By Bonnie Sinnock
Regulatory changes continue to be what largely drives automation for those on the production side, especially when it comes to the documentation necessary, according to executives at DocMagic Inc., Carson, Calif., which does business as Document Systems Inc.
Dominic Iannitti, president of DSI, said regulatory developments continue to be "the big focus" in his business. "That, to me, is everything," he told Origination News.
"The regulatory aspect of the industry continues to challenge our clients," added Michael Morford, director of business development and integration at DSI. He said the business seeks to help with this challenge by "making sure that if they are subject to audit there are no concerns." The company has more than a dozen people devoted solely to compliance, he said.
The range of document services goes from identifying the loan file, through auditing the data to production of the documents. Compliance comes in when it comes to the qualification of the data, Morford said. "We want to make sure when they do draw the documents, they are compliant." This is designed to help prevent post-closing issues down the road.
Because regulatory changes can be fast changing and involve deadlines many clients are driven to use efficient technology to meet them, Morford said. The Mortgage Disclosure Improvement Act has been a catalyst for electronic disclosures in particular, he said. For example, MDIA has a provision in it where a lender cannot charge a fee until the borrower has received the disclosures. "If these can be delivered in a matter of seconds (by e-disclosure) versus a matter of days using the mail, that streamlines the origination process."
As a result, so-called electronic mortgage and paperless efforts have continued to gain momentum and there has been increased interest in electronic delivery of documents to borrowers when it comes to the production-focused document services DSI provides. The company, originally known perhaps best for closing documents, today offers a wider range of docs that extends to the prequalification side of the business all the way through to secondary market documents like servicing transfer notices or goodbye letters.
Hard copy documents do persist, however, which means imaging using barcodes on those documents that are scanned or faxed so that they can be converted into electronic form "continues to be just as important," Morford said.
"The industry is not paperless yet," he said. "As soon as a document is printed that whole electronic chain just stops. But you want to at least [convert paper into electronic form] and create an electronic folder for it [whenever possible]."
Also important are the company's interfaces with loan origination systems that transmit data to regulatory documents. DSI through its new DocMagic XL product has been working on improving the efficiency of these, taking on responsibility for the legwork and cost involved in the integration for LOSes that agree to make enough data available to eliminate most rekeying.
"We're providing an alternative path that has a very fast time to market and can leverage our data transformation services so the LOS partner does not have to do the data mapping," Morford said.
Iannitti said DocMagic XL creates an automatic link with the client's LOS. While generally there is no additional data entry required, if there is any additional data manipulation required the system prompts the user for it and makes it accessible through a one-button click, he said.
This can improve data quality, reduce integration time with an LOS and reduces the cost of integration for an LOS partner, the two men said.
In this and all areas where having a secure exchange of information is important, DSI has taken steps to protect data as it flows from one party to another, they said. "There's no worries in terms of system integrity," said Iannitti. This is true in terms of both business-to-business and business-to-consumer delivery authorization and receipt.
All documents can be viewed in portable document format through a "management console" that is invisible to the borrowers, but provides secure access to those on the business side that need access to the signed documents, Iannitti said.
"Any level of security can be put on by the user," he said. Citing some examples, he noted that information can be password protected, a log of access to the documents available can be kept, and a branded invitation to can be sent to the borrower that allows the borrower to consent to receiving documents in an electronic format. Borrowers can be given the option to "click sign" by using their mouse to click an on-screen button acknowledging and authorizing the document.
Documents also can be managed so that certain ones can be "wet signed" in hard copy with a pen due to users preference or legal requirements, Iannitti said. The system can "print just those pages that require an ink signature," Morford said. Originators can still manage these relatively efficiently by allowing them to be printed out with the bar code that accommodates imaging, he continued.
While regulation often is the driving force behind documents offered, other documents can be produced and distributed using the technology. "Any document... could be delivered to the settlement partner or to the borrower," Morford said.