Time To eVolve

Stronger Information. Less Paper. Better Service.

By Prudence Green

Now that we’ve laid the groundwork for how customer service in the mortgage industry has evolved in recent years, let’s discuss the three remaining ways in which technology has moved our industry along – efficient collaboration, data quality and reliability, and transparency.

Faster!

I think we, as a mortgage industry, would all agree that document collaboration solutions greatly accelerated the loan process by removing paper from the process. With technology, the industry went from snail mail to immediate and simultaneous access to loan documents. Loan officers, who previously had to wait for files to be returned or call to check on status, can now check the status of a loan online while it is being processed or underwritten. And, as solutions continue to improve and enhance their features and capabilities, even greater efficiency can be gained.

For instance, if you think back to last week’s post when I talked about communication, I shared an example of sending disclosure documents to borrowers. While communication was greatly improved by connecting borrowers to mortgage participants, the efficiency gains are also easily apparent. Costs are decreased since packages are no longer needed to be sent and time savings are seen by no longer having to wait on the borrower to mail back their signed documents.

Clean and Organized

Technology has also improved quality and reliability across the loan folder. Rather than organizing and filing documents one-by-one, solutions can now read image data and automatically map document types and assist in organizing files. In addition, advanced technology such as DataGlyphs^® – a security feature that embeds computer-readable data onto paper similar to a barcode – can be used to easily map scanned paper documents into their appropriate loan folder within a document collaboration solution. More accurate loan files and faster processing lead to better customer service and improved loan quality.

I Know Who Did It!

Increased access and accountability fosters greater transparency between lenders and originators. Historically, paper transactions required all files to be manually reviewed and filed – often leading to human error and the “he-said, she-said” blame-game. Now, with detailed audit trails, there is no question about when a file was received, when it was edited or what stipulations are on it. Loans processed through document collaboration solutions carry audit trails on every file within the loan, throughout the entire loan. Upon completion, all notations, comments and changes to the document can be viewed, helping to promote a higher level of performance for all those collaborating on the loan.

In addition, through the use of advanced multi-tier security, both based on roles (e.g. underwriter) and rights (e.g. administrator), participants can be confident that only those people who should view a file, are viewing a file. It also ensures that people can only access files at the appropriate time.

Satisfaction Guaranteed?

Is it realistic to guarantee absolutely perfect service during each loan we work through? Probably not since customers and conditions will always remain variable. However, we now have the means to better serve mortgage participants through due to accessible and accurate documents and data.

I know this is a hectic industry, but let’s all take a step back and evaluate how we can improve our client service.

As vice president of client services, Ms. Green is responsible for implementation, support, and training services for BlitzDocs. Ms. Green brings more than 15 years experience in training, client, and technical support to the Xerox Mortage Services Team (XMS). Prior to XMS, Ms. Green served as senior business analyst for Identitech Inc., where she developed implementation and consulting methodologies; managed projects for industries including real estate, finance, government, and medical coding; and developed internal corporate training programs. She has also worked as training and services manager and senior business consultant for Intertech Information Management. Her training and client service background was also honed through work with Storagetek, TSW/(INDUS) International and Cyntergy Corporation. She also serves on the board of directors for Synergistic Youth Enterprises (SYE Inc) a non profit organization promoting youth leadership.

Improved Mortgage Service Is All In The Details

By Prudence Green

Last week, I introduced the ways in which society’s “gotta have it now” mentality has transcended the mortgage industry. New technologies simplify the loan process by granting access to key documents and enabling updating from any place at any time. Such streamlining has raised the bar for the level of service expected at each stage of the process. This increased demand for fast, quality service has redefined how lenders, originators and investors approach the process in seven key areas.

In my recent post, I examined how electronic processing extends work hours and capabilities to reduce turn times. This week, let’s discuss how technology has boosted service through improved communication and access to information.

Remind me please…

Communication is critical to moving forward in any environment. The mortgage industry is no exception. In fact, with the many disparate parties we have, poor communication can create confusion that significantly tacks on time needed to complete a loan.

Using technology to increase collaboration ensures that the various parties involved on a loan work together better to meet customer needs. Electronic document collaboration solutions enable each party to complete part of the loan and dynamically update others in the workflow. In other words, electronic notifications can be sent to alert a lender that a stipulation has been met. Or, one can be sent to the broker telling them that a disclosure document has yet to be electronically signed by a borrower. This increased communication streamlines the loan process and reduces the number of follow-up calls that brokers must make to lenders.

Can I see that?

You are in this building. Your lender is in that building. And your borrower is somewhere else. In today’s world, time and distance does not matter. You can be in one place, another mortgage participant can be in another, and yet you can both work on the same loan to accelerate its turn time. But, with this anytime access to an electronic loan folder comes the need for tracking changes. It is important to know who made what change and when, so the proper person can answer any questions that arise. This accountability helps keep the loan on path and ensures it is updated in a timely and efficient manner. A key component to great service in today’s world is having all the information you might need in central location that you can access at any time.

Effective mortgage processing is a matter of providing the right information – both in how you communicate with your fellow parties throughout the process and how quickly and accurately you make adjustments to necessary documents. A steadier flow of details will eliminate logistical hurdles and ensure loans are completed faster, leaving you to wonder how you ever used to find anything in endless stacks of paper.

Check back next week as we reveal the final factors that improve mortgage service and examine how paperless processing creates greater process efficiency, transparency and reliable data.

Quality Service: A Staple Of The Mortgage Menu

By Prudence Green

For those who read Todd’s recent post discussing best-of-breed versus all-in-one, you may recall him talking about the growing hype around smart phones. People have options—they can text, talk, watch videos and check out webpages. This desire to have immediate access to information has spilled over to all facets of people’s lives. They want to self-check their groceries, book flights online, and don’t kid yourself—they want to make the loan process simpler and faster as well.

With new e-mortgage solutions, it is possible to streamline the loan process and deliver even better customer service. As proof, in Xerox Mortgage Services’ 2010 Path to Paperless Survey, nearly three-quarters of respondents said that improved service was an important factor in evaluating technology throughout the loan cycle.

During the next few weeks, I’ll elaborate further on how document collaboration technologies have redefined service in the mortgage industry in seven ways. To kick it off, let’s discuss availability and turn time.

Help please, NOW

Mobile business solutions have put additional demands on originators, transforming a 9-to-5 operation into one that must be accessible at all time. “Out of the office” is a past time saying, with smart phones now enabling originators to respond immediately to conditions from anywhere, at any time. Lenders can also use new technology to receive and review updates on outsourced processes (such as indexing, processing and registration) the moment they are ready. By accessing data at any time of day, or night, the loan process can be accelerated.

Is it ready yet?

Although technology has yet to make the loan process completely instantaneous, it certainly has decreased the time needed to take a loan from origination to closing. The most recent example of how technology can be used to eliminate time from the loan process is programs that bring borrowers into the collaborative fold. No longer must originators print, assemble and mail disclosure documents. Now, with the click of a few buttons, borrower portals can be created where all necessary disclosure documents are housed online. Borrowers can access this information, acknowledge receipt and even electronically sign some documents. Then, with just one more click, the accepted/signed documents can get pushed back into a central electronic loan folder where mortgage participants can access them. Time and steps of manual labor have been taken out of the process, replaced with a more efficient and streamlined approach.

Check back next week as I discuss more ways that technology has changed the face of how people expect to receive service during the mortgage process.

An Industry Resolution Wish List (Part Three)

By Nancy Ally

“It is better to give than receive” – an old adage, this saying carries extra meaning during the holiday season. Regardless of personal beliefs or traditions, most of us take time share with others during this time of year. And many of us open our homes to friends and families – cooking feasts and handing out presents. As the celebration winds down, we realize that the pleasure that comes from opening your home to others.

It is with that in mind that I developed my third resolution for the mortgage industry – sharing technological advancements and using them to extend your connections and service beyond the four walls of your office.

Resolution #3: Share Your Innovation With Others

As we prepare ourselves for the change that will occur in 2011, we, as an industry, will look to technology to provide the flexibility, adaptability and service needed to gain a competitive edge.

But before we jump to build homegrown solutions or implement new technologies, let’s ask ourselves a few questions:

>> Will this extend beyond my organization?

>> Will my customers benefit from these advancements?

>> Will my downstream partners be able to advantage of these changes?

Hopefully, the answer to these questions will be yes. If so, then we will have met the goal of sharing innovations to achieve collective improvement.

As an industry, we are an extremely interdependent, although often disparate, network of players that must work together to make the homeownership dream a reality – from interfacing with consumers to servicing. For innovations to fulfill their desired impact, change must resonate throughout the entire network. And, as history has taught us, when technology extends beyond the borders of an office and greater adoption occurs, the benefit of that technology greatly increases.

Therefore, let’s take time to share not only our learnings but our technological advancements this year. As with the holidays, oftentimes the joy of giving is often a gift within itself.

Bring on 2011!

Nancy Alley is vice president of product management for Xerox Mortgage Services’ BlitzDocs paperless collaboration solution. She has more than 15 years of financial software product management experience and is an expert in e-signatures and electronic record retention. Nancy previously led the product management and engineering efforts for eSignSystems. In addition, she spent eight years at GE Capital Corporation developing her product management and business development skills in the mortgage banking technology area. Nancy can be reached via e-mail at Nancy.Alley@xerox.com.

Electronic Recording: Selecting The Right Vendor For Your Business (Part Two)

By Bryan Young

The expanding adoption of electronic recording by county clerks, recorders and registries of deeds has resulted in a competitive field of e-Recording vendors from which to choose. Finding the best e-recording vendor for your business requires the evaluation of a number of important criteria. How you weight the importance of these criteria will help you determine which e-recording vendor to select. Here’s how you do it:

>> Pricing – While virtually all vendors charge a set fee for each document recorded through their system (not each page, as some submitters fear), some add additional monthly or annual software licensing and/or maintenance fees.

>> Payment options – There are three primary payment options for both county and vendor service fees: through Automated Clearing House (“ACH”), by invoice paid by check or wire transfer, and through vendor escrow accounts. Different vendors provide a different mix of these options, as well as a variety of payment terms (nightly, weekly, monthly or other).

>> Quality of customer service – Reputation matters. Does the vendor you are evaluating have a reputation for responsiveness? If your recordings are time-sensitive, choose a vendor that delivers top-quality, timely customer support.

>> Flexibility – The phrase “one-size-fits-all” can usually be followed by “but not very well”. Should you need to integrate your e-Recordings with your LOS or other back-end process, you need a solution that can accommodate those needs.

>> County coverage – Since e-Recording vendors vary in their county footprint, your business should identify which vendor best covers your target geographic area. If you never record documents in Powder River County, Montana, a vendor’s ability to submit there shouldn’t be a factor in your decision. However, if you serve the entire nation, your e-Recording vendor should have an equally comprehensive footprint.

>> Document type availability – Research the document types an e-Recording vendor can submit. Some only process satisfactions, releases and assignments, while others process any document type a county accepts. If you only record sewer liens in Rogers County, Oklahoma, make sure your vendor can record that document type in that county.

>> Financial strength – Perhaps the most important consideration is whether your potential e-Recording partner has the financial strength to back up its promises. The documents you entrust to your vendor are extremely valuable, and it would be wise to investigate this as part of your due diligence (for instance, by checking a Dun and Bradstreet® report).

In the end, most e-Recording vendors do not require the exclusive use of their services. As a result, you can always select multiple vendors and decide based on your own experience where you want to direct your volume in the future. So do your homework – research the various vendors and poll your colleagues in the industry – and then get started. The time to move forward with electronic recording is now! You can be confident that once this proven technology is integrated into your daily workflow, you will wonder how you ever ran your business without it.

Bryan Young serves as Business Relationship Manager for Erxchange, one of the original e-recording vendors, now owned by ACS, A Xerox Company. He has over ten years of software development management experience, including eight years in the mortgage and document imaging industries. The primary developer of Erxchange, Bryan has managed the business for about two years. Bryan holds a Bachelor of Arts in Economics from the University of Tulsa [OK]. He can be reached via e-mail at Bryan.Young@acs-inc.com.

Electronic Recording: The E-Mortgage “First Mile” (Part One)

By Bryan Young

Depending on who you talk to, the dream of the “electronic mortgage” has been around for as long as the Internet itself – or longer. However, the barriers to adoption have been legion and plenty of start-ups have fallen by the wayside trying to create an end-to-end solution. Only recently have the legal, technical and collaborative frameworks fallen into place to make an end-to-end e-mortgage viable. However, one step in the path to the e-mortgage has made steady progress over the last decade: electronic recording with county clerks, recorders and registries of deeds. Adoption of e-recording at the enterprise level required progress on three primary fronts.

First, a three-part legal framework had to be constructed to ensure that e-recorded documents had the full legal legitimacy of wet-signed documents. Part one was the passing of federal legislation known as E-SIGN (the “Electronic Signatures in Global and National Commerce Act”) in 2001. Part two was the development of UETA (the “Uniform Electronic Transactions Act”), which has been adopted by 47 states (with the other three states having similar legislation in place). Part three was the creation of URPERA (the “Uniform Real Property Electronic Recording Act”), written in 2004 and adopted by at least 26 states and territories, with bills pending in four more state legislatures.

Second, pioneering counties had to deploy the technical infrastructure to accept e-recordings. For many, this meant relying on their land records management system (“LRMS”) vendor to develop and install an e-recording module on their existing systems. For others it meant developing e-recording capabilities in-house. Still others relied on third-party vendors to install proprietary software allowing them to accept recordings over the Internet but move them to their LRMS manually.

Third, e-recording vendors had to tie together these disparate county e-recording modules into single-source gateways through which submitters may e-record documents. While a few very large banks and title companies have developed their own internal gateways to the various LRMSs, the cost to create and maintain such software has led most submitters to turn to e-recording vendors to handle this for them. With the e-recording market maturing, a number of e-recording vendors are now competing for the business of local, regional and national submitters.

If you are evaluating the suitability of e-recording for your business, how should you choose which e-recording vendor to use? This will be the topic of next week’s installment.

A Thanksgiving Travel Lesson: Security

By Nancy Alley

With Thanksgiving just around the corner, many of us are packing our bags and heading to see loved ones. Given how modern life has flung families far and wide, many of us will be flying – meaning going through security, and possibly having full body scans or pat downs. And what an uproar it has caused! Some feel it is justified and others feel it is invasive.

Yet, at the root of the issue is the fundamental need for security. Regardless of your opinion on body scans, I doubt any of us want to be less secure. The debate is about how we attain security and at what cost.

With the American public reading about mortgage wrongdoings daily in the press, security has never been more important in our own industry. But just like the TSA can’t endure a national boycott of body scanning, we can’t have our security model bring our business to a grinding halt. Security needs to be flexible and configurable. In fact, it needs to be downright smart.

A Smarter Model

Document collaboration solutions provide a prime example of an area where we need to be smart in how we balance security with productivity. If you lock it down so tight, then how can a loan get processed efficiently? Consumers and users will complain about the delay and inconvenience. If you leave it wide open, your business is open to both internal and external security breaches and potential fraud.

Luckily, smart document collaboration solutions can define access to electronic files at a document level. In other words, select mortgage participants can be put on the “no fly list” when it comes to viewing files. Even better, the participants might only be restricted in certain situations. This is where security transforms to “intelligent security.”

To know if a solution has the advanced, intelligent security that is truly needed in today’s world, ask a few questions:

·>> Can the solution set up tiered security based on geography or position? For example, can large lenders define security so that branches only view their own documents?

·>> Can the solution set up security based on a user’s role? For example, can you set it so your underwriter can add and clear conditions, but your loan officer can only add documents?

·>> Can the solution dynamically alter security settings based on where a loan is in the workflow? For example, can you enable a borrower to review and eSign disclosure documents, but after a certain period of time cancel the file?

·>> Can the solution handle unique use cases, such as employee loans, with tighter security throughout the process?

A solution that can answer yes to these questions understands how to leverage security for the desired result. It will help streamline the process and push the loan forward for quicker processing.

Here’s wishing you equal success to quickly making it through airport security lines for a wonderful Thanksgiving holiday.

Foreclosure-Gate: Fact Or Fiction?

By Todd Moncrief

Mortgage foreclosures are big right now– even the general press has gotten involved with questions like: Are foreclosure proceedings fair? How might they impact the future of eMortgages?

Here’s my question though….is“Foreclosure-gate” real or is this a media sensation?

Fact vs. Fiction?

Let’s start with what the press has been saying about current proceedings. Suddenly, new terms such as “robo-signing” are being tossed around. Now, let me come clean and tell you that when I first heard the term, I pictured some distant kin of Rosie the maid on the Jetsons. Sadly, “robo” does not imply some great leap in automation. So who are these robo-signers and what do they mean to foreclosure proceedings?

First, we need to have a clear understanding of the foreclosure process. The process requires individuals, such as attorneys, to sign off on specific foreclosure documents – often lost note affidavits – as part of the foreclosure proceeding. This (should) ensure a check and balance of power and authority in an unfortunate process. Historically this “sign off” step went smoothly and without noise.

However, the last few years has seen an unprecedented level of foreclosures, which has put a tremendous strain on industry resources. As signature requests piled up, the sign-off check point became a bottleneck. The result? Attorney’s either signed foreclosure documents blindly or had others sign on their behalf – often in the masses. A new term was born: “robo-signing”.

Now, I agree we should always take pause when we detect a breach in policy or procedure. And the mainstream media was happy to play industry watch dog. (And, given the reputation of the mortgage industry, I am pretty sure these dogs will be on our collective scent for some time!) But before we rush to judgment, we also need to determine intent and look at the facts.

When major lenders looked at the foreclosure packages, the facts were in order. These loans were deemed unrecoverable and foreclosure was imminent. There was no conspiracy to force innocent families out of their homes.

So what should we, as an industry, do? While the industry has re-started their foreclosure proceedings, we need to ask ourselves if we can evolve to a better process. While we will still need the sanity check of human approval in the process, increased use of automation and document collaboration would reduce the paper chase of the current process. Add eNotes to the mix, and suddenly there are no lost notes and no confusion of who the rights holders are.

Electronic documents can be controlled in a way paper never can be. Take, for instance, the sign-off checkpoint – when an attorney logs in, the system can make the attorney page through, view and acknowledge they read everything, and then allow them to electronically sign them. The system can also control the number of times someone can log in making it impossible for multiple people to do the same job if the security and processes are set up properly.

And I know you are thinking that there is no way you can make them read it. That is and will always true, even in the paper world, but we can at least try to put a better process in place to ensure an effective checks-and-balances.

Todd Moncrief serves as Xerox Mortgage Services’ vice president of business development and has more than 17 years of mortgage lending and mortgage technology background. Todd has worked at multiple start-up companies that were later acquired, including SwiftView, Inc. and Mortgagebot. He also worked at Fiserv Lending Solutions managing interfaces as a business analyst. Todd holds a Bachelor of Science from the University of South Florida. He can be reached via e-mail at Todd.Moncrief@xerox.com.

End-To-End Vs. Best-Of-Breed

By Todd Moncrief

Can one system really do it all? This is a point of contention everywhere you look. Folks are lined up at phone stores vying for one phone to talk, listen to music and take pictures – but can you imagine having photographers lined up on a sideline of a ball game with their smartphones and then trying to sell those pictures to respected magazines and people. Or, paying close to a thousand dollars on a DJ for an event, and him showing up with just a smart phone and a dock? Would either of these scenarios work? Well, technically yes. Would the folks who paid the vendors be happy and the output quality be up to par? Now there, I think we can all agree, heck no.

The mortgage industry also faces this in end-to-end solutions versus best-of-breed solutions. Some lenders argue that, “we’ll try end-to-end because it is all included,” but then they start using the system and realize, “man, it does X, Y, and Z – but not really well.” That’s not a fun place to be. You invest money in a system to take you into the future, but are already struggling to get its value in the present. The problem is how can one company be the most innovative and elite at everything?

To think of it in another way, do you really want your document compliance company focused on anything other than getting your documents correct? Or, do you really want your LOS provider trying to be an enterprise lending application when we all realize that commercial, residential and consumer lending are changing rapidly?

On the flipside, best-of-breed vendors invest serious R&D dollars in their system to make what they do, and just what they do, better. This means they have a deep domain expertise, a strict focus on your exact business needs for one particular part of the process and lay their product roadmaps with future innovation in mind.

Regardless if you want end-to-end versus best-of-breed, I think we can all agree:

>> Technology will always need investment and time in order to create the next phase of innovation

>> One company cannot invest more than everyone in each sector of the industry (case in point- Xerox spends almost a billion dollars a year in just R&D on document processes and services)

>> Innovation is where technology and the will to push the envelope and take risks come together. It all comes from listening to clients and the market. Listen, can you hear it?

>> Sales and Marketing make up half the battle to obtain customers. Services and Innovation make up the other half to retain customers.

The Xs And Os Of Collaboration

By Nancy Alley

So last week I shared my love for Michigan when discussing how the make-up of a team and teamwork are both extremely critical to a winning season, but I neglected to mention that my daughter is a raging Florida Gator fan. (No, she’s not adopted.) When we talk about Florida football, even she will admit that Urban Meyer needs to take another look at his playbook if he wants to succeed. The days of spread offense and Tebow’s line drives are gone, leaving everyone to wonder – can Urban make what he’s got work?

Personally, I would argue that a truly great Coach goes back to the Xs and Os of the game and creates a game plan that maximizes the contribution of each player to drive winning results. Actually, it’s a little like the mortgage industry when you think about it…

Changing Roster

The mortgage industry is an extremely dynamic market. While we don’t replace a Heisman-winning QB with one who has only spent a few minutes on the field, we do have a constantly changing workload – with one month’s high sometimes followed by another month’s low. For this reason, document collaboration solutions must be configurable and quickly adapt to changes without the need for custom in-house code.

While historic low rates may be driving record high loan volume for your company, such volumes may dissipate quickly in 2011. Document collaboration solutions, particularly those paid for as a variable model, will enable you to scale accordingly. Configuration can also help you easily update security models or quickly adapt to changing regulations.

Honorable Mentions

Also like football, it’s not just about the players – it’s about the tutors, the trainers, the physical therapists. All these folks, who aren’t directly involved in the game, make critical inputs for a successful season.

As an industry, we must realize the importance of all our players in achieving greater efficiency and speed. While I am referring to our many disparate parties, I am really talking about the multiple external systems we work with. From portals and pricing engines to loan origination and document preparation, integrating these external systems with a common document collaboration solution ensures the final loan folder will contain accurate and up-to-date information.

Let’s take pricing engines as an example. If the loan is deemed acceptable, then the appropriate user can automatically create a loan folder with the desired attributes and documents in the collaborative document solution. On the receiving end, the loan officer can automatically see the submission, eliminating the need for unnecessary follow-up while maintaining continuous collaboration with the underwriter. This seamless integration has eliminated steps and accelerated the total loan processing time.

Positioned for Success

The mortgage industry has a well-known line-up of players that are ready for the coach’s orders – your orders. Perhaps these thoughts can make it into your mortgage playbook and help position you for a successful year.

There’s No “I” In Collaborate

By Nancy Alley

For those of you who know me well, know I am a college football fanatic – with a particular affection for the Michigan Wolverines. After a 5-0 start, my team, which I still love, has dropped its last two games due to turnovers, special teams buffoonery and a non-existent defense. Yet, Michigan still boasts one of the most electrifying players in the game today, QB Denard Robinson. It got me thinking about how the results vary if it’s an individual effort vs. a team effort. Football, like the mortgage industry, has so many moving parts and players. Mortgage players – each with their own contribution to the process – need to efficiently communicate and work with each other to yield the best team results.

But, how can we work in partnership effectively? I believe one of the winning plays in the mortgage industry’s playbook is using technology to achieve “intelligent eCollaboration.”

Statistics Matter

Intelligent eCollaboration is more than just connecting a handful of participants in the process – it is bringing the whole team together. With a limited number of participants collaborating, companies just scratch the surface of the benefits of mortgage document collaboration. Intelligent collaboration is about achieving a critical mass of mortgage constituents to collaborate with.

Known as the “network effect,” the value of collaborative technology increases exponentially as more industry players use it. Put in another way, it’s like the fax machine – when one person had a fax, it had no value; when 200 people had a fax, it had limited value; but, when millions had a fax, it had tremendous value – the same is true of paperless mortgage technologies.

A Team Effort

Critical mass alone won’t guarantee winning results – it’s about the right people collaborating. Just as a spectacular offense won’t win games without a solid defense, collaboration requires input from different parties in the mortgage transaction. From originators to underwriters to investors, the power of collaboration grows as these disconnected parties come together via one technology to work collaboratively.

Interestingly enough, a new critical addition to the mortgage team is the borrower. Often considered one step removed from the process, today’s eCollaboration means bringing the borrower into the process through electronic delivery, capture of electronic or ink signatures and automated return to the joint collaboration folder. Once akin to the lowly kicker, the borrower’s contribution may score the needed points to secure victory for a team.

As you can see, teamwork from each and every member of the roster is key to eCollaboration. Hmmm…I am starting to wonder if I am underpaid for my Saturdays watching ESPN.

“Experience” Is What You Get…When You Don’t Get What You Want

By Greg Smith

Let’s face it… those of us serving the mortgage industry have gotten more “experience” than we wanted over the past few years. After unprecedented growth in home ownership during the late 90’s to 2006, the subprime and then home finance hangover started in full force during 2007. In 2008, we found ourselves entangled in a near-death experience of the entire global financial system. Surely these times have tried our souls, but what can we do to prevent this type of meltdown in the future?

Thoughts for Surviving and Thriving in the Years Ahead

The constant theme of our industry and our time is change. The technology that brought the industry into 2010 will not be the same that takes us to 2015 and 2020. As we look at the current state of the mortgage industry: interest rates are at 40-year lows; property values have declined approximately 28 percent from 2006 peak values; 30 percent of current mortgages are under water; there is almost a 10 percent unemployment rate; there has been tremendous intervention from our government with the take-over of Fannie Mae and Freddie Mac and the purchasing of securities by the Federal Reserve; and FHA originations have risen from three percent during the boom to nearly 50 percent in some markets.

These statics would have been unthinkable just a few short years ago. Add those changes to the unprecedented levels of new compliance requirements our industry will soon be undertaking, and it is clear the U.S. mortgage industry is experiencing monumental change.

As an industry that has almost always followed an “evolutionary” versus “revolutionary” path in its adoption of new technology, can we expect history to repeat itself? What should vendors be asking themselves as we look to the future? Here is my top list, but tell me if you have others…

1) What does my customer today… really need? And, can I provide it?

2) What will my customer need three years from now to score better loans? And, can I provide it?

3) If I were my competitor(s), what would I do to compete more effectively against me?

4) What is the effect of the addition, or removal, of government intervention for my business?

While none of us may be able to accurately predict what the future holds, let’s all try to lead our companies with open eyes. Acknowledge the fact that the only given is more change. Challenge management teams to not get too comfortable with the status quo. Create a flexible, innovative and strategic atmosphere. In short, let past experiences be the guide to the future.

Greg Smith, general manager and vice president of Xerox Mortgage Services, is the founder of Advectis®, Inc., which was acquired by Xerox Corporation. The 2009 recipient of the Steve Fraser Award, Smith is responsible for the conceptualization and creation of BlitzDocs, a leading mortgage document collaboration solution. He also has created vertical market solutions in the insurance and commercial real estate industries. Smith holds a master’s degree in International Business from the University of South Carolina and a bachelor’s degree in Mechanical Engineering from Clemson University.

What Happens At MISMO…Doesn’t Stay At MISMO

By Todd Moncrief

Never been to a standards meeting? Let me ask you a few questions:

- Are you not the most technical person but still know what XML is and understand the flow of data in the mortgage process?

- Do you know that in the next 24 months you need to make strategic changes in software and services to stay competitive?

- Are you already using eSignatures but not sure when to move on eClosings?

If you answer yes to any of these questions (or even if you didn’t), you should attend one of the upcoming MISMO trimester meetings! The MBA and MERS started a business track that will take you through the what, when, where and why you should implement MISMO in your strategy.

I’ve always thought business process needs should lead technology development/selection, not the other way around. Most lenders do not pick software, nor do vendors sell software, because it’s cool or is built in the latest jargon (unless you are Apple, which has worked very well for them – unfortunately most companies can’t abide by that same business model).

For us mortgage folks, if we want to see where/how data standards are currently being used to solve current business process problems, then MISMO’s new “business track” is just the place to start. No, I’m not saying eMortgage’s will be here in 12 months – I believe they are already here. What I am saying is that we can all learn a whole lot about real life use cases, issues and plans from businesses already using these standards today.

If that is not enough, you’ll get to hear from people who’ve trudged through this for years with little credit. Industry veterans – Harry Gardner of SigniaDocs, Pat Hartford of Quicken Loans, Roger Gudobba (a long time mentor of mine) of CSi to name a few – will share their MISMO war stories and help steer industry dialog. These guys and gals and several others bleed the MISMO colors and standards, so all of us can reap rewards by implementing what they’ve learned.

Don’t wait any longer to get involved. Have your say, get your answers, and attend this year’s MISMO trimester meetings. Then you can share the insider knowledge you’ve learned with your company and co-workers to ensure they are taking full advantage of MISMO.

Do You Need An eDictionary? (Part Two)

By Nancy Alley

Last week, I started a conversation about the need for an eDictionary. Imagine my surprise, when my nine-year-old daughter informed me that not only did one exist (actually, according to her there are two), but she used an eDictionary all the time.

“Mom, that is what Google and Wikipedia are for!” she informed me. Feeling suddenly like a dinosaur, I whipped out a real dictionary. She laughed and said, “There’s an app for that on dad’s iPhone.”

So I put her to the test and told her to Google one of my words for this week: “eVault.”

“There’s no Wikipedia link. Just a lot of companies selling stuff,” she announced. No Wikipedia link. No common definition. We still have some industry talking to do.

First though, some background on eNotes, eMortgages and transferable records.

eNote: The industry is starting to get comfortable with this term. Think of it as an “electronic promissory note,” which has come to mean a note in the form of a MISMO Category 1 SMARTDoc. While an eNote does not have to be a SMARTDoc, the eNotes signed to date have been SMARTDocs because that is what investors accept. The SMARTDoc functionality – being able to lock data and the view together – is just too appealing to pass up. This is where definition and implementation need to be considered jointly.

eMortgage: In short, an eMortgage consists of a mortgage with at least an eNote. It may contain other electronic documents, typically in PDF format, as well as paper documentation – often the security instrument. Based on this definition using images for processing, underwriting and post-closing does not constitute as an eMortgage, nor does an electronic signature on a loan application or disclosure documents. While these are all great paperless initiatives, the eMortgage is dependent on having an eNote.

Transferable Record: This term was introduced in UETA and ESIGN. A transferable record is basically the electronic equivalent of the promissory note. For purposes of the mortgage process, the eNote is the transferable record. So unless we are trying to impress others at cocktail parties, I recommend we replace the “transferable record” lingo with the “eNote” lingo when we are talking about mortgages. What are your thoughts?

eVault: While the word may seem straightforward, the definition can be slippery to define. Looking at the MISMO eMortgage Vaulting Guide, eVault is not even defined. Please know that I am not criticizing the Guide – I think it is a great start, we just need to build it out a bit more. So here is what I am hearing…

At the highest level, an eVault is a storage system to retain eNotes and other electronic mortgage records.

To some, eVault is synonymous with eCustodian – an electronic way to securely retain the note. For others, mortgage eVaults must offer MERS™ eRegistry connectivity. In other words, the eVault not only provides record retention but also the key functionality to stay in sync with the eRegistry as it relates to the current rights holders on the eNote. For example, an eVault could be used to notify the eRegistry of changes in rights holders (e.g., transfer ownership to an investor) or receive notices about changes (e.g., a servicing transfer).

Given this expanded definition, an eVault starts to apply to more than custodians and can become an important solution to the various eNote rights holders, including the lender, warehouse lender, investor, servicer and custodian. Basically, the word has become a mixture of definition and business practice.

Authors Needed

There are many words to add to our growing eDictonary, so please keep the momentum and offer up your perspective. Maybe someday – hopefully someday soon – all this “e” stuff will be so elementary, that we won’t need to look it up on our iPhones.

Do You Need An eDictionary? (Part One)

By Nancy Alley

My kids are back in school – finally! Summer was a much needed respite filled with adventures, but by August I could tell their little minds needed the cobwebs cleared. And, starting on the first day, I was hearing about retention quizzes. Leave it to elementary teachers to remind me that you can’t make progress without a strong foundation and common understanding. This is true not only for a classroom of children, but for our industry as well.

All things “e” – eSignature, eDisclosure, eMortgage, eNote and eVault – are hot topics in the mortgage industry. While I am not sure our random use of “e” would pass any classical grammar tests, I am sure many of these terms mean different things to different people. I have a sneaky suspicion that if I were to whip out a vocabulary test – multiple choice at that – there would be confusion and debate over what these terms really mean.

If we, as an industry, don’t have a common understanding of these terms, how are we going to communicate and collaborate to make progress? It is critical we start speaking the same language to effectively evaluate and implement our chosen technologies.

So, in the spirit of back to school, let’s start a conversation to create an industry-wide eDictionary. Here are some of my thoughts:

Lesson 1: electronic signature vs. digital signatures

An electronic signature (eSignature) is defined under ESIGN and UETA as “an electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record.”

This broad definition could mean anything from typed signatures and PIN numbers to image-based signatures created through electronic images of wet-ink signatures, signature pad technology or eSigning solutions using script type fonts. Oddly enough, even a voice signature can constitute an eSignature – although it should be noted that such signatures are not readily accepted by mortgage investors.

Digital signatures, although sounding synonymous with eSignatures, are actually just one type of eSignature. In other words, while digital signatures can be used as eSignatures, not all eSignatures are digital signatures.

So what makes a signature digital? Digital signatures are based on encryption algorithms (or math for us mere mortals) and help determine the authenticity of a message. Digital signatures are based on a concept of key pairs – a private key that only one person possesses and a public key.

By the sender encrypting the document with a private key, the receiver can decrypt the document by using the public key. If it decrypts, the receiver can be assured it came from the sender. This process, if combined with clear intent by the sender to be an act of signing, can be used as a type of eSignature.

In addition, a digital signature also helps you detect if a document has been altered in any way. In short, I know who signed and sent it and that the contents have not changed. Without a doubt, digital signatures offer one of the most secure forms of electronic signature technology and are often held up as the gold standard by the technology and risk folks. Yet, most eDisclosure and eNote solutions actually use other electronic signature types. For example, many require the insertion of the borrower name in a font script on the signature line – rather than a true digital signature. What gives?

The industry smartly has realized that in addition to risk and security considerations, going “e” requires the borrower to actually use the technology. Digital signatures aren’t visible to the naked eye, require distribution of the signing keys and expect a user to associate a magical encryption process with a signature. The adoption risk often proved too great.

This is not to say you can cross digital signatures off this week’s vocabulary list. Interestingly enough many successful eSignature solutions have employed both electronic and digital signatures: a more traditional electronic signature, like images, at the borrower level and then applying a server level digital signature as a “tamper evident seal”. The use of the digital signature as a tamper evident seal does not require the borrower to have a private key as it is done at the solution level yet affords the security and ability to detect alteration as the document is passed along to trading partners. In summary, electronic signatures plus digital signatures really add up to a great solution.

OK, I can imagine we all need a recess break! I’ll be back next week looking for more feedback on terms that should be in our industry-wide eDictionary.

Tech Buyer’s Blue Book

By Todd Moncrief

Last week I discussed the importance of data standards in technology solutions and leveraging standardization to bring together best-of-breed solutions to drive your business. Assuming you bought into my line of thinking, let’s talk about how to get past the marketing hype and select the best solution to meet your business needs.

While a standards-based solution should be a prerequisite to even exchange business cards with a vendor, we all know standards alone are not the answer. I liken it to buying a new truck. For me, trucks are always four-wheel drive. Just trust me on this one; no self-respecting Southern boy would consider anything else. Get stuck in the middle of nowhere without cell phone service while camping, hunting or fishing and you will know why. The same line of thinking applies to selecting technology: support for data standards is a must.

But if all I needed was a four-wheel drive truck, shopping would be mighty straightforward. Nope. There is much more research to be done. Here are some other key ingredients to the selection process.

Crash Ratings: Have you ever looked at those fancy car brochures? Man, the feature list is compelling and, before you know it, the wife and kids have steered you to a minivan because of its entertainment system. Marketing at its best. While feature lists are great and necessary, make sure you evaluate your vendor on what you need from the system — not on its bells and whistles. In our industry, you need the vendor that delivers excellence in product – not the vendor that offers a lot on paper. Ask about performance statistics. Determine service levels. Understand the commitment to the offering – is it core or ancillary? After all, the entertainment system won’t get you out of a mudhole.

A Reputation: Reputation really does matter. If it didn’t, why would the internet be running crazy with consumer reviews? A vendor should be known for excellence, and should be willing to put money where its mouth is. Ask them how much of their budget and R&D dollars is spent on the product or service you are seeking. And don’t just listen to the guy in the car lot – listen to other buyers and industry analysts.

A Green Alternative: While gas mileage is important (and yes, I do realize I drive a truck) and technology solutions can help us save trees no doubt — the right solution should also help you generate the other “green”: money and a tangible ROI. Ask your vendors to see the ROI of their solution. Are you looking at only the current ROI or is their more coming? Will they put that in writing?

Service with a Smile: Another buyer’s consideration that often gets overlooked is the Service department. Granted it is hard to think about these things when staring at all the shiny options out there but this is critical. How does your vendor plan on supporting you? What is the implementation process and support protocol? Who handles ongoing maintenance and configuration of the system? In short, will your vendor be there for you post-purchase to ensure a smooth roll-out and production system?

A Maintenance Plan: It is one thing to be in awe of your intended selection at time zero (Everything looks good on the showroom floor.) But does your provider have the capital to implement and maintain standards and requirements that will consistently change over time? There is a difference between a vendor who has all the 2010 bells and whistles and a vendor who has the capital and investment in its product to continue to maintain and enhance the offering. Unless it truly is a classic, no one likes to be seen driving a discontinued model.

Road Tested: A key, but often overlooked, consideration is – where is your potential vendor headed? Too often you see the selection of a vendor based on current year requirements. What about the future direction of your business. How will your vendor get you there? Probe the vendor on the product roadmap for each of the offerings you are considering. Are they on the innovation highway or is this a pit stop?

Even after you’ve found what appears to be the perfect vendor, you need to make sure of two final things: a) you are not limited to their other partner providers for other services and products and b) they are motivated, post-closing, to helping you integrate their solution to your other vendor solutions to meet your requirements. Whatever you do, make sure you are hitching your company to the provider you want to drive you into the future.

Buyer Beware

By Todd Moncrief

As an industry, vendors and lenders have done our best to create data standards so we can easily communicate and transmit information. This enables the seamless flow of information throughout the lender’s choice of platforms and providing a roadmap for connecting the disparate solutions lenders used. Ten years ago, I remember sitting in on the first MISMO meetings and it all seemed so doable. Vendor partnerships were forged and the work began. A no brainer, right?

Not so fast. A major player in the change of the industry has been the lender. For lenders, it was about “my”. From my POS, LOS and document solution, to my credit reporting, fraud detection and closing platform, to my title company, QC company and MI company – lenders wanted to do business with the folks they liked and trusted. The selected software and vendors provided the best service and technology to meet the lender’s needs. And, seen as an added bonus was the fact that if one wasn’t living up to expectations, the lender could switch one piece of the equation out with minor disruptions.

I agree—life is short, work is hard. We might as well surround ourselves with the technology and people we like.

It’s More Complicated Than It Looks

Standards are good and liking the people we work with is common sense. Unfortunately, if these concepts are not combined, there are several potential “gotchas.” For example, what if:

>> A LOS eats your POS?

>> The MI company becomes controlled by the credit agency?

>> The doc prep company pays less revenue share than the one that is hobnobbing with the LOS?

>> The title company, which doesn’t play nice with the doc prep company, wants to handle closings on their platform?

The potential “what ifs” are endless, but you get the picture. All of a sudden, you are asked to work with people and use technology that you wouldn’t have chosen independently. Furthermore, these entrants to your world may not embrace the data standards, causing new or increased integration issues.

One for All and All for One?

It almost seems like picking one “end-to-end” platform would be easier. Just think —a magic pill, claiming to solve all the problems of the industry in a single dose. Then why can I hear my grandma somewhere in the background alternating between warnings of “if it sounds too good to be true….” and “just say no to drugs”?

Let’s say you decide not to listen to grandma and take that magic pill. Lo and behold it does some things incredibly well, but not everything —and you begin to miss your old document vendor and, even more so, you miss your POS.

Now you’re left feeling with you have less choice and are the owner of an end-to-end solution that may travel the distance but at half speed.

Let’s Get Real

So what’s a lender to do?

First of all, I have to tip my hat to the brainiacs—those data standard folks have a point. If we can work as institutions and vendors to implement standards-based products and services then we can interchange solutions that play nicely together. We don’t need to depend on one solution to do it all. Choice returns!

Combining best-of-breed technologies may actually result in something magical. No small print or legal disclaimers. Along with choice, competition returns and that ultimately results in better solutions for lenders.

Mortgage’s Modern Family

By Nancy Alley

The mortgage industry is the quintessential “modern” family—with both old and new relationships, and a healthy dose of dysfunction. And, like any family, while we may not always appreciate each other to the fullest, we know it is best to support each other and get along. However, even with the best of intentions, we still manage to get on one another’s nerves at times.

Recently, I’ve heard many complaints about “locked PDF documents” wreaking havoc in downstream electronic processes. This makes me wonder: Are we a family with trust issues? Or is this a case of communication issues between family members? Let’s explore.

It’s important to recognize that locked documents typically come in two forms:

>> Password protected documents, which require the viewer to input a password to view a document. When these are passed downstream to the other family members, automated processes can become labor intensive.

>> Restricted documents, which can easily be viewed but may be restricted from editing or printing. If such restrictions are in place, it may prevent others from inputting or merging the documents into other third-party systems, such as loan delivery systems.

So who is locking these documents and why?

The most commonly “locked document” is the appraisal. It appears appraisers are simply trying to protect their appraisals from alteration. While their intent is good, it may limit data transparency in automated processes. A second, growing source of locked documents is from POS systems. It appears that certain systems have locked document features, possibly trying to help brokers and lenders comply with privacy issues. Regardless of the intent and whether the documents are Password Protected or Restricted, these documents can cause problems between mortgage family members.

Need some examples?

1. Think of a wholesale lender receiving documents from brokers. If a document is password protected, the lender will be unable to view it—creating additional steps to unlock it or secure an unlocked version. And like most continual annoyances, they become a greater point of contention the longer they occur.

2. Trying to deliver locked documents to investors—many of whom will not even accept locked documents. This means either the delivery fails or the loans are stipped upon receipt.

Both scenarios are can be costly, requiring resources to fix the documents and causing funding delays. Furthermore, with requirements to submit appraisals to the GSE’s Uniform Collateral Data Portal fast approaching, locked appraisals most likely will be counter to the UCDP initiatives.

Before the finger pointing begins and tensions run high, as an industry, we need to come up with a solution. Where we can, we need to stop locking documents and use technology to help identify a locked document as early in the process as possible. Finally, we all need to dig a little deeper to determine and respect each other’s motivation behind this burgeoning trend and come up with a family compromise.

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Time To eVolve

Stronger Information. Less Paper. Better Service.

Improved Mortgage Service Is All In The Details

Quality Service: A Staple Of The Mortgage Menu

An Industry Resolution Wish List (Part Three)

Electronic Recording: Selecting The Right Vendor For Your Business (Part Two)

Electronic Recording: The E-Mortgage “First Mile” (Part One)

A Thanksgiving Travel Lesson: Security

Foreclosure-Gate: Fact Or Fiction?

End-To-End Vs. Best-Of-Breed

The Xs And Os Of Collaboration

There’s No “I” In Collaborate

“Experience” Is What You Get…When You Don’t Get What You Want

What Happens At MISMO…Doesn’t Stay At MISMO

Do You Need An eDictionary? (Part Two)

Do You Need An eDictionary? (Part One)

Tech Buyer’s Blue Book

Buyer Beware

Mortgage’s Modern Family

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