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Docutech Advances “E” Initiatives

Docutech, a provider of document, eSign, eClosing, and compliance technology for mortgage, home equity and consumer lending, announced that its Solex eClosing and eVault solution has been approved by Fannie Mae for eClose, eNote, and eVault functionality. In addition, the Solex eVault has received certification from the MERS eRegistry for all eNote management transactions. And there’s more …

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Solex eClosing and eVault enables lenders to securely close and register electronic notes on the MERS eRegistry and deliver them with full confidence that each mortgage satisfies investor requirements. Leveraging Docutech’s proprietary and enhanced Solex eVault, lenders can securely and automatically store eNotes, register them on the MERS eRegistry and transfer control to investors via direct VPN connectivity to Solex. The MERS eRegistry serves as the legal system of record for identifying the Controller (holder in due course) and Location (custodian) for the Authoritative Copy of every registered eNote in the country today.

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In conjunction with Solex’s Fannie Mae approval and MERS certification, Docutech announced that a top five retail mortgage originator has executed its first eClosing using Solex, including registering an eNote on the MERS eRegistry and delivering it to Fannie Mae.

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The Solex eClosing platform, in partnership with Simplifile, provides lenders with a comprehensive Integrated eClosing solution, with eSigning efficiencies from initial document generation through post-closing. Combined with Docutech’s dynamic document generation engine ConformX, lenders can automatically generate digital, data-driven documents that adhere to rules-based intelligence and meet specific loan criteria. Docutech and Simplifile’s intelligent eEligibility engine analyzes each closing package to be as “e” as it can be, according to state, county, and investor variations. Hybrid options include eSigning of ancillary documents, plus options for SMART Doc eNotes, eNotarization and eRecording.

“We are honored to work side-by-side with leading lenders in the spirit of driving innovation and delivering an exceptional customer experience” said Amy Brandt, Docutech’s president and CEO. “Fannie Mae and MERS have been critical to the actualization and furtherance of eMortgages within our industry. With their backing, we can ensure that our solutions meet the highest standards and are able to comprehensively serve lenders and their customers in the evolution to a fully digital mortgage.

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.

Advancing eNote Adoption

MERSCORP Holdings, Inc. (MERSCORP Holdings) and eOriginal, Inc. have launched a new solution offering that will enable originators to accelerate entry into the digital mortgage ecosystem.

MERS eNote Solutions, part of the MERS eSuite, will enable the creation, execution, registration and management of the electronic promissory note, or eNote, to mortgage originators across the industry.

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“MERSCORP Holdings is proud to provide technology-based solutions that add value to our members’ bottom line,” said Brendon Weiss, MERSCORP Holdings Chief Operating Officer. “Our members identified several gaps that need to be addressed to increase eNote adoption, and this new solution fills a significant need for originators seeking to leverage existing vendor relationships.”

MERSCORP Holdings is the owner and operator of the MERS eRegistry, the national mortgage registry and legal system of record for identifying the controller (holder) and location (custodian) of the authoritative copy of registered eNotes. Interest in the production of eNotes continues to grow as consumers and lenders recognize the value of moving toward a more streamlined, electronic process. With more than 5,000-member organizations, MERSCORP Holdings is central to the growth of digital mortgages, and the new service provides a turn-key solution to those members who are driving toward a paperless process.

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“This solution will enable thousands of originators to realize the benefits of a digitally executed promissory note at the closing table. The eNote is the most important document of a digital closing because it is critical for the funding of electronic mortgages by investors,” said eOriginal Senior Vice President and General Manager of Digital Mortgage, Simon Moir. “MERSCORP Holdings, as the operator of the MERS eRegistry, has been instrumental to the advancement of digital mortgage. We are proud to have eOriginal’s technology power the MERS eNote Solutions.”

eOriginal delivers a fully digital mortgage and supports every type of digital closing strategy. By creating a ‘digital original,’ eOriginal guarantees trusted transactions of digital financial assets. Major financial institutions, leading law firms and credit ratings agencies have validated and rely on eOriginal as a trusted partner with the greatest depth of digital transaction management expertise to navigate and advise on industry best practices.

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Hopefully partnerships like this will move the eNote ball 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 Industry Is Advancing

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Yes, getting a mortgage is still an antiquated process. But advances have been made and more are on the way. How do I know? Just look at what happened to MERS. A big name company just acquired them with the intent of modernizing their technology and supporting eNotes.

Specifically, Intercontinental Exchange (ICE), will acquire a majority equity position in MERSCORP Holdings, Inc., owner of Mortgage Electronic Registrations Systems, Inc. (collectively “MERS”). In addition, ICE and MERS have entered into a software development agreement to modernize and enhance the MERS System.

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MERSCORP Holdings owns and operates the MERS System, a national electronic registry that tracks the changes in servicing rights and beneficial ownership interests in U.S.-based mortgage loans. ICE is a leading operator of global exchanges and clearing houses and provider of data and listings services.

“This transaction underscores MERSCORP Holdings’ efforts to strengthen the value to its member institutions and continue to support MERS’ role as a national mortgage registry,” said Kurt Pfotenhauer, Chairman of MERSCORP Holdings. “The investment of capital and resources from ICE will enhance the effectiveness and efficiency of MERS for our more than 5,000 member organizations.”

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“This agreement brings the strengths of our organizations together to benefit the U.S. residential mortgage finance market,” said Jeffrey C. Sprecher, ICE Chairman and CEO. “It also complements our data and technology expertise in diverse, regulated markets. We are pleased to bring our strong track record of innovation, governance and operational execution to MERS, and look forward to contributing to the evolution of mortgage market infrastructure.”

Benefits of this transaction will include:

>> A commitment by a leading market infrastructure operator with global experience in complex, regulated financial environments;

>> A state-of-the-art MERS System with dynamic, world-class data and transaction management that strengthens value to stakeholders, including home-buyers and regulators; and

>> Continued support of eNotes, which are electronic promissory notes, and electronic processing that serves lenders and consumers.

The transaction is expected to close at the end of June. Under the agreements, ICE will rebuild the MERS System infrastructure and is expected to shift its operation to an ICE data center in the first half of 2018. Price and terms of the transaction are immaterial to ICE, and were not disclosed.

In response to this news I say: Thank God, it’s about time.

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.

MERS Gets Acquired

Intercontinental Exchange (ICE), will acquire a majority equity position in MERSCORP Holdings, Inc., owner of Mortgage Electronic Registrations Systems, Inc. (collectively “MERS”). In addition, ICE and MERS have entered into a software development agreement to modernize and enhance the MERS System.

MERSCORP Holdings owns and operates the MERS System, a national electronic registry that tracks the changes in servicing rights and beneficial ownership interests in U.S.-based mortgage loans. ICE is a leading operator of global exchanges and clearing houses and provider of data and listings services.

Featured Sponsors:

 

“This transaction underscores MERSCORP Holdings’ efforts to strengthen the value to its member institutions and continue to support MERS’ role as a national mortgage registry,” said Kurt Pfotenhauer, Chairman of MERSCORP Holdings. “The investment of capital and resources from ICE will enhance the effectiveness and efficiency of MERS for our more than 5,000 member organizations.”

“This agreement brings the strengths of our organizations together to benefit the U.S. residential mortgage finance market,” said Jeffrey C. Sprecher, ICE Chairman and CEO. “It also complements our data and technology expertise in diverse, regulated markets. We are pleased to bring our strong track record of innovation, governance and operational execution to MERS, and look forward to contributing to the evolution of mortgage market infrastructure.”

Benefits of this transaction will include:

>> A commitment by a leading market infrastructure operator with global experience in complex, regulated financial environments;

>> A state-of-the-art MERS System with dynamic, world-class data and transaction management that strengthens value to stakeholders, including home-buyers and regulators; and

>> Continued support of eNotes, which are electronic promissory notes, and electronic processing that serves lenders and consumers.

The transaction is expected to close at the end of June. Under the agreements, ICE will rebuild the MERS System infrastructure and is expected to shift its operation to an ICE data center in the first half of 2018. Price and terms of the transaction are immaterial to ICE, and were not disclosed.

About The Author

Tony Garritano

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

Ensuring The Validity Of MERS

*Ensuring The Validity Of MERS*
**New Tool Emerges**

validate***The legal stance of MERS is questioned on a regular basis these days. While the validity has been disputed, MERS has always come out on top. Now technology vendor ServiceLink is entering the fray to further validate this electronic service with the launch of the MERS Reconciliation and Resolution program. Here’s how it works:

****Offered through LoanCare, ServiceLink’s servicing division, the program monitors and manages MERS data in order to ensure accuracy on behalf of its lender and servicer clients, ensuring that this information remains compliant with the latest industry standards by:

****>> Reviewing daily activity based reports for exceptions, confirming Mortgage Identification Number (MIN) status updates and taking corrective action when necessary;

****>> Managing all monthly portfolio analyses and reconciliation, comparing data and MIN status provided in MERS to the data and loan status in the system of record to identify variances and resolve any discrepancies;

****>> Providing a three-way review on newly registered loans, reviewing registration data, loan documentation and the data in the system of record to ensure data integrity across all platforms;

****>> Conducting root-cause analyses to help prevent future discrepancies and

****>> Providing audit support, including documentation preparation, execution and recordation.

****“Many providers tout reconciliation solutions, however the services they provide don’t fully meet the definition of ‘reconciliation,'” said Virginia Earley, Director of Client Solutions with ServiceLink’s LoanCare servicing division. “While these offerings are great at comparing datasets and providing convenient lists of discrepancies, lenders and servicers still have to research and correct all of the resulting discrepancies in order to be in, and remain in, compliance with MERS regulations.”

****In order to complete the reconciliation process, lenders and servicers must have the resources and expertise needed to perform loan-level research and apply corrections according to MERS’ guidelines. While other solutions simply identify issues for MERS members, ServiceLink’s MERS Reconciliation and Resolution offering provides loan-level research throughout the entire process – from daily reporting to final review – and resolves any variances and discrepancies, removing the burden of data validation from the client. This results in error-free data and documentation, significantly improving loan file quality and potentially netting servicers higher returns at the time of loan sale.

****“The ability to proactively identify and resolve issues within mortgage documents and public records is critical to enhancing portfolio compliance,” said Gene Ross, President, ServiceLink’s LoanCare servicing division. “MERS Reconciliation and Resolution is a result of our steadfast commitment to providing uniquely powerful programs that eliminate roadblocks to the industry’s overall growth and return valuable resources back into lenders’ and servicers’ organizations.”

Let’s Think About Data And Documents Differently

*Let’s Think About Data And Documents Differently*
**By Reid Smeda**

***Static Forms …. You’re familiar with them. Fixed-format documents with checkboxes and such. “Pictures” of documents, really.

****There are thousands of static forms we use in the industry everyday to manage mortgage transactions. If there is a change to one of those forms, it usually means there are changes to other similar forms – e.g., for all 50 state versions of each of the forms; for the fixed rate version; for the variable rate; with MERS; without MERS. And so on, and so on, and so on.  Beyond being an administrative nightmare, that’s a lot of changes imposing unnecessary risks of mistakes, not meeting deadlines, training challenges, etc. – not to mention the costs resulting from the inherent inefficiencies and opportunity costs.

****Although static form technology has evolved over the years, going from manually completed forms to electronic images of forms to fillable PDFs, fundamentally, the end result—static documents – haven’t changed. At all.

****So, instead of thinking about how to get data on to images, we need to think about how to leverage technology so that documents are “merely” a resulting output of to what we want to do not vice versa. Instead of using PICTURES of forms, why not develop documents as smart software applications that analyzes information about a transaction and assembles all the required words and formatting needed to complete that specific transaction? Applying the dynamic nature to document assembly for the transaction is here and now. Dynamic documents are fundamentally different than static documents because they adapt to the transaction and not the other way around. They deliver more value to customer and the efficiencies and compliance power are enormous.

****Here is one example of the power of changing the paradigm of how we think about what a document is.  In the typical static document world, it takes over 2,000 templates/STATIC documents to support mortgage and home equity lending. Think about all the compliance support, data mapping, updating efforts associated with keeping a library of over 2,000 documents up to date. BUT, when you have about compliance documentation being managed via smart software applications that adapt to the transaction, you reduce the number of documents to approximately 160 dynamic pieces of software that select and assemble all of the necessary documents for all mortgage transaction types.  No more templates.  None.

****So what is the power of this change in paradigm? Well, in the static document world, for example, the promissory note has many variations to satisfy fixed rate mortgages, adjustable rate mortgages with its various indices, balloons, buy-downs, etc…. In the dynamic world, the note is a software application that automatically morphs into the specific note based on the data for that transaction. Similarly, in the old static document paradigm, the real estate security instrument has Fannie Mae/Freddie Mac, FHA and VA versions; AND then, of course, the necessary state versions for each of those – both with and without MERS. The static templates necessary for the mortgage/deed of trust alone are hundreds, and hundreds and hundreds and hundreds …. Whereas, in the dynamic world, the mortgage/deed of trust is a single  software application that automatically morphs, based on the specific data for each given mortgage transaction, into the specific security instrument needed for that transaction.  Many hundreds of templates that would otherwise require mapping, updating, training, correct selection for transactions, etc., can be replaced by ONE security instrument piece of software.

****A dynamic document selects content on the fly as the technology analyzes the parameters/data of the loan transaction. In addition, the data is automatically selected and formatted and dynamically placed in the proper location. No more problem, like with static templates, with not enough white space to accommodate the data. Financial Institutions could realize enormous reduction in support and update time, money, and resource demands.

****The future of successfully documenting mortgage transactions involves innovative technology creating solutions that bring together content, rules, best practices, processes, and policies that are flexible enough to meet all unique business needs. Unless it is what you “eat, sleep and breathe”, it can be a bit overwhelming; and the associated risks of “getting it wrong” a bit scary. But when you focus on the transaction and the data surrounding the transaction, the complex comes into view – and the “pictures” of documents can at long last fade out of view.

Reid Smeda is the president of Compliance Systems, Inc. Reid has over 20 years of banking experience – serving in senior roles as an attorney, lender and business leader for national and international financial institutions. Compliance Systems, Inc., (CSi) is a highly respected provider of best in class “financial transaction” technology and expertise.

Marketing Analysis: Giving MERS Members A Helping Hand

*Giving MERS Members A Hand*
**By Tony Garritano**

***MERS has been getting a bad rap. However, the service that MERS provides is needed. And every day more and more technology vendors are using MERS to help ensure that their lenders are producing quality loans. For example, The StoneHill Group, a national provider of pre- and post-closing quality control audits, fulfillment, due diligence, and collateral audits to mortgage bankers, banks, credit unions, and the financial services industry, has launched a service to help MERS System members comply with their annual reporting and monthly reconciliation requirements. Here’s the story:

****The MERS System is a national electronic database that tracks changes in mortgage servicing and beneficial ownership interests in residential and commercial mortgage loans.

****“If you are a servicer or sub-servicer who needs assistance in complying with Rule 7 of the MERS System Rules of Membership, we have several cost-effective and low maintenance solutions for processing and quality assurance management to help you,” said David Green, President of The StoneHill Group.

****The StoneHill Group offers the following services to MERS System members:

****>> Monthly data reconciliation with the MERS System

****>> Document forensics

****>> Quality assurance plan review and professional services

****The StoneHill Group maintains strict quality control standards while supporting MERS System Members and ensures data integrity by being compliant to SSAE 16 audit rules.

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.

Market Analysis: ISO Launches New Standard

*ISO Launches New Standard*
**By Tony Garritano**

***Hot off the presses, I have just learned that ISO has just published a new standard for the financial services industry which provides a global solution for the accurate and unambiguous identification of entities engaged in financial transactions. ISO 17442:2012, Financial services – Legal Entity Identifier (LEI), is aimed at meeting the data collection and analysis needs of both national and global regulators in their responses to problems arising from the world financial crisis. Here’s the details so far:

***The development of ISO 17442 has been positively received by the financial services sector and by regulators. These include the Financial Stability Board (FSB) which was established to coordinate at the international level the work of national financial authorities and international standard setting bodies, and to develop and promote the implementation of effective regulatory, supervisory and other financial sector policies in the interest of financial stability.

***ISO 17442 is one of the standards developed by ISO technical committee ISO/TC 68, Financial services, whose leadership was invited to participate in the FSB Industry Advisory Panel formed by the FSB Expert Group charged by the G-20 to prepare recommendations for a global LEI solution to the G-20 at its upcoming meeting in June, in Los Cabos, Mexico. In a communiqué following its plenary meeting on 29-30 May in Hong Kong to prepare its recommendations, the FSB stated that its initial reference data and LEI code are in line with ISO 17442.

***ISO/TC 68 Chair, Karla McKenna, comments: “The work on the LEI is exemplary in providing an international solution through standards. ISO /TC 68 brought the relevant communities and stakeholders together, looked across industry lines on the scope and coverage of the LEI standard, and built the necessary consensus to deliver ISO 17442, demonstrating the responsiveness and value of the ISO process.”

***James Whittle, Convenor of ISO/TC 68 working group WG 6, responsible for the LEI standard, explains the benefits of ISO 17442 as follows: “LEIs can be assigned to a legal person or structure that is organized under corporate laws of any jurisdiction. These entities include, but are not limited to, all financial intermediaries, banks and finance companies, all entities listed on an exchange, all entities that trade stock or debt, partnerships and pension funds, all entities under the purview of a financial regulator and their holding companies and supranationals.”

***ISO 17442 describes a 20-character alphanumeric code, as well as additional elements for reference data attributes. Key attributes of the standard include the following:

***>> Enables unique identification of global entities requiring an LEI

***>> Defines robust open governance of the issuance and maintenance of the LEI scheme

***>> Defines an LEI that contains no embedded intelligence

***>> Can be applied worldwide to support the financial services industry

***>> Leverages the expertise of ISO/TC 68 in defining and maintaining identifier standards

***>> Defines a scheme that is scalable and free from assignment limitations.

***An article on ISO 17442 appeared in April 2011 issue of ISO Focus+ magazine and can be accessed free of charge on the ISO Website.

***ISO 17442, Financial services – Legal Entity Identifier (LEI), is available from ISO national member institutes (see the complete list with contact details). It may also be obtained directly from the ISO Central Secretariat, price 50 Swiss francs, through the ISO Store or by contacting the Marketing, Communication & Information department (see right-hand column).

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.

Understanding The News: Perfecting Loan Validation Processes

*Perfecting Loan Validation Processes*
**Validating MERS Electronically**

***Aklero Risk Analytics Inc., a provider of mortgage quality control software and services via their automated data and document validity assurance platform, has unveiled DQx for MERS Data and Document Validation Module. The module is part of Q-Close, their Loan Quality Management Platform, and provides an automated method to validate the accuracy of data resident in the MERS Electronic Registry. Here’s what you need to know:

****“We developed this offering in response to the requirements outlined in the MERS Quality Assurance Procedures issued in September requiring servicers to validate the accuracy of the data held on the MERS’ system against source documents,” said Richard J. Downing, Executive Vice President of Sales for Aklero.

****As a result, lenders are required to attest that they have performed a three-way document to data validation, including comparing the data on the MERS system against the bank’s data and against the “true data,” or original documents, a process that ensures a high degree of accuracy.

****“Aklero is the only firm in the mortgage industry that has automated the process of comparing the data that populates original documents to the records the servicers and MERS maintain,” said Julia Hernandez, Senior Vice President of Professional Services for Aklero. “People make mistakes, but, by relying on the original documents, especially those from the closing, our solution provides a more accurate and comprehensive audit.”

****That approach enables Aklero to review the documents and identify discrepancies. For servicers, the benefit of using this module is that Aklero can validate thousands of loans overnight, while in the same amount of time, servicers that cling to expensive manual processes complete far fewer loans files.

****Based in Fort Washington, Penn., Aklero provides mortgage quality control and risk analytics solutions for the mortgage lending industry. Its proprietary Q-Close Loan Quality and Mortgage Risk Analytics Platform provides loan audits and automated deficiency detection, allowing users to quickly and efficiently find, fix and understand problems in mortgage loan files. Augmenting its technology platform the company also provides forensic analysts, mortgage quality control audits, due diligence loan reviews and a variety of operational solutions and customizable products and services that can be tailored to suit clients’ needs. Aklero’s customers include mortgage lenders, institutional investors, investment banks, government agencies, community banks, credit unions, mortgage insurance companies and other financial institutions. After an in-depth evaluation that pitted the firm against its competitors, the American Banker Association, named Aklero its exclusive provider of mortgage quality control services.