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Guaranteed Rate Partners with DocMagic to Cut Closing Time

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Borrowers can have a 10-minute closing appointment when reviewing and electronically signing documents in advance

DocMagic, Inc., the premier provider of fully-compliant loan document preparation, regulatory compliance and comprehensive eMortgage services, announced that retail mortgage lender Guaranteed Rate can now cut closing time by electronically signing mortgage closing documents in advance.

Guaranteed Rate has branded the solution FlashClose, which allows customers to opt-in, review and complete most documents in advance of the notary arriving, saving an hour or more at the closing table – with some averaging a mere 10-minute appointment to provide inked signatures.

“Guaranteed Rate is always looking for ways to simplify the process using innovative technology to enhance the customer experience,” says Jim Hettinger, executive vice president of operations for Guaranteed Rate. “With the successful launch of FlashClose, powered through our partner DocMagic, this tool adds speed, convenience and accuracy to the closing process.”

“Guaranteed Rate is a leader in mortgage technology innovation and collaborating with them on this project has created a solid hybrid eClosing approach that saves a lot of time for both borrowers and closing agents,” stated Dominic Iannitti, president and CEO at DocMagic. “The fashion in which Guaranteed Rate is leveraging our technology has resulted in the successful adoption of a sound, compliant, secure hybrid eClosing that is unique to their retail lending business strategy.”

Of note is that DocMagic offers a comprehensive eClosing solution called Total eClose™ that delivers fully paperless closings from start to finish. DocMagic’s proprietary eSign platform is a component of Total eClose and can be accessed and implemented by lenders to help automate the closing process.

For more information about FlashClose, visit https://www.guaranteedrate.com/flashclose.

About Guaranteed Rate:
Guaranteed Rate is one of the largest retail mortgage lenders in the United States. Headquartered in Chicago, the company has approximately 210 offices across the U.S. and Washington, D.C., and is licensed in all 50 states. Since its founding in 2000, Guaranteed Rate has helped hundreds of thousands of homeowners with home purchase loans and refinances and funded nearly $19 billion in loans in 2017 alone. The company has become the Home Purchase Experts® by introducing the world’s first Digital Mortgage technology and offering low rate, low fee mortgages through an easy-to-understand process and unparalleled customer service.

Guaranteed Rate won an American Business Award for its Digital Mortgage technology in 2016, ranked No. 1 in Scotsman Guide’s Top Mortgage Lenders 2016, was chosen as Top Lender 2016 and 2017 by Chicago Agent magazine, made the Chicago Tribune’s Top Workplaces list seven of the past eight years, and was named Best Overall Online Lender and Best Lender for FHA Refinance by NerdWallet in 2018. Visit https://www.guaranteedrate.com/ for more information.

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Setting the Record Straight on Digital Mortgages

mortgage-app-form-digital-mortgage The Whole is Greater than the Sum of its Parts When it Comes to Digital Mortgage Solutions and eNotes

By Tim Anderson,
Director of eServices, DocMagic, Inc.

Having worked in the mortgage industry for over 30 years, I’ve pretty much seen it all. As a mortgage technologist, I’ve watched vendors and lenders alike create hype around various technologies and new buzz words over the years, only to see so many of them never gain adoption or provide value. Sometimes, the rollout is flawed or it’s an outright failed go-to-market strategy. I recall when the likes of Service Oriented Architecture (SOA), Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS), cloud-based computing, and so many others instantly became attractive terms and acronyms with mortgage technology vendors flocking to incorporate them into their marketing speak—whether they delivered on their promises or not.

Collaborating closely with the GSEs, investors, lenders, servicers, warehouse lenders, and many other industry participants, I’ve worked to forge ahead and evangelize the far-reaching benefits of a comprehensive “eMortgage” process, a term that has essentially been replaced by “digital mortgage.” No matter what you call it, it’s always been about replacing and automating paper-based processes with automation.

Now we’re living in a world of digital mortgage. We’ve seen many new and small software companies pop up, driving hard to attract lenders with slick marketing speak and often low price points for what is sometimes immature, unproven technology.

Many of these newbies don’t have the much-needed mortgage industry domain experience needed to succeed, as some vendors stumble once they become immersed in the overwhelming minutia, nuances, and complexities of the mortgage manufacturing process. On top of that, even some well-established mortgage technology vendors have jumped on the “me too” digital mortgage bandwagon.

Who can blame them? It’s a shiny new object that lenders are naturally drawn to. How can we forget TRID readiness? Remember when so many tech vendors became TRID compliant virtually overnight, offering some sort of solution—of varying degrees? However, that was far from reality; it was mostly just vendor marketing speak.

The mortgage industry has slowly but surely been working to achieve a true end-to-end digital mortgage process that is fully integrated and 100 percent paperless. But the reality is that, while progress has been made over the past few years, the industry as a whole still isn’t fully grasping everything that is needed to create a total, seamless, comprehensive and scalable digital mortgage solution. Many vendors are still falling short.

Of note, however, is that some of the new entrants that automate the point-of-sale have, in fact, done an outstanding job. Being able to instantly pull and validate things like VOE, VOI, VOA/banking information, IRS/tax returns, etc. while at the point-of-sale has definitely been a huge help to supporting the digital mortgage cause to elevate the borrower experience. But there is a lot more that needs to happen thereafter, such as a full eClosing.

Is digital mortgage about the borrower experience? In part, yes. But it also encompasses so much more. Value is gained for nearly all the participants in the digital mortgage process, but only if it’s done right. What do I mean by right? The technologies cannot be siloed, poorly integrated, or offer just enough automation to address bits and pieces of the process in order to get by for now. Digital mortgage for the consumer is starting ‘e’ and staying ‘e’ with the same common and consistent end-user experience.

The Digital Mortgage Challenge
There is no way to say this tactfully. It’s the tech vendors that created the problem and continue to create confusion in the marketplace. I can’t be more pointed when I say that the mortgage industry, for the majority of vendors, is a big, fat fail. It isn’t the lender’s fault.

Many digital mortgage technology providers (both newbies and established vendors) are offering one-off pieces of the overall process. These solutions are merely workarounds that most often create inefficient stopgaps in the workflow, communication challenges, integration breaks, compliance risk, solution deficiencies, and other problems.

Use of an eVault Isn’t a Digital Mortgage
Some applications create initial excitement and address components of the overall problem. For instance, lenders can jump into the digital mortgage arena and store their loans in an eVault, but that doesn’t mean the promissory note includes all of the necessary documents to ensure a legally compliant closing.

Some solutions just OCR docs and store them in an eVault, which isn’t always 100 percent accurate; anytime you are manipulating a source document, there is always the risk of errors and omissions that could easily get lenders into trouble at a later date. And what if something changes? How are they adjusted and properly tracked to ensure a full audit trail and electronic evidence of compliance within an eVault?

A Complete Digital Mortgage Solution
Put simply, make sure that you are dealing with a vendor that has a proven, single-source solution that supports all documents and functions that you need to deliver a complete digital/paperless process to the consumer and across multiple lending entities.

This all starts at the time of application with MISMO SMART Doc creation and management (TRID compliant initial disclosures to the borrower and the LE/Loan Estimate). You, of course, need eSign technology to securely and compliantly allow the borrower to sign all documents throughout the mortgage process.

Lenders must also implement a comprehensive eClosing technology platform, where the LE/Loan Estimate and CD/Closing Disclosures are automatically compared and matched for any change of circumstance and TRID compliance. eNotarization capability needs to be integrated into the documents and the process as well. MERS eRegistry of the note is a requirement. All documents, signatures, and proof of compliance must be stored in a certified eVault.

Also, seamless integrations must exist with the lender’s LOS platform to auto-generate smart documents (embedded signatures and notary tags) from the start, as well as integrations with the title company software platforms to do the same with their documents. Delivery of not only the eNote but all critical closing documents to investors/GSEs is made to be quick and easy. A fully integrated platform and process includes everything from the warehouse lenders to eMods and refis within the servicing system as well as what I consider a cradle-to-grave, lights out digital mortgage technology solution.

It’s a total, fully paperless digital mortgage—one that doesn’t involve lots of different vendors doing their best to work together—whether it’s de novo software providers, aggressive fintechs, on down to the long-time mortgage technology incumbents.

We need to deliver actual, comprehensive solutions to the industry that are fully integrated and scalable, not bits and pieces/hybrid offerings. Put simply, they just fall short of achieving a total solution. It’s a menagerie of vendor hodgepodges, which are mostly light applications that only address parts of the overall digital mortgage process.

Digital Mortgage Hype versus Reality
Beyond a shadow of a doubt, I feel that the mortgage industry was steered in the wrong direction from the beginning by tech vendors that were all too eager and rushed to launch and market some sort of digital component offering. By and large, many tech vendors did so in order to effectively compete. Marketing puffery can easily trick unsuspecting ultra-busy lenders.

Going completely paperless really boils down to two factors:

Implementation of a comprehensive digital mortgage technology solution; and
lender adoption of e-automate everything, not just pieces of the process. The mortgage industry still faces an uphill adoption curve.

There are, however, some complete end-to-end solutions available on the market today from single-source vendors. Those lenders that implement the right end-to-end digital mortgage technology now will have a significant competitive advantage over those who remain in a wait and see mode or those that merely dip a toe in the water, adding a multitude of different hybrid vendors. It just doesn’t work well and by no means is it a long-term digital mortgage loan production, workflow, and back-office business strategy.

Before buying any type of digital mortgage technology, be sure to fully educate yourself and conduct deep-dive due diligence on everything you will need to implement a successful total digital mortgage solution from soup to nuts. Think of where you want to be 18-24 months out. Implementing a short-term solution will likely later need to be replaced by a complete solution. Your long-term viability and success depend on making the right choice the first time.

About Tim Anderson

tim-email Tim Anderson is the Director of eServices for DocMagic, Inc. He has held executive management positions with LPS, Stewart, Fidelity, FreddieMac and HomeSide Lending where he ran the eCommerce Division and worked at technology companies like Dexma, Microsoft and Tuttle Information Services. He was also the original founder of the eMortgage Alliance which promoted MISMO standards for delivering legal paperless processes.

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Going 100 Percent Paperless: Where It Is Now and Where It Is Headed

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.

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Going to the Digital Mortgage Conference? Schedule a meeting with us!

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.
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Schedule a Meeting with Us Now!
Meet us at kiosk #9 to learn how we can support your eMortgage and UCD process.
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eMortgage Revolution: The Fully Digital Future of Mortgage Signings is Here (Part 2 of 2)

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.

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

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eMortgage Revolution: The Fully Digital Future of Mortgage Signings is Here (Part 1 of 2)

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.
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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.

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Paper is the Past

By Tim Anderson

Today, digital technology is driving more of the loan transaction away from paper to online. The industry is realizing that it’s time to get the paper out of our systems and manual processes. Paper documents take more time to process, require more people to validate, and key information from and follow-up efforts to track down missing pages, signatures, or total file loss.

For example, delivering a correct closing disclosure (CD) to the borrower three days before closing highlights just how difficult it is to get everything right and on time in a paper world.

Ensuring proof of compliance on confirming something like receipt of delivery is next to impossible in a paper world. Taking the mortgage process fully electronic will be the only way to ultimately ensure a totally verifiable, auditable compliant process.

Beyond the improvements gained by eliminating the paper process, digital collaboration during the loan transaction promises a better consumer experience from the start. For lenders, the increase in operational efficiencies and consistency are measurable. Overall, a digital process ensures greater data and document integrity, compliance and control.

Digitizing the mortgage process has the potential to greatly improve both productivity and the customer experience. Lenders who incorporate a digital workflow gain efficiency, better satisfy borrower expectations for collaboration and communication, and ultimately capture more market share.

Go from a 50-minute to 15-minute closing
Eliminate last minute surprises at the closing table
Significantly reduce time and cost
Close without exceptions
Ensure a “consistently clean and clear” closing every time
Better authentication and security (reduce fraud)
Tamper evident seal on data and documents to protect data and document integrity
Differentiates yourself in the marketplace
Ensure greater service
Ensure better loan quality and compliance

The technology is available and the process, albeit not widespread, is gaining momentum. Selling something that everyone else already does and has makes it a commodity. Digital Mortgages are for those that want to introduce a new way of doing business that gives you a competitive market advantage. It presents a new opportunity to truly differentiate yourself in an otherwise crowded mortgage market. With immense regulatory pressure looming, historical methods will no longer be sufficient. And, as more organizations discover the demands of the marketplace, and today’s borrower, more parts of the lending transaction will happen electronically.

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DocMagic’s Total eClose Solution Facilitates First State Sponsored eClosing in North Carolina

Press Release:
TORRANCE, Calif., May 16, 2017- DocMagic, Inc., the mortgage industry’s leading provider of document production, automated compliance and comprehensive eMortgage services, announced that it completed North Carolina’s first 100 percent paperless eClosing. The DocMagic-driven eClosing was completed on Friday, May 5th at North State Bank and was carried out in the presence of borrowers Jason and Karen Boccardi, the North Carolina Secretary of State, a closing paralegal, an eNotary, and members of the media who documented the historical event.

Attorneys from the Hunoval Law firm attended via interactive video. The entire eClosing took only about 20 minutes to complete.

DocMagic’s Total eClose™, which contains all the components to facilitate a fully compliant, 100 percent paperless digital closing, served as the single platform that enabled the entire transaction. eNotarization was facilitated by long-time DocMagic strategic partner World Wide Notary (WWN).

DocMagic facilitated four of the five statewide-first eClosings, as well as the CFPB’s eClosing pilot program. The North Carolina eClosing was part of a state sponsored eClosing Pilot Program that was established in 2016 by North Carolina Secretary of State Elaine F. Marshall to create a best practices guide for mortgage lenders seeking the heightened security, speed and efficiency of eClosings.

North State Bank is the only lender in North Carolina, and one of only a handful of lenders nationwide, to have successfully completed a 100 percent paperless eClosing. The eNote was registered on the MERS eRegistry and made available to Mid America Mortgage, the investor in the transaction—within minutes of being executed by the borrowers.

Unlike hybrid systems that still require various documents to be papered-out, DocMagic’s eClosing system enables a 100 percent paperless process—this means that the eClosing requires zero paper from any party whatsoever, including documents requiring notarization.

“There’s a big difference between 100 percent paperless eClosings, and semi-paperless eClosings when it comes to quality, speed, security and efficiency,” stated Dominic Iannitti, president and CEO of DocMagic. “Together, DocMagic and our partner World Wide Notary provided the most comprehensive, advanced technology solution to enable the safest, highest quality, fastest, most efficient experience—not only for the borrowers, but also for the lender, investor, and every settlement services provider at the closing table.”

“This was our first North Carolina eClosing; it is not our last. We want this to become a regular option for lenders and their customers because of the many advantages eClosing offers versus the slower, traditional paper-based system,” Secretary of State Elaine F. Marshall said in a statement.

Secretary of State Marshall has been a leading advocate for modernizing traditional business practices in North Carolina to better compete at the national and international levels.

“We’re proud to have been selected by the state of North Carolina to participate in this historic event and to work with progressive lenders like North State Bank who are moving the industry forward into a faster, safer and more efficient closing process,” said Iannitti. “We’re looking forward to further supporting Secretary of State Marshall’s efforts to elevate the competitiveness of businesses in North Carolina.”

DocMagic’s digital mortgage suite includes all the critical components required to execute a 100% paperless eClosing transaction. The single-source platform creates a highly-efficient, transparent and fully compliant eClosing process that guides users through every step, logs all activities and creates an irrefutable audit trail.

About DocMagic:
DocMagic, Inc. is the leading provider of fully-compliant loan document preparation, regulatory compliance, eSign, eDelivery and comprehensive eMortgage services 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 http://www.docmagic.com/.

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DocMagic, BeSmartee, & LendingQB Host Webinar on Digital Lending

Press Release:
DocMagic, BeSmartee and LendingQB Host Webinar on Digital Lending To Improve Loan Process

Costa Mesa, CA, April 24, 2017 – DocMagic, the mortgage industry’s leading provider of document preparation, automated compliance and comprehensive eMortgage services, BeSmartee, a leading online mortgage automation company and LendingQB, a provider of lean lending loan origination technology solutions, will hold a webinar discussing the opportunities and challenges of the “Digital Lending” paradigm on April 26, 2017 from 10 a.m. to 11 a.m. PST.

Webinar attendees can expect to hear how the mortgage lending process is being transformed into a pure digital format, and how that impacts borrowers, lenders and institutional investors. Webinar topics will include a discussion of current-day digital lending efforts on the point-of-sale, loan origination, closing and delivery phases of mortgage lending. The three hosts will demonstrate how their systems interact with each other and highlight the critical aspects of data integrity, workflow, exchange and compliance that provides the necessary framework for a pure digital lending process.

“Digital lending is more than just a mobile loan application,” said Tim Nguyen, President of LendingQB. “The webinar will help broaden people’s perspective on what digital lending is and what its true potential is. Leveraging a data-driven mortgage lending process reduces the risk to investors because it provides the accessibility and transparency they need. To achieve this level of data clarity, it’s important that every participant in the process – the point of sale system, the LOS, the e-Vaulting system – be equipped with the best integrations that can communicate securely and seamlessly throughout the entire loan life cycle.”

“The point-of-sale is key to creating a positive digital experience with the consumer,” said Tim Nguyen, Co-Founder and CEO of BeSmartee. “But the consumer experience extends beyond a loan application. Lenders need to stay engaged with their borrowers by providing value-added services such as loan status updates, condition tracking, closing disclosures – activities that reach deep into the functionality of the LOS. Seamless integrations between the LOS and POS bridges the gap between consumer experience and a lender’s workflow that not only saves time and money, but ensures data integrity.”

“Lenders need to understand all the components of the eMortgage process so they can avoid costly mistakes,” said Dominic Iannitti, President and CEO of DocMagic, whose Total eClose™ solution seamlessly integrates every component of the closing process. “Digital mortgages require numerous technologies working in tandem. The way they communicate and interact with each other can have a huge impact on the effectiveness—and the cost—of the process.”

For more information and to register for the free webinar, please visit http://info.docmagic.com/digital-lending-webinar.

About DocMagic

DocMagic, Inc. is the leading provider of fully-compliant loan document preparation, regulatory compliance and comprehensive eMortgage services for the mortgage banking 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 www.docmagic.com.

About BeSmartee

BeSmartee, Inc. has developed a best of breed mortgage origination technology, enabling lenders to compliantly take their borrowers from the initial contact into Underwriting in 20 minutes with a complete application, credit report, income/asset documentation, eSigned/eDelivered disclosures and paid appraisal. Founded in 2008 with headquarters in Huntington Beach, Calif., the BeSmartee, Inc. team has worked on the front and back-end of mortgage originations for over a decade, using their knowledge and experience to shift the paradigm and develop a truly unrivaled experience with an array of tools and features catering to the specific needs of mortgage lenders and their borrowers.

For more information on how BeSmartee's Smart Mortgage can reduce the mortgage process by up to two weeks, visit www.besmartee.com.

About LendingQB

LendingQB is a provider of Lean Lending solutions. The Lean Lending solution consists of a 100 percent web browser-based, end-to-end loan residential mortgage origination system, best of breed integrations with key industry partners and ‘adoptimization’ services that result in faster cycle times and lower costs per loan. For more information, please call 888.285.3912 or visit www.lendingqb.com.

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