documents. Notaries have yet to solve electronic notarization. Closing are used to paper-based processes dictated by lender and investor requirements,” he said. “We’re working within our very large nationwide network of closing agents and notaries to support the paperless migration.”

Any time a technology offers a process that makes loans better, faster and cheaper to create, the industry will eventually get behind it, Matthews believes. “The digital revolution is here and everyone in the mortgage value chain benefits from data-validated mortgages,” she said. “And that includes consumers and real estate agents. The CFPB and the GSEs are solidly behind going digital, and the Uniform Closing Dataset is the next big requirement looming for lenders now that the KBYO deadline has passed,” Matthews noted. “Starting as early as the second quarter of 2017, the GSEs will only purchase loans that conform to the Uniform Closing Dataset,” she said. “When the data is standardized, everyone will be a winner, both inside and outside the industry.”

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And lenders are starting to move on e-mortgage initiatives. For example, Mid America Mortgage Inc. will utilize DocMagic’s SaaS-based compliance and mortgage loan document engine together with the on-premise solutions of DocMagic’s recently acquired eSignSystems patented eSigning, eNotary, eVaulting, eRegistration and eRetention solutions. This is the first time since the acquisition of eSignSystems in October 2014 that the combination of technologies will be jointly utilized to facilitate a complete eClosing and validate DocMagic’s eMortgage model.

“We made the decision to sign with DocMagic and its subsidiary division eSignSystems because of the unique capabilities of the combined technology components, together with the most powerful eMortgage reputation and expertise in the industry,” said Jeff Bode, president of Mid America Mortgage. “The blend of these technologies integrated with our loan origination system (LOS), Mortgage Machine, establishes the path for us to close our loans electronically. DocMagic’s solutions are ready today for eClosing, and now that the GSE’s are accepting eNotes, their advance readiness for electronic closings is critical to Mid America’s short and long-term eStrategy.”

“The marriage of our SaaS and on-premise solutions delivers a unique value proposition for Mid America,” said Dominic Iannitti, president and CEO of DocMagic. “DocMagic’s SaaS model compliantly delivers dynamic, intelligent, data-driven loan documents and disclosures with a full eClosing for borrowers. eSignSystems’ on-premise platform provides Mid America with internal controls and tools to configure the solution to their specific business processes and the ability to efficiently work with third parties to achieve an eMortgage.”

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.

The ROI Of A Data-Validated Mortgage Explained

eLynx has determined that there are substantive benefits across all stages of the mortgage cycle to moving towards digital, data-validated loan files. Origination, secondary marketing and servicing all gain from migrating away from paper-based methodologies that restrict accuracy and transparency, according to eLynx’s CEO and president, Sharon Matthews.

Featured Sponsors:

[huge_it_gallery id=”2″]

“Paperless mortgages will soon reach a tipping point, though not everyone realizes it,” said Matthews. “The entire industry uses loan systems that create electronic files that allow for the electronic movement of documents and data during the mortgage process. As the industry migrates to MISMO standards and the Uniform Closing Dataset, the benefits for all become clear,” she explained.

“Origination benefits through the electronic delivery of Know Before You Owe (KBYO) disclosures and the better use of mortgage data to enable transparency for borrowers, GSEs and private investors alike. With higher quality data, investors can better evaluate loan portfolios well before commitment and delivery, which will lead to greater private mortgage capital infusions,” she said. “Servicers benefit by leveraging the uniform data when boarding loans, and for ongoing quality control and analytics that protect both lenders and investors, and augment the viability of mortgage investment vehicles,” Matthews continued. “Consumers benefit from lower origination costs using digital processes and delivery, as well as increased online capabilities, which Millennials and other younger borrowers demand today.”

Featured Sponsors:

[huge_it_gallery id=”3″]

eClosings are the final step and they are coming, said Alec Cheung, eLynx vice president of product management and marketing, who participated closely in the successful CFPB eClosing pilot that concluded this past August. “The pilot made it clear that eClosings can be successfully performed at scale and lead to a positive experience for consumers, as proven by borrower surveys,” said Cheung. “Process, not technology, is the determining factor. Borrowers did embrace electronic closings and technology is not the primary hurdle,” he noted. “Process is where the last roadblocks remain but those are starting to erode. Investors have long hung on to paper documents. Notaries have yet to solve electronic notarization. Closing are used to paper-based processes dictated by lender and investor requirements,” he said. “We’re working within our very large nationwide network of closing agents and notaries to support the paperless migration.”

Any time a technology offers a process that makes loans better, faster and cheaper to create, the industry will eventually get behind it, Matthews believes. “The digital revolution is here and everyone in the mortgage value chain benefits from data-validated mortgages,” she said. “And that includes consumers and real estate agents. The CFPB and the GSEs are solidly behind going digital, and the Uniform Closing Dataset is the next big requirement looming for lenders now that the KBYO deadline has passed,” Matthews noted. “Starting as early as the second quarter of 2017, the GSEs will only purchase loans that conform to the Uniform Closing Dataset,” she said. “When the data is standardized, everyone will be a winner, both inside and outside the industry.”

Progress In Lending
The Place For Thought Leaders And Visionaries