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Docutech’s Harry Gardner Elected Chair Of ESRA Board Of Directors

Harry Gardner, executive vice president of eStrategies for Docutech, was named chair of the board of directors for the Electronic Signatures and Records Association (ESRA) for 2018. Gardner has participated in ESRA’s activities since its inception and joined the organization’s board of directors in January of last year.

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ESRA was founded in 2006 with the mission to lead and advocate the use of electronic records across multiple industries. The organization strives to develop and promote progressive eSignature-related public policy as well as inform and educate its members, lawmakers and the general public on changing regulations. ESRA currently comprises approximately 40 member-companies and organizations of electronic signature and document technology providers and users across the globe.

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“I’m honored to have been elected to serve as chair of the board of directors for 2018 and pleased to help ESRA as we move forward in this very critical year,” said Gardner. “Of course, improvement is always the main goal. We’re constantly looking to build up ESRA’s membership and to further expand our legislative and educational impact to see the full realization of the value proposition of eSignature technology across industries.”

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Gardner joined Docutech in 2016, building on more than 18 years of mortgage technology experience and standards development leadership. A leading player in the development of and education around mortgage technology standards, Gardner has written articles for many publications, including a series inMortgage Banking Magazine as the “eMortgage Evangelist.” At Docutech, Gardner collaborates with the leadership team to define and execute the electronic document and eSignature product strategy.

eClose: Moving Toward The Holy Grail

A fully paperless eClose has long been the Holy Grail for the mortgage industry. Just as Sir Galahad embarked on a quest to find the Holy Grail that would bring the ultimate benefits of self-actualization and salvation, brave lenders and tech vendors have been working tirelessly to achieve fully electronic closings and reap their invaluable benefits.

Not only do eClosings offer a wealth of operational benefits for lenders—improved efficiency, cost savings, tighter security and compliance, just to name a few— but they also enable lenders to extend more convenience and transparency to their customers. For lenders, they truly are the Holy Grail worth questing after.

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Luckily, eClosings are seeing more traction within the industry than ever before, but there’s still some distance to journey before they become standard. The first important step is understanding where the industry is currently and where it still needs to go before it can get its hands on the Holy Grail.

The Current State of eClose

A majority of eClosings today are hybrids between a standard paper closing and a full eClosing, meaning part of the process takes place electronically, but some portion still involves paper, usually for the notarized and title documents. Hybrid eClosings indicate progress for the industry and are still preferable to an entirely paper-based process, as transferring even part of the closing to digital brings business benefits to the lender and an improved experience to the borrower.

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Now it’s time for pioneers in the industry to address the handful of obstacles that remain on the path to eClosing.

(1) eNotarization

eNotarization is the aspect of eClosing that has perhaps most complicated the industry-wide transition to paperless closings.

This difficulty can be traced to confusion and lack of consistency in the current legal environment. While there is an existing legal infrastructure to confirm the validity of electronically notarized documents, notary legislation is controlled on a state level, which has resulted in a patchwork of differing laws.

While some states simply accept the ESIGN/UETA legal infrastructure, others have crafted their own legislation, and still others have yet to proclaim whether or not they will recognize eNotarization. This issue has been complicated even further now that some states recognize remote eNotarization—similar to standard eNotarization except the notary witnesses the closing ceremony via webcam instead of in person.

Due to differing state laws, title underwriters have been hesitant to insure loans closed with remote eNotary, because of the risk that a county recorder might notice that the notary was from a different state than the borrower and refuse to record the loan. As a result, investors have also been hesitant to purchase loans that have been remotely eNotarized unless they’re working in the few states, like Virigina and Montana, that have explicitly passed laws around the practice. Fannie Mae and Freddie Mac’s official policies initially stated that they would accept remotely-notarized loans only for borrowers and properties in the same state as the remote notary. More recently, those policies seem to be evolving toward acceptance of a remotely-notarized loan “as long as the title underwriter insured it,” regardless of location.

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The most straightforward solution would be for all states to simply accept the legal validity of electronic notary signatures under the existing ESIGN/UETA legislation. Only once the legal landscape has become more standardized across states will eClosings become the norm.

(2) Widespread Misconceptions

While most lenders and consumers recognize the benefits of conducting closings electronically, commonly held misconceptions among all parties involved have also impeded eClose traction. Luckily, this is an easy obstacle to overcome, as addressing it simply requires a little more education.

With the increasing frequency and complexity of data breaches, perhaps the biggest worry among lenders is that eClosings could be less secure than paper closings. However, digital mortgage processes actually have the potential to be more secure, as there’s less manual data management and better authentication methods to confirm the borrower’s identity. And it’s always important to remember that regardless of the method used to sign the final documents, on paper or electronically, lenders must store and secure the borrower’s personal information in the same back-end LOS systems, so eClosings don’t introduce any new issues related to data breaches.

Borrowers are generally happy to embrace eClosings, since many of them are already familiar with completing financial transactions online and would prefer the convenience of this method. However, they may also have security concerns, so lenders should make it a point to be transparent during the process to ensure borrowers feel comfortable.

(3) Technology

Technology solutions supporting eClose exist today, but they vary in their areas of focus and don’t yet comprehensively address every need at the closing table. Solutions that focus on eNotarization or remote notarization lack tight integration with document generation and employ manual tagging for signature points, introducing opportunity for human error if a signature point is missed.

There have been recent announcements of “completely electronic closings,” which indicate good progress toward a completely paperless process. However, in each case a lot of manual work and document handoffs were necessary to pull together all of the closing documents into a single eSigning event. Still, as the industry develops greater integration between lenders’ loan origination systems, doc generators, title production systems, closing agents, and electronic notarization and recording, we will continue to move toward more seamless solutions where document assembly and tagging will be performed automatically.

These developments attest to the hard work technology vendors have been putting into heralding in the age of eClose with optimal technology. The increasing prevalence of APIs and vendor partnerships are also facilitating the transition.

Additionally, there are still individual solutions that lenders can use to take some of the paper out of the process. Since eClosings hinge so significantly on documents, the most important feature to have in today’s lending environment is integration between the doc source and eSign platforms.

The industry is closer than ever to possessing the Holy Grail of mortgage lending: a fully paperless eClosing. All that remains of the quest is to overcome some difficult but conquerable obstacles, and then the entire industry will reap the benefits of eClosings.

About The Author

Harry Gardner

Harry Gardner is executive vice president of eStrategies for Docutech, a leading provider of compliance and documentation technology. Founded in 1991, Idaho Falls, Idaho-based Docutech offers a wide range of solutions to institutions all over the world. From document generation and imaging support to eDelivery, digital signatures and print fulfillment, Docutech sets the standard in providing market-proven technology and unrivaled client service to you, your workforce and your clients.

The Real Vote That Lenders Need To Cast

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The November election is not the only choice lenders face as they make decisions regarding the future of the mortgage industry. As the legal obstacles to electronically-signed loan documents fall and more consumers demand electronic documents for their home-buying process, lenders must evaluate and decide which of the two formats best serve their needs.

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On one side is the dynamic data-driven Securable, Manageable, Archiveable, Retrievable and Transferable document (MISMO SMART Doc). On the other side is the Adobe Portable Document Format (PDF).

Which format will win the hearts and implementations of lenders everywhere? While it’s too soon to know for sure, there are some key differences between the formats lenders should know.

Understand the Issues – What is Different Between the Formats?

SMART Docs and PDF-based documents both reach the same outcome – a legally binding loan document. However, each format uses a different technology and provides different benefits to the end user.

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From a technology standpoint, an electronically signed SMART Doc is a single electronic document with five sections. These sections are XML-based and the creation, viewing, signing and storage are all typically completed in a Web-based environment.

PDF Documents on the other hand, are often created in another application and converted to the PDF format which is then viewed within a Web browser or through stand-alone utilities like Adobe Reader.

While there are significant differences, eSigned SMART Docs and eSigned PDFs each have benefits useful to the lender. The choice is driven by each lenders’ individual needs, but it is also important to consider that the two types of eDocuments are not mutually exclusive. For example, a SMART Doc can include an embedded PDF file that has been electronically signed.

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Many advocates of the SMART Doc tout the format’s native Web structure and data integrity. The SMART Doc Version 1.02 format has also been implemented by most eClosing technology providers. Most importantly, it is the only electronic note format currently accepted by Fannie Mae.

SMART Docs are data-driven and system agnostic. They do not require proprietary software to implement, and the format can automatically extract loan data. SMART Docs also provide an extra level of data security with an Audit Trail feature that can track every change made to the document and provides a secure record of all signatures, deliveries and modifications.

The challenge to SMART Doc eNotes has often been around implementation. Lenders and financial organizations trying to consolidate technology formats for electronic documents across all departments have also struggled since few industries outside mortgage lending use XML for binding legal documents. The required XHTML View (for SMART Doc Category 1 eNotes) can also create inconsistent displays on different Web browsers, and print rendering can be inconsistent. This is a headache for consumers who want a simple process to view, print and sign documents.

eSigned PDF documents, which have been in use longer than SMART Docs, are the most widely used format by mortgage lenders and other financial services, even though most investors still do not accept them. These documents are also legally binding (remember, the legal foundations of ESIGN and UETA are technology-neutral), and eSigned PDF files are accepted by many industries outside of mortgage lending. PDF documents are arguably easier to implement and present a consistent display across all Web applications. In addition, all eSign providers can electronically sign PDFs. PDF documents are also easy for the borrower, since free PDF reader software is readily available for home computers, allowing borrowers to easily receive, view, save and print the documents for their own records. However, it is more difficult to embed data into PDF Documents in a standardized format, something that SMART Docs were designed for from the start.

Is There a Third Party?

While the selection of SMART Doc or PDF sounds like an all-or-nothing decision, there have been recent changes to the proposed formats that incorporate the best of both formats. The MISMO SMART Doc V3 protocol (an inherent part of the MISMO Version 3.x Reference Model XML specifications) includes both the native XML Data section and a View section that can contain any file format, including PDF, images, Microsoft Word and others. This closes the gap between the formats by providing a consistent, standardized structure for all loan documents – disclosures, closing and title – with XML data along with an easy-to-use PDF view for consumers.

Fannie Mae and Freddie Mac are also looking hard at ways to facilitate broader eMortgage adoption, per their FHFA Scorecard mandate, and moving to SMART Doc V3 with PDF View is one consideration. In addition, the MERS® eRegistry allows for registration of PDF or SMART Doc V3 eNotes through the Data Point registration method, eliminating one of the biggest obstacles to embracing one format over another. These considerations are being vetted within the MISMO eMortgage Workgroup, which will meet in person in Crystal City, Virginia during the week of September 12 – see www.mismo.org to register and join us there.

While neither PDF nor SMART Doc 1.02 answer the industry’s need for a universal intelligent electronic document format, SMART Doc V3 with a PDF View provides a universal View format coupled with intelligent, standardized XML data. Widespread adoption could be spurred on by broad investor acceptance, which could be led by GSE acceptance and an associated timeline for required delivery.

Today’s top document vendors can already dynamically generate multiple output formats. Adding the SMART Doc V3 to their systems would be relatively easy, and would provide lenders nationwide with the data security, technology and usability needed to propel electronic loan documents into the mainstream.

About The Author

Harry Gardner

Harry Gardner is executive vice president of eStrategies for Docutech, a leading provider of compliance and documentation technology. Founded in 1991, Idaho Falls, Idaho-based Docutech offers a wide range of solutions to institutions all over the world. From document generation and imaging support to eDelivery, digital signatures and print fulfillment, Docutech sets the standard in providing market-proven technology and unrivaled client service to you, your workforce and your clients.

Decision 2016: SMART Docs and PDF Forms Vie for Lenders’ Vote

The November election is not the only choice lenders face as they make decisions regarding the future of the mortgage industry. As the legal obstacles to electronically-signed loan documents fall and more consumers demand electronic documents for their home-buying process, lenders must evaluate and decide which of the two formats best serve their needs.

Featured Sponsors:

 

 
On one side is the dynamic data-driven Securable, Manageable, Archiveable, Retrievable and Transferable document (MISMO SMART Doc). On the other side is the Adobe Portable Document Format (PDF).

Which format will win the hearts and implementations of lenders everywhere? While it’s too soon to know for sure, there are some key differences between the formats lenders should know.

Understand the Issues – What is Different Between the Formats?

SMART Docs and PDF-based documents both reach the same outcome – a legally binding loan document. However, each format uses a different technology and provides different benefits to the end user.

Featured Sponsors:

 
From a technology standpoint, an electronically signed SMART Doc is a single electronic document with five sections. These sections are XML-based and the creation, viewing, signing and storage are all typically completed in a Web-based environment.

PDF Documents on the other hand, are often created in another application and converted to the PDF format which is then viewed within a Web browser or through stand-alone utilities like Adobe Reader.

While there are significant differences, eSigned SMART Docs and eSigned PDFs each have benefits useful to the lender. The choice is driven by each lenders’ individual needs, but it is also important to consider that the two types of eDocuments are not mutually exclusive. For example, a SMART Doc can include an embedded PDF file that has been electronically signed.

Featured Sponsors:

 
Many advocates of the SMART Doc tout the format’s native Web structure and data integrity. The SMART Doc Version 1.02 format has also been implemented by most eClosing technology providers. Most importantly, it is the only electronic note format currently accepted by Fannie Mae.

SMART Docs are data-driven and system agnostic. They do not require proprietary software to implement, and the format can automatically extract loan data. SMART Docs also provide an extra level of data security with an Audit Trail feature that can track every change made to the document and provides a secure record of all signatures, deliveries and modifications.

The challenge to SMART Doc eNotes has often been around implementation. Lenders and financial organizations trying to consolidate technology formats for electronic documents across all departments have also struggled since few industries outside mortgage lending use XML for binding legal documents. The required XHTML View (for SMART Doc Category 1 eNotes) can also create inconsistent displays on different Web browsers, and print rendering can be inconsistent. This is a headache for consumers who want a simple process to view, print and sign documents.

eSigned PDF documents, which have been in use longer than SMART Docs, are the most widely used format by mortgage lenders and other financial services, even though most investors still do not accept them. These documents are also legally binding (remember, the legal foundations of ESIGN and UETA are technology-neutral), and eSigned PDF files are accepted by many industries outside of mortgage lending. PDF documents are arguably easier to implement and present a consistent display across all Web applications. In addition, all eSign providers can electronically sign PDFs. PDF documents are also easy for the borrower, since free PDF reader software is readily available for home computers, allowing borrowers to easily receive, view, save and print the documents for their own records. However, it is more difficult to embed data into PDF Documents in a standardized format, something that SMART Docs were designed for from the start.

Is There a Third Party?

While the selection of SMART Doc or PDF sounds like an all-or-nothing decision, there have been recent changes to the proposed formats that incorporate the best of both formats. The MISMO SMART Doc V3 protocol (an inherent part of the MISMO Version 3.x Reference Model XML specifications) includes both the native XML Data section and a View section that can contain any file format, including PDF, images, Microsoft Word and others. This closes the gap between the formats by providing a consistent, standardized structure for all loan documents – disclosures, closing and title – with XML data along with an easy-to-use PDF view for consumers.

Fannie Mae and Freddie Mac are also looking hard at ways to facilitate broader eMortgage adoption, per their FHFA Scorecard mandate, and moving to SMART Doc V3 with PDF View is one consideration. In addition, the MERS® eRegistry allows for registration of PDF or SMART Doc V3 eNotes through the Data Point registration method, eliminating one of the biggest obstacles to embracing one format over another. These considerations are being vetted within the MISMO eMortgage Workgroup, which will meet in person in Crystal City, Virginia during the week of September 12 – see www.mismo.org to register and join us there.

While neither PDF nor SMART Doc 1.02 answer the industry’s need for a universal intelligent electronic document format, SMART Doc V3 with a PDF View provides a universal View format coupled with intelligent, standardized XML data. Widespread adoption could be spurred on by broad investor acceptance, which could be led by GSE acceptance and an associated timeline for required delivery.

Today’s top document vendors can already dynamically generate multiple output formats. Adding the SMART Doc V3 to their systems would be relatively easy, and would provide lenders nationwide with the data security, technology and usability needed to propel electronic loan documents into the mainstream.

About The Author

Harry Gardner

Harry Gardner is executive vice president of eStrategies for Docutech, a leading provider of compliance and documentation technology. Founded in 1991, Idaho Falls, Idaho-based Docutech offers a wide range of solutions to institutions all over the world. From document generation and imaging support to eDelivery, digital signatures and print fulfillment, Docutech sets the standard in providing market-proven technology and unrivaled client service to you, your workforce and your clients.