The new Mortgage Disclosure Information Act is prompting many lenders to lean hard on their document preparation providers to help them comply through automation.
MDIA is a huge catalyst in the process of furthering marketwide e-disclosure adoption, according to Don Iannitti, president and CEO at DocMagic. "DocMagic e-disclosures provide a means to potentially eliminate the 72-hour waiting period that lenders must wait that constitutes the assumed waiting period until the borrower receives their disclosure document via mail.
"Furthermore, since we are generating the APR for both initial disclosures and closing docs, we can audit and test the values and compare the dates to let the lender know if the loan is within tolerance or not. We are uniquely positioned to provide this benefit."
DocMagic has positioned itself to partner with all mortgage lenders for all their loan disclosure needs. Lenders can outsource the entire process to DocMagic, and DocMagic will ensure they are compliant with RESPA, ESIGN and MDIA legislation.
"The waiting period involved with MDIA is prompting a lot of lenders to automate," noted Mr. Iannitti. "There's a three-day waiting period so the loan is just waiting, but if you can get e-consent within one hour, you've just shaved 70 hours of waiting out of the process and you can order the appraisal.
"At the end of the day, if you are out of tolerance when it comes to close you have to re-disclose and wait another 72 hours. Since we generate the APR, we'll do the calculation to let the lender know if they're in tolerance and electronically re-disclose if needed."
Through the DocMagic e-disclosure process, the lender gets the compliant initial disclosure package, the borrower is notified via e-mail that they are invited to sign the disclosures online, and the system captures their electronic consent to receive documents electronically. At that point, the system performs a "reasonable means test" which proves the borrower can read the disclosure documents, and allows them to (optionally) electronically sign the disclosures. Once that is done, the documents are submitted back to the lender.
Every step in the process is date stamped with the time, and DocMagic supplements this with the company's own print and mail facility whereby DocMagic can paper out as needed based on the lender's business rules, delivering paper disclosures to borrowers on behalf of the lender. This single process completely satisfies both RESPA and ESIGN, and does so much more quickly and cost-effectively than they are doing today in a paper world, said Mr. Iannitti.
"We've been making a lot of headway on e-disclosures," said Mr. Iannitti. "We've included our own click sign technology. We also added a dashboard/system console to enable lenders to track the process. We like to consider DocMagic a compliance company first. Docs are just a byproduct of compliance nuances. For example, with ESIGN you have to capture a borrower's consent before e-signing and give them the ability to paper out at any time."
But will lenders get behind electronic signatures? "Lenders like click sign because we only charge if they get an actual e-signature," answered Mr. Iannitti. "If the borrower declines consent or if after 48 hours an e-sign isn't obtained we won't charge and we'll notify the lender they have to paper out or we can paper out for them. The borrower will get a PDF of both the consent and the e-signed documents. For the lender, they get a full audit log."
DocMagic also offers DMXL, which is a hybrid interface that can read almost any LOS data directly, and obtain documents with only a few clicks. It provides all of the benefits of DocMagic's Online Java Applet. The product draws on existing seamless interfaces, including full data audits (including MDIA), Section 32 analysis, state high-cost analysis, and the appropriate agency tests. DMXL also incorporates the MDIA audit test piece.