Mid America Mortgage will utilize document preparation and electronic signature and vaulting technology developed by DocMagic to facilitate paperless mortgage closings complete with e-signed promissory notes.
The technology implementation marks the first time that a lender has enabled a full e-mortgage capability using both DocMagic's flagship doc prep software and the eSignSystems electronic signature, notary and vaulting platform that the Torrance, Calif.-based vendor acquired in October 2014.
The move comes as the mortgage industry prepares for the Oct. 3 implementation of the Consumer Financial Protection Bureau's TILA-RESPA Integrated Disclosures, also known as TRID, two new borrower disclosures that combine requirements of the Truth in Lending and Real Estate Settlement Procedures acts. By using electronic signatures, Mid America will be able to move faster than its competition as well as being able to track when the consumer receive and view the disclosures, said Mid America president and owner Jeff Bode in a recent interview.
"Speed of execution to get closings taken care of is going to be important and with TRID, and we think some of our competition will have trouble tracking when the verifications are signed," he said.
Separate from TRID, the CFPB has been encouraging lenders to adopt paperless processing. It recently published the results of a pilot program to test so-called e-closings, where borrowers electronically signed their closing documents, with some lenders also providing the documents to borrowers in advance of the closing to provide extra time for review.
While the CFPB pilot focused on e-signing virtually all loan documents except the promissory note, Mid America's new capabilities go one step further by enabling e-signed notes — something that's generally considered by both lenders and tech vendors to be the key component of an e-mortgage. Both Fannie Mae and Freddie Mac purchase fully paperless e-mortgages from lenders.
Customer service and the ability to close quickly are a competitive differentiator that lenders can point to in soliciting real estate brokerage business, Bode said. As a result, proponents of the increased use of electronic signatures in the mortgage origination process believe TRID will force increased adoption of that technology.
"TRID is more about timing and tracking than it is about a form and we think that the digital signatures will allow us to track when things were executed by the client," he said.
Mid America Mortgage, based in the Dallas suburb of Addison, Texas, uses a loan origination system developed by Mortgage Machine Services, a company that Bode also owns. The new e-mortgage capabilities integrate the LOS with DocMagic's software-as-a-service doc prep software and the self-hosted eSignSystems platform.
"DocMagic's SaaS model compliantly delivers dynamic, intelligent, data-driven loan documents and disclosures with a full e-closing for borrowers, [while] eSignSystems' on-premise platform provides Mid America with internal controls and tools to configure the solution to their specific business processes and the ability to efficiently work with third parties to achieve an e-mortgage," DocMagic CEO Dominic Iannitti said in a press release.
— Austin Kilgore contributed to this report.