TORRANCE, Calif., March 29, 2018  — DocMagic, Inc., the premier provider of fully-compliant loan document preparation, regulatory compliance and comprehensive eMortgage services, announced that Deutsche Bank has successfully implemented and is actively utilizing its proprietary eVault technology.

“Deutsche Bank has an international footprint in multiple forms of lending and servicing, and having a company of their size select our eVault to safely and securely store sensitive loan documents speaks volumes about the bank’s confidence in our technology,” said Dominic Iannitti, president and CEO of DocMagic, Inc. “We are very pleased to partner with Deutsche Bank on a long-term basis to help achieve its servicing goals with our eVault.”

Using the DocMagic eVault, Deutsche Bank’s document custody group is now empowered to take full possession of electronically originated assets for clients as the loan market continues to transition to a paperless process. DocMagic establishes a legally compliant method to securely move original electronic files from one custodian to another, while preserving unique authoritative digital ownership.

Further, the eVault ensures authentication of original documents passing between owners, irrespective of how many duplicate electronic files there may be of the same record. The repository system within DocMagic’s eVault relies upon digital tamper-proof seals and a detailed, well-documented audit trail that ensures compliance and provides detailed reporting.

DocMagic also made available to Deutsche Bank the ability to leverage a unique dual-option solution that accesses its on-premise eVault installation to provide a gateway to seamlessly and securely connect to MERS via any browser, as well as by way of a direct VPN connection.

As a result of partnering with DocMagic, Deutsche Bank is now well-positioned to easily, compliantly and securely service loans housed in the eVault, creating newfound efficiencies and a competitive advantage for the bank. By providing eVault services to Deutsche Bank’s clients, they further cement themselves as a leader, innovator and provider of excellence in loan servicing.

Of note is that DocMagic has been at the forefront of developing award-winning technology that facilitates a complete eMortgage solution for the entire supply chain that fully supports an end-to-end, completely paperless digital mortgage process. This includes from the point-of-sale through eClosing, eWarehouse lending, secondary marketing and even servicing.

DocMagic’s eVault has been thoroughly vetted and officially approved by Fannie Mae, Freddie Mac, and MERS® to compliantly support eVaulting services.

About DocMagic:

DocMagic, Inc. is the leading provider of fully-compliant loan document preparation, compliance, eSign and eDelivery solutions for the mortgage industry. Founded in 1988 and headquartered in Torrance, Calif., DocMagic, Inc. develops software, mobile apps, processes and web-based systems for the production and delivery of compliant loan document packages. The company’s compliance experts and in-house legal staff consistently monitor legal and regulatory changes at both the federal and state levels to ensure accuracy.

For more information on DocMagic, visit https://www.docmagic.com/.

National Mortgage Professional Magazine recently sat down with Tim Anderson, Director of eServices at DocMagic, to gain insight and trending into the mortgage industry’s current progress and needs to achieve a completely paperless lending transaction. Tim is a subject matter expert in end-to-end digital mortgage processes, electronic compliance and supporting eServices, among an array of other mortgage technologies. He has more than 30 years of industry experience working on both the lender and vendor side of the business.

NMP: Lots of attention has been placed on the importance of digital mortgages as of late, in particular in the last 18 months. Why the sudden rush?

Tim Anderson: The advent of fintechs to focus and improve on the consumer experience in order to capture more business has been significant. Couple that with the government-sponsored enterprises (GSEs) moving their traditional post-closing pre-funding review process to a more automated pre-closing quality control (QC) process, along with Day One Certainty and Loan Quality Advisor, and these have become major factors and drivers of change.

eMortgage services that facilitate a paperless lending process have been available for quite some time, but industry-wide adoption has been slow up until lately. However, you are with an organization that is currently at the right place at the right time. Can you elaborate as to how you got here?

The mortgage industry, as a whole, takes quite a long time to flex with significant changes, especially from its entrenched paper-based processes, which is a long-term commitment. At DocMagic, we developed our own eSign technology back in 2011. We later acquired eSignSystems from WAVE in 2014 to add a total enterprise on-premise eSign, eClosing and eVaulting solution for lenders and vendors to implement within their own firewalls. With great fanfare, we launched our hosted Total eClose SaaS version in the spring of last year.

The mistake that many people make, however, is that they think eSign equates to eMortgages and that couldn’t be further from the truth. It is so much more involved than licensing an eSign tool. There is a dominant eSign player out there today that focuses on serving multiple industries, but the ability to auto-enable all the legal documents required to facilitate a legal and compliant closing, including the GSEs’ requirements to deliver a category one SMARTDoc eNote takes a level of sophistication and industry knowledge that no eSign tool or dumb PDF-based doc provide can deliver. That is why DocMagic is in a unique position to deliver a “total” solution, (eSign, eClosing, eVault, eDocuments, eNotary) than most vendors that are just hocking a technology that lenders still must figure out on how to implement on their own.

Believe me, when you are a national player and you start looking at the magnitude of creating and supporting thousands of mortgage templates for closing documents that are dynamic and variable, those types of broad, non-industry focused systems are not sustainable and just won’t scale with industry complexities and constant regulatory changes.

DocMagic’s technology facilitated most of the nation’s first successfully completed eClosings. What can the industry learn from those eClosings?

This is a very insightful question. We knew early on that as eMortgages became mainstream many “Johnny-Come-Lately” companies would eventually jump into this space and offer hybrid solutions. Depending upon your lending footprint, at the local jurisdiction level there are still a lot of variables in what they accept as legal and compliant from an eSign, eNotary and eRecording perspective and because of this many of the major players are hesitant to jump in. Again, this is a key differentiator for us as we make our documents “intelligent” to provide visual cues and automated compliance rules so we know down to document and county level which documents can be eSigned, eNotarized or need to be papered out and “wet” inked signed so the lender does not have to manage all of this.

The other key piece of the equation is that you cannot just automate the lender side of the transaction and ignore the title aspect. So we auto “e” enable those documents for automated eSign and eNotary to deliver a full paperless closing and better consumer experience for all parties involved.

eClose adoption is well on its way. Can you tell us a little bit about how eClosings are most effectively addresses with technology, and how it will help the industry advance digital mortgage adoption?

This also ties into the previous question of us having been out there longer than most to develop a more total, feature rich and robust solution than just a basic, simple eSigning tool. Delivering a system that does not include an automated way to “e” enable the documents is not a solution. Although we offer our system with or without embedded documents, in most installs where it was left to the lender to enable their documents, it never seemed to get off the ground. It’s one thing to enable a few static documents that incorporate a couple pages like the 1003 loan app, but it’s a totally different level of scale and complexity to attempt to do this with thousands of closings documents that must be dynamic and variable in nature.

Both Fannie Mae and Freddie Mac maintain a list of approved vendors that support eNote, eClosing and eVaulting, but for many on that list they are dependent upon other vendors to provide the key pieces needed to deliver a complete process and solution. That means that lenders have to separately vet out and sign multiple agreements to get and do what we do as a single provider. This introduces additional third party processes and risk into an already fairly complex process and service. At the end of the day, who is that one throat to choke that is going to stand behind and rep and warrant the process? People forget this is more than buying shoes online via Amazon. This is one of the most important legal transactions that a majority of consumers will make in their lifetime. I would go with a vendor that has a sole purpose of ensuring legal compliance.

Are there any pitfalls that lenders should look out for when selecting a vendor and implementing a digital mortgage process?

Yes. One key pitfall is what I mentioned above: Go with a vendor that can automate and support the entire process. Also, make sure they have been thoroughly vetted and approved by MERS, Fannie and Freddie and are currently on their vendors list. And finally, to ensure success, go with someone that actually has some experience and has been doing this for a while. Trust me, I’ve seen many initial failed “pilots” take place that have consumed a lot of time and resources, basically learning as they go along. This is not the best path or process you want to take.

There still seems to still be quite a bit confusion in the marketplace as to what actually comprises a digital mortgage. We’ve heard about hybrid solutions making some headway, but what about a completely paperless, comprehensive digital mortgage? Can you break it down for us?

Yes, and some of it is in terms of how we define a “Digital Mortgage” versus an “eMortgage.” We really don’t even talk about eMortgages anymore, as the industry coined the new term digital mortgages as if this is something totally new and different. When I talk about digital mortgages it’s more about providing additional automated data validation around systemically verifying the compliance of the data before you include it a document. eMortgages are really about making the process of generating, executing, storing and delivering the documents in a totally paperless and legal process. To ensure compliance, you need a solution that does both. That is the entire reason and need for an intelligent or SMART Document process. To fully break that critical component down, however, it would take another article to describe the importance of why.

But it is also a reason why many doc companies still can’t support a full eClosing process because their systems are based upon and can only produce dumb PDF documents as standard output. DocMagic’s docs, on the other hand, are native XML so we can embed the original source data to be electronically boarded and re-verified for any system to not only ensure the integrity of the document but the compliance of the data securely embedded within it. This is a revolutionary concept that many still do not understand today but if you look at where the Consumer Financial Protection Bureau (CFPB), Fannie Mae and Freddie Mac are going, all the new CFPB and GSE’s documents are moving to support MISMO 3.3 data format to verify the data before documents are drawn. But what good is verifying data if the originator cannot ensure the data that was last verified is in the documents they are purchasing? The only way to do that is to create an intelligent document and then eClose it to provide a tamper evident seal to ensure that.

That is why most doc systems can only support a “hybrid” eClosing because they cannot produce a SMARTDoc eNote or any other intelligent document that can be systematically verified and boarded. That is also why they do not have good solutions to auto tag eSignatures and eNotary just like the embedded data tags on those documents.  SMART Documents is what allows lenders to create more automated processes and auto boarding and verification of the data without having to OCR dumb PDF’s to extract the data to verify data after the fact. That is what intelligent processes and documents is all about and where the industry is moving.

This article originally appeared in the February 2018 edition of National Mortgage Professional Magazine.

Milestone results from increased adoption of several DocMagic technologies

TORRANCE, Calif., Jan. 24, 2018 — DocMagic, Inc., the premier provider of fully-compliant loan document preparation, regulatory compliance and comprehensive eMortgage services, announced that it has processed more than 300 million mortgage-related electronic signatures.

This milestone achievement is the direct result of increased adoption of several DocMagic technologies that feature its comprehensive eSigning platform, which can be accessed as a software-as-a-service (SaaS) or on-premise enterprise platform. Each of DocMagic’s digital platforms reports a significant increase in volume, which the company attributes to lenders’ growing need to prove a TRID-compliant, 100 percent paperless mortgage process.

“Borrower demand is driving the increase in eSignings, and lenders are choosing DocMagic to get a consistent, compliant eSigning solution that spans the original LE [Loan Estimate] to the final CD [Closing Disclosure],” said Dominic Iannitti, president and CEO of DocMagic. “Lenders know DocMagic is the go-to choice for compliance. We reached 300 million eSignatures because we have solved lenders’ number one burden for the past two years—electronic evidence of TRID compliance—while enabling them to stay competitive and enhance the overall borrower experience.”

DocMagic reports significant volume increases for SmartCLOSE™ and Total eClose™, two award-winning technologies that enable lenders to comply with TRID and UCD (Uniform Closing Dataset) guidelines. SmartCLOSE is a collaborative closing portal offering one system of record that assures accuracy, completeness, consistency and compliance of the data before final documents are drawn and the borrower electronically executes the documents using DocMagic’s integrated eSign technology. Total eClose, a complete paperless, digital closing solution with integrated eSignature and eNotarization capability, provides continuous compliance checks to assure all documents are complete, current, consistent and compliant.

“A lot of existing DocMagic customers adopted our eSign technology because it’s so much easier to access and use than other platforms,” said Iannitti. “We were already integrated with the vast majority of LOS systems, so providing eSigning functionality was a logical extension of our service. We also added new integrations, which brought onboard new eSigning customers. Having an eSign technology that can draw new customers while expanding use among existing customers shows the ubiquitous need for the functionality DocMagic’s technology provides.”

DocMagic provides the most commonly used eSignature technology in the mortgage and financial services space and is the leading provider of eClosing technology for the majority of state-sponsored eClosing pilot programs to support 100 percent paperless digital mortgage transactions.

New facility provides compliant solution to 'opt-out' requirements for mortgage transactions that revert from digital to paper processes

TORRANCE, Calif., Dec. 5, 2017 (SEND2PRESS NEWSWIRE) — DocMagic, Inc., the premier provider of fully-compliant loan document preparation, regulatory compliance and comprehensive eMortgage services, announced that it has opened a 12,000 square foot print fulfillment center minutes from its Torrance, California headquarters. DocMagic added the high tech “supercenter” to support lenders’ growing need for secure, compliant paper documents as the mortgage industry transitions to a 100 percent digital mortgage process.

“Ironically, DocMagic’s increasing need to produce paper documents results from the growing number of lenders using our technologies to transact paperless mortgages,” said Dominic Iannitti, president and CEO of DocMagic, who explained that even lenders employing 100 percent digital processes need to produce paper documents due to paper “fallout.”

Paper fallout, which is normal and can be expected with any digital process, is usually caused when borrowers do not respond to email requests for eSigning within required timeframes or because they specifically ask their lenders to revert to paper documents. When this happens, lenders’ risk of compliance violations increases. The process of printing, preparing and delivering paper documents is traditionally an intensely manual and time-consuming process, which increases lenders’ risk of missed disclosure deadlines, errors and compromised data.

“Simply creating a print fulfillment center wouldn’t have been an adequate solution because high risk is inherent in handling paper fallout,” said Iannitti. “We needed a fulfillment center based on technology that eclipses any process – manual or automated – currently being used to process paper documents. Fortunately, this is where DocMagic excels. We created a fulfillment supercenter that operates at the height of automation in the mortgage equivalent of a sterile environment. We’re very proud of what we’ve built.”

The new fulfillment center uses biometric authentication and video monitoring to provide auditable assurance that only authorized individuals access the building and specific areas within the structure. Inside, advanced technology automates nearly every step of the paper process. Once the documents are ordered, a printer automatically feeds the paper documents directly into an automated system that scans and reads the barcodes to assure that all documents are present. The documents are then inserted into envelopes, sealed and stamped—all without human intervention. The system logs and stores all actions, so lenders can review them and produce detailed information about any document’s activity, at any time. The result of this high-tech process for handling paper is a drastic reduction in the risk of errors, omissions and compromised data.

“UETA [Uniform Electronic Transactions Act] requires that consumers be allowed to opt out of electronic processes at any time, but that’s just one compliance issue lenders need to address,” said Iannitti. “The key difference between DocMagic and a basic software provider is DocMagic’s core focus on providing a legal and compliant process. Unlike other providers, we’ve automated and integrated that opt out option within our workflow so lenders can avert risks that arise when transitioning to another system or vendor.”

DocMagic plans to open additional regional print centers across the US over the next several years to support its expansion into other types of consumer loan programs. While there will always be some degree of fallout, as borrowers embrace the eSigning of all documents as the new norm, opting out to a paper process will become less common as well as the need to support additional fulfillment centers.

About DocMagic:
DocMagic, Inc. is the leading provider of fully-compliant loan document preparation, compliance, eSign and eDelivery solutions for the mortgage industry. Founded in 1988 and headquartered in Torrance, Calif., DocMagic, Inc. develops software, mobile apps, processes and web-based systems for the production and delivery of compliant loan document packages. The company’s compliance experts and in-house legal staff consistently monitor legal and regulatory changes at both the federal and state levels to ensure accuracy.

For more information on DocMagic, visit https://www.docmagic.com/.

The committee is comprised of select subject matter experts

TORRANCE, Calif., Nov. 28, 2017 (SEND2PRESS NEWSWIRE) — DocMagic, Inc., the premier provider of fully-compliant loan document preparation, regulatory compliance and comprehensive eMortgage services, announced that Jonathan Kearns has been appointed to the Mortgage Industry Standards Maintenance Organization (MISMO) Residential Standards Governance Committee.

The committee is comprised of select subject matter experts, nine of which who will began their two-year term on Jan. 1, 2018 through Dec. 31, 2019. The Mortgage Bankers Association (MBA) is the parent corporation of MISMO and is actively involved in the organization’s ongoing contributions to the industry.

The Residential and Commercial Standards Governance Committees report to MISMO’s Board of Directors. The committees are responsible for administering and overseeing MISMO’s activities specific to the Standards. This includes providing guidance to the MISMO workgroups; establishing and managing the MISMO Reference Model release schedule; conducting oversight to ensure that standards development is occurring in conformance with established policy; and maintaining the architectural consistency of the MISMO Standards.

Jonathan is the senior vice president of technology solutions at eSignSystems, a division of DocMagic, and has been with the company since its 2014 acquisition of eSignSystems from WAVE. He has been instrumental to DocMagic in advancing business processes and developing workflows that incorporate electronic documents, eSignatures, eVaulting and other paperless mortgage solutions.

“We congratulate Jonathan on his appointment to the MBA’s MISMO committee to provide his expertise in helping move the mortgage industry forward,” said Dominic Iannitti, president and CEO of DocMagic. “Jonathan exemplifies a forward-thinking mortgage technologist who is always innovating and arriving at better, more efficient ways to solve business problems. DocMagic believes strongly in being a thought leader and giving back to the mortgage industry. We are an active participant in MISMO at the Champion level and Jonathan volunteering his time for the next two years to serve on the MISMO Governance Committee reflects this continued commitment.”

Prior to Jonathan’s appointment, DocMagic’s director of eServices Tim Anderson also volunteered his time, serving on both the MISMO Governance committee as well as the MISMO board for a total of four years.

DocMagic is a pioneer of comprehensive eMortgage solutions and services for the mortgage industry, developing leading-edge products that fully support an end-to-end, 100 percent paperless digital mortgage process. For years, the company has been at the forefront of leading the charge in evangelizing the benefits and adoption of a complete eMortgage across the entire supply chain — from the point-of-sale through eClosing, eWarehouse lending, secondary marketing and even servicing.

About DocMagic:
DocMagic, Inc. is the leading provider of fully-compliant loan document preparation, compliance, eSign and eDelivery solutions for the mortgage industry. Founded in 1988 and headquartered in Torrance, Calif., DocMagic, Inc. develops software, mobile apps, processes and web-based systems for the production and delivery of compliant loan document packages. The company’s compliance experts and in-house legal staff consistently monitor legal and regulatory changes at both the federal and state levels to ensure accuracy.

For more information on DocMagic, visit https://www.docmagic.com/.

About MISMO:
MISMO® is the voluntary standards development body for the mortgage industry. Voluntary use of MISMO standards reduces processing costs, increases transparency and boosts investor confidence in mortgages as an asset class, while creating cost savings for the consumer.

For more information, visit http://www.mismo.org/

A leading national subservicer opens up market opportunities by servicing eNotes stored electronically via DocMagic's eVault Technology.

VIRGINIA BEACH, Va. – October 20, 2017 – LoanCare, a ServiceLink company, announced today that it has begun utilizing DocMagic, a provider of fully-compliant loan document preparation, regulatory compliance and comprehensive eMortgage services, in order to add eVaulting capabilities to its process. This allows LoanCare to begin servicing loans registered with MERS® as eNotes.

LoanCare is a subservicer operating in all 50 states, servicing more than 1 million loans. Clients of LoanCare can now begin servicing loans stored electronically as eNotes, using an eVault that is secure, compliant and scalable while providing process transparency.

“By utilizing DocMagic, we have established a competitive advantage and created the opportunity to store and subservice loans housed in an eVault, making us the premier subservicer for electronically closed loans,” said Gene Ross, executive vice president of strategy and business development at LoanCare. “After performing a careful evaluation of vault providers in the marketplace, it became clear that DocMagic was the software company that could enable us to broaden our services for our clients.”

DocMagic has an existing integration with the MERS® eRegistry system that registers originated or purchased loans as eNotes. After MERS® registration, the eNote is securely transferred to DocMagic’s eVault, and then can easily and efficiently be serviced by LoanCare. Loan details that are stored in DocMagic’s eVault can be referenced and reported on, so that in the event of an audit, LoanCare can provide proof of compliance for its clients such as TRID and other rules and regulations.

For all eNotes that LoanCare services, DocMagic retains a complete electronic audit trail, tracking every event and securely storing both data and documents for the life of the loan.

“As states continue to adopt more convenient notarization for consumers to enable digital signing of mortgage documents, we anticipate greater market acceptance that will drive the ease in which loans are originated,” said Dave Worrall, president of LoanCare. “One example was North Carolina’s recent achievement of its first ever eClosing – our servicing of that electronic mortgage loan utilized DocMagic’s technology. By providing eVault services to our clients and the marketplace, we plan to continue to be a leader of technology and process innovation.”

“With eClosings starting to gain adoption among lenders, LoanCare’s use of our eVault opens up a substantial opportunity for them to capture market share while operating efficiently, cost effectively and compliantly,” said Dominic Iannitti, president and CEO of DocMagic. “Our Total eClose™ single platform solution enables lenders to close loans without any paper involved whatsoever. The industry adoption of eClosings that we are seeing is significant. LoanCare is a visionary organization that has prepared itself to start servicing eNotes by harnessing the right technology ahead of the curve.”

DocMagic's eMortgage solutions have been thoroughly vetted and approved by Fannie Mae, Freddie Mac and MERS® to compliantly support all three eMortgage categories for eVault, eNote and eClosing. In addition to its SaaS-based eVault, DocMagic also offers an on-premise eVault solution that is available through eSignSystems, a DocMagic owned and operated company.

There's so much happening at this year's 2017 MBA Annual! Are you ready? Stop by booth 707 to learn how DocMagic's digital technology is helping lenders to close on fully paperless mortgages. Total eClose™, our suite of seamless, end-to-end, digital eClosing technology, is providing solutions to problems across the mortgage lifecycle. Read more see what else we have in store for the event.

TechLIVE —  Fintech Solutions to Digital Mortgage
October 25th — 9:00 AM - 10:30 AM Level 3 - Four Seasons Ballroom 1
Tim Anderson, DocMagic Director of eServices

Learn about opportunities to digitally transform your operation and how lenders and agents are collaborating through technology.

ROCKIN' IN THE ROCKIES! DOCMAGIC SPONSORED EVENT!

Sunday, October 22, 2017
6:00-10:00pm | Denver, CO.
We're kicking off MBA Annual with a party! 

Join us for dancing, appetizers, and rock n' roll. 
RSVP NOW for this exclusive event! 

DOCMAGIC'S GSE-CERTIFIED UCD SOLUTION
Is your UCD process ready? We're making it easy for you to implement successful UCD submissions to the GSEs. Our GSE-Certified solution allows you to satisfy 100% of the mandate far in advance of the 2018 deadline:

• Generate & deliver UCD files to your GSE of choice
• UCD file with embedded PDF of the CD
• Borrower (and seller) data in the UCD file format
• Integrated via DocMagic’s API
  
  

Join us at the 2017 Digital Mortgage Conference in sunny San Francisco, CA! At DocMagic, our goal is to make it easy for you to implement successful Uniform Closing Dataset (UCD) submissions to the GSEs.

A GSE-CERTIFIED UCD SOLUTION PROVIDER:
Generate & deliver UCD files to your GSE of choice UCD file with embedded PDF of the CD Borrower (and seller) data in the UCD file format Integrated via DocMagic’s API Our GSE-Certified solution is ready NOW... and allows you to satisfy 100% of the mandate far in advance of the 2018 deadline.

Come see our UCD DIGITAL INNOVATION demo:
Thursday, September 28th, 1:30 PM (PST) SmartCLOSE™ solves many of the key challenges between lenders and settlement providers. Join us as we demo the latest SmartCLOSE™ capabilities — electronic generation and delivery of XML UCD files, containing both borrower and seller data, to the GSE of your choice.
Add to Calender!

Schedule a Meeting with Us Now!
Meet us at kiosk #9 to learn how we can support your eMortgage and UCD process.
Schedule A Meeting Now!

Written by Nathan Batts. This is the part 2 of a blog series. Click here to read part 1.

What is Driving the Transition

North Carolina is not the first state to begin offering electronic mortgages, but it is the first state in which the government has taken an active role in the development and rollout. The decision by the Secretary of State to begin a pilot project, convene various market participants together for a discussion, and form an advisory committee with the goal of developing best practices and standards now positions North Carolina to help form the national model for such transactions.

The groundwork began many years ago. The legal basis for digital signatures and documents has existed at the federal level, through such laws as the Electronic Signatures in Global and National Commerce Act (E-Sign Act), and at the state level in North Carolina, through such laws as the Uniform Electronic Transactions Act found in Article 40 of Chapter 66, since at least the year 2000. Similarly, North Carolina has had a structure for electronic recording and electronic notarization in place since 2005. The North Carolina structure includes safeguards such as a requirement that the electronic notary must be physically present with the borrower so as to protect against fraud or impersonation and duress.

In the years since then, advances in technology and encryption have made more secure transactions possible and have added the capability to detect when tampering is attempted to electronic signatures and documents. Changes affect the “hash value” which operates like a cryptographic and tamper evident seal.

From the standpoint of compliance with the Consumer Financial Protection Bureau’s TILA-RESPA integrated disclosure rule (TRID), an electronic mortgage also has many advantages. One of these is the ability to easily retain and store records and produce audit logs. Every digital signature is logged when made and the reports generated can become an important tool in showing good faith compliance.

As we look at the development across the state of capability to accept eRecording, additional counties are quickly coming online. In North Carolina, an estimated 77 out of 100 counties now accept secure eRecording, with 74 having full capability and three accepting mortgage satisfactions only. Electronic documents coming in are of higher legibility, and staff time and operating costs are reduced as scanning and other responsibilities are diminished. As more counties accept eRecording, travel to go out and do the filings in person and shipping costs can be reduced or eliminated, saving time, money, and reducing carbon emissions. 

From the closing attorney perspective, after an initial learning curve to use the software and modest investments in equipment like a webcam, electronic signature pads, and a computer, there is the prospect of potentially faster closings, as well as less travel to visit borrowers or down time waiting for borrowers and others to arrive for the closing. Mountains of paper are no longer needed. Much of the eClosing package can be completed in advance and the attorney has the certainty of knowing that all of the documents are on hand and are in the eClosing platform rather than dealing sometimes with the last-minute scramble to collect them from lenders. For an attorney, this could translate into a higher degree of efficiency and the capability to fit more closings in per day. And the closing attorney doesn’t have to lose time tracking down a borrower after closing because a document was left unsigned.

From a borrower perspective, the greater automation means that the time from application to underwriting and approval and closing can be significantly shortened. There is also the convenience factor of potentially eliminating travel, with the electronic notary coming to the borrower’s home or another location. And there is the real prospect of lowering closing costs as such things as mailing costs go away.

From a lender perspective, the essential documents are already in electronic form and are thereby ready much sooner for sales to investors, which can translate into more money per transaction as investors pay a premium for such speed. There is also the added advantage that there are no paper promissory notes to get lost.

Other Considerations

Lenders can choose what portions of the mortgage transaction should be electronic and which should continue to follow a traditional model. If a Register of Deeds in the lender’s market doesn’t accept eRecording for instance, the documents may need to be converted into paper for recording and notarized using the traditional method, but the efficiencies before that step are still realized. Similarly, a lender that wants to continue using paper documents may still want to scan documents and eRecord in some circumstances to save time. And there is nothing that prevents the closing from still taking place in person if that is the most comfortable for the parties.

For millennials and others who place a high value on convenience, electronic mortgages could be a good option. And for those who are buying a second home and don’t want to travel several hours to a closing, the prospect of having an electronic notary instead travel to them to help complete the transaction and to do the closing remotely may be a selling point. 

Future Transactions

While the NCBA is very optimistic about the market potential for electronic mortgages, we are still early from a market adoption standpoint. Federal regulators have been very supportive, particularly the CFPB which conducted a study and has actively encouraged financial institutions to explore the use of electronic mortgages.

Importantly, the servicing process and secondary market are still developing. Fannie Mae and Freddie Mac have taken steps to support the transition but others on the investor side are still building out their procedures. This means in the near term that the number of transactions will tick upward but the tipping point to when the flood begins is further down the road. 

As we go forward in this process, other eClosings have already been scheduled by the earliest adopters of this technology. The beginning of calendar year 2018 is emerging as a time period when some of the larger players in the mortgage industry appear positioned to begin phasing in the technology that underpins electronic mortgages. Once the conversion begins, the enhanced speed, efficiency, and cost savings will undoubtedly drive and accelerate the transformation. 

------

Nathan Batts, Senior Vice President and Counsel, North Carolina Bankers Association (NCBA)

Written by Nathan Batts

The mortgage process is time-tested and ancient. While there has been considerable innovation, such as in the ability to shop for rates and apply online, many facets of the mortgage process have remained essentially unchanged. Paper and ink signatures continue to dominate transactions, closings are face-to-face, many documents are mailed, and filings with a local land records office are often still done in person. 

With wholesale transformations occurring everywhere in the banking business, we are at a critical point when changes in both technology and the law underpinning transactions are combining to bring about a new advancement for the mortgage industry. Electronic mortgages are positioned to transition from pilot project initiatives to routine occurrences and finally the new norm. In this article, the focus is on providing a high level explanation of these transactions and how the changes will benefit customers, financial institutions, and other market participants.

eMortgages and eClosings

Let’s start with a few basic terms. In an FAQ entitled “eClosings and eMortgages (eNotes)” last updated on May 18th of this year, the government-sponsored enterprise Fannie Mae includes the following helpful information.

“What is an eClosing? An eClosing is the act of closing a mortgage loan electronically. This occurs through a secure electronic environment where some or all of the closing documents are executed and accessed online (also known as the ‘execution’ phase of creating an electronic mortgage loan). This is often a hybrid process in which certain key documents (e.g., Note, Security Instrument) are printed to paper and traditionally wet-signed while other documents throughout the process are signed electronically.

What is an eMortgage? An eMortgage is a mortgage loan where the critical loan documentation, specifically the promissory note (eNote), is created electronically, executed electronically, transferred electronically and ultimately stored electronically. An ‘eClosing’ produces an ‘eMortgage’ only if the promissory note is signed electronically. Note: This can still include a traditionally wet-signed security instrument.”

“eClosings and eMortgages (eNotes)” Frequently Asked Questions, Fannie Mae, https://www.fanniemae.com/content/faq/emortgage-faqs.pdf. 

Thus, two key terms, eClosings and eMortgages, have emerged. For now, we can use electronic mortgages as a more general term encompassing both concepts. The term digital mortgage is also widely circulating.

Characteristics of the First Transactions

The eClosing for the first documented end-to-end electronic mortgage in North Carolina occurred on May 5, 2017 as part of a pilot initiative by the North Carolina Department of the Secretary of State and North State Bank Mortgage.

The second eClosing occurred on August 10th as a hundred industry and regulatory agency observers, who had signed nondisclosure agreements to protect borrower information, gathered in Raleigh and watched the transaction unfold remotely on video screens. 

For the observers at the second eClosing, the left-hand side of the screen was split between streaming video of the closing attorney sitting in her office and below streaming video of another location where the borrower was seated together with a certified electronic notary. On the right-hand side of the screen, observers saw an open application window displaying the mortgage documents. A sidebar in the document window showed by name which document was being displayed and listed the other documents in the closing package. Thus, video-conferencing replaced a transaction which has traditionally been conducted in an attorney’s conference room, where everyone would gather around a table and sift through a stack of paper documents.

In transactions such as these, the software platform used by the lender and the closing attorney helps to guide the workflow and keep everything organized. The borrower simply goes through a few steps on the screen to consent to electronic records and to adopt an electronic signature which is held in the system. Then, the closing attorney explains to the borrower the mortgage disclosures and loan documents, steadily scrolling forward using mouse clicks and a scroll bar. At intervals a tab pops up on the screen where a digital signature needs to be applied. The closing attorney then temporarily transfers control to the borrower, who in turn with mouse clicks applies the previously selected digital signature to those tabbed places in the agreement or disclosures. After a digital signature has been applied, control transfers back to the closing attorney who continues his or her explanation and scrolls to the next area where a signature is required. One safeguard in the software platform is that documents will not continue to advance on the screen until necessary signatures have been obtained, which prevents many of the mistakes that occur at closings.

Once all borrower signatures have been obtained, the closing attorney and the electronic notary can carry out any remaining steps. For example, the closing attorney can pass control to the notary to apply electronic notarizations to the documents, with the notary’s signature and seal being applied in much the same manner used by the borrower to apply digital signatures. The closing attorney can review the documents and, using the dashboard in the eClosing platform, send the documents electronically to the lender for final funding approvals.

When the approvals have been obtained, any documents such as the deed of trust that require local recordation can be sent electronically, along with the recording fees, using an eRecording platform to the local Register of Deeds for the county where the real property is located. What the observers at the second eClosing saw was a software product that integrated both the eClosing and eRecording features. Once received by a Register of Deeds, the documents are reviewed by staff and either approved, with a book and page number assigned, or the closing attorney is notified where there may be any deficiencies that need to be corrected before the recording can be accepted.

Assuming the recordation has been done, the electronic promissory note is ready for eVaulting and registration on the MERS® eRegistry.

Under these steps, ownership can be transferred and view or access rights can be granted to various participants like warehouse lenders and Government Sponsored Enterprises like Fannie Mae and Freddie Mac. While there may be many copies of the documents, the registry is set up so that there can be only one “authoritative copy” of the eNote, with information stored about who is the current controller/holder and the location where the authoritative copy is stored.

Thus, the cycle or workflow is from Pre-Closing (loan origination, title production, and document preparation, with any associated platforms or software systems), to eClosing, eRecording, and finally eAsset Management. Much of the flow can be controlled through simple software dashboard steps through the selected technology provider. 

Secretary of State Elaine Marshall and a team led by Ozie Stallworth, Electronic Notarization and Notary Enforcement Director, have posted an excellent video online that walks viewers through these steps and shows how the transactions look. The video is available on YouTubeᵀᴹ and is entitled “North Carolina Secretary of State eClosing Pilot: From Aspirational Vision to Commercial Reality.”

North Carolina Department of the Secretary of State. “North Carolina Secretary of State eClosing Pilot: From Aspirational Vision to Commercial Reality” Online Video clip. YouTube. YouTube, 15 August 2017. Web. 25 September 2017. 
-----

We'll continue the 2nd part of the series next week when we dive into "What's is Driving the Transition" and "Future Considerations."

Nathan Batts, Senior Vice President and Counsel, North Carolina Bankers Association (NCBA)

Reposted with Permission from Carolina Banker Magazine.