DocMagic, a provider of fully-compliant loan document preparation, compliance, eSign and eDelivery solutions, recently announced that PHH Mortgage has signed a multi-year lease to use its products to further enhance TILA-RESPA Integrated Disclosure (TRID) rule compliance capabilities.

TRID goes into effect October 3, 2015.

This agreement will help lenders comply with TRID requirements and utilize the SmartCLOSE portal for settlement providers and other parties to collaborate efficiently, compliantly, and cost effectively.

“We have worked closely with DocMagic for the last year to thoroughly evaluate, test and integrate their technology and compliance solutions, and we will use various components to ensure we are TRID compliant,” said Eric Sadow, chief compliance and fair lending officer. “We are confident that our use of the DocMagic technology and compliance solutions will meet our needs and the needs of our clients, regulators, investors, partners and borrowers.”

PHH, its clients, and their borrowers can easily access DocMagic’s eSign/eDelivery technology that enables the electronic delivery of TRID documents and the electronic viewing of closing disclosures and related documentation.

DocMagic’s Audit Engine electronically tracks and logs transactions touched by all parties working with its Compliance Engine as well as its SmartCLOSE portal, while continuously comparing the initial Loan Estimate against the final Closing Disclosure to ensure RESPA compliance throughout the process.

“For a lender with the size and reputation of PHH to select DocMagic to comply with TRID, speaks volumes about how sophisticated and scalable our solution really is,” said Dominic Iannitti, president and CEO of DocMagic.

DocMagic has developed SmartCLOSE, which can integrate with loan origination systems for seamless, bi-directional exchange of data and related information. Additionally, it will integrate with all leading settlement technology platforms and other third party applications used in the loan closing process to allow all relevant parties to share, validate, audit, track and collaborate on documents, data and fees in a secure, collaborative environment.

“We have designed SmartCLOSE to be the most advanced and effective TRID solution in the industry," Iannitti said. "That is why we can rep and warrant all documents and calculations generated in SmartCLOSE with a TRID Compliance Guarantee.”

As featured by HousingWire, October 2015

Enables lenders to adhere with TRID requirements and provides the SmartCLOSE™ portal for settlement providers and other parties to collaborate efficiently, compliantly and cost effectively

TORRANCE, Calif., Oct. 1, 2015 — DocMagic, Inc., the premier provider of fully-compliant loan document preparation, compliance, eSign and eDelivery solutions, announced that PHH Mortgage (“PHH”), one of the largest providers of residential mortgages in the United States, has signed a multi-year license agreement to use its expansive set of products to help ensure compliance with the TILA-RESPA Integrated Disclosure (TRID) rule that goes into effect on Oct. 3, as well as other federal, state and investor requirements.

“We have worked closely with DocMagic for the last year to thoroughly evaluate, test and integrate their technology and compliance solutions, and we will use various components to ensure we are TRID compliant,” said Eric Sadow, chief compliance and fair lending officer. “We are confident that our use of the DocMagic technology and compliance solutions will meet our needs and the needs of our clients, regulators, investors, partners and borrowers.”

PHH, its clients and their borrowers can easily access DocMagic’s eSign/eDelivery technology that enables the electronic delivery of TRID documents and the electronic viewing of closing disclosures and related documentation.  DocMagic’s Audit Engine electronically tracks and logs transactions touched by all parties working with its Compliance Engine as well as its SmartCLOSE™ portal, while continuously comparing the initial Loan Estimate against the final Closing Disclosure to ensure RESPA compliance throughout the process.

“For a lender with the size and reputation of PHH to select DocMagic to comply with TRID, speaks volumes about how sophisticated and scalable our solution really is,” said Dominic Iannitti, president and CEO of DocMagic.

Expanding on its technology and compliance solutions, DocMagic has developed SmartCLOSE, which can integrate with loan origination systems for seamless, bi-directional exchange of data and related information. Additionally, it will integrate with all leading settlement technology platforms and other third party applications used in the loan closing process to allow all relevant parties to share, validate, audit, track and collaborate on documents, data and fees in a secure, collaborative environment.

Iannitti added: “We have designed SmartCLOSE to be the most advanced and effective TRID solution in the industry. That is why we can rep and warrant all documents and calculations generated in SmartCLOSE with a TRID Compliance Guarantee.”

About DocMagic
DocMagic, Inc. is a 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 www.docmagic.com.

About PHH Mortgage
Headquartered in Mount Laurel, New Jersey, PHH Mortgage Corporation, a subsidiary of PHH Corporation (NYSE: PHH), is one of the largest originators and servicers of residential mortgages in the United States. The company originated approximately $36 billion of mortgage loans in 2014 and maintained a total loan servicing portfolio of approximately $227 billion with over 1.1 million customers as of December 31, 2014. PHH Mortgage is dedicated to responsible and ethical lending and servicing practices and offers mortgage solutions to wealth management firms, banks, credit unions, real estate companies, relocation professionals and directly to consumers. For additional information, please visit the Company’s website at www.phh.com.

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.

As featured by Mortgage Technology, September 2015

Untitled Document

DocMagic Inc. has announced that Mid America Mortgage Inc. will utilize DocMagic’s SaaS-based compliance and mortgage loan document engine together with the on-premise solutions of DocMagic’s recently acquired eSignSystems patented eSigning, eNotary, eVaulting, eRegistration and eRetention solutions. This is the first time since the acquisition of eSignSystems in October 2014 that the combination of technologies will be jointly utilized to facilitate a complete eClosing and validate DocMagic’s eMortgage model.

“We made the decision to sign with DocMagic and its subsidiary division eSignSystems because of the unique capabilities of the combined technology components, together with the most powerful eMortgage reputation and expertise in the industry,” said Jeff Bode, president of Mid America Mortgage. “The blend of these technologies integrated with our loan origination system (LOS), Mortgage Machine, establishes the path for us to close our loans electronically. DocMagic’s solutions are ready today for eClosing, and now that the GSE’s are accepting eNotes, their advance readiness for electronic closings is critical to Mid America’s short and long-term eStrategy.”

“The marriage of our SaaS and on-premise solutions delivers a unique value proposition for Mid America,” said Dominic Iannitti, president and CEO of DocMagic. “DocMagic’s SaaS model compliantly delivers dynamic, intelligent, data-driven loan documents and disclosures with a full eClosing for borrowers. 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 eMortgage.”

As featured by National Mortgage Professional, September 2015

By Bonnie Sinnock

Lenders and vendors breathed a sigh of relief when the Consumer Financial Protection Bureau this week released its long-awaited procedures for examining compliance with the new integrated mortgage-disclosure rules — but it was a brief celebration.

Though the document contained no bombshells, the CFPB has still left plenty of gray areas, industry observers said.

"I didn't think they answered questions lenders were asking," said risk management consultant Becky Walzak. "They didn't tackle the big issues."

Among the biggest outstanding questions is how lenders should adhere to the disclosure regulations on loans with extenuating circumstances, such as when a borrower requests a last-minute delay to the closing date that results in a fee to extend the interest rate lock — particularly if the delay is requested after the lender delivers the Closing Disclosure.

"We continue to think this is an example of the complexity of compliance that justifies a more formal hold-harmless period," said Scott Olson, executive director of the Community Home Lenders Association.

Even if they aren't the norm, incidents like a delayed closing are realistic situations that lenders must prepare for, said Phil McCall, chief operating officer of technology vendor ACES Risk Management.

"I have seen no further clarification of that in the updates and it is going to come up," he said.

The CFPB did not respond to multiple requests for comment.

The CFPB's "Supervision and Examination Manual" dictates how auditors examine compliance with consumer financial protection laws. The update released Tuesday spells out the procedures for reviewing compliance with the Truth-in-Lending Act/Real Estate Settlement Procedures Act Integrated Disclosures, also known as TRID.

Some lenders and vendors are concerned the CFPB's promise to be "sensitive" to lenders making "good-faith efforts" to comply at the rule's outset is not enough to preclude early enforcement actions. But others said the release of the exam procedures, less than three weeks before the rule's implementation date, suggests the bureau still needs time to gear up for the rule and, barring a blatant violation, probably won't act early on.

"I would be shocked if we saw examinations with monetary penalties before the rule had been out for 90 days unless you saw true noncompliance," said McCall.

Lenders would like more compliance guidance for such situations, but the lack of other major changes is helpful in that it doesn't require mortgage businesses to make any big operational adjustments ahead of TRID's Oct. 3 implementation date, said Rick Roque, managing director of retail lending at Michigan Mutual, a national retail and wholesale lender based in Port Huron, Mich.

"The content wasn't surprising, I was thankful," he said. The exam guidelines are "a good thorough background of what to expect in the event of an audit," said Roque.

But he said he wished that the CFPB hadn't issued updates that had to be reviewed so close to the implementation date as they have added to operational preparations for compliance. Gearing up for TRID's implementation is slowing closings at least temporarily and making planning and budgeting challenging, he said.

"It's two weeks-plus before the implementation of the rule, and we're already seeing turn-times slow down," Roque said. He added that the expenditure for compliance has been relatively large for a family-owned, midtier lender-servicer like his company, which he estimates has spent well over $1 million on TRID preparations.

TRID also is likely to impose more costs on lenders if they represent closing expenses outside tolerances, he added.

The new TRID exam guidelines stress at least one nuance of the CFPB's expectations related to remuneration of closing costs outside tolerances, said Deborah Hoffman, chief legal officer at Digital Risk.

"While not new information, there is a critical piece of information that should be highlighted," she said, referring to a passage that reads, "The rule revises the tolerance limits on fee increases for certain settlement costs and restricts fees and certain actions taken before the consumer has received the Loan Estimate and indicated the intent to proceed with the transaction."

Lenders may not realize it's not just about the Loan Estimate and Closing Disclosures being within tolerances, but it's also about early representations of costs and fees of any kind matching later ones, she said.

"The importance here is that if tolerance limits are in place governing actions and addition of certain fees, should they be warranted, before the consumer has received the forms, then the lender may have to take a hit and pay for the fees out of pocket," said Hoffman.

This might add to lenders' costs, but exam violations could be even more expensive. And with the examination and readiness guidelines still leaving some in the industry puzzled and the lack of a formal grace period, many fear that a number of painful lessons are on the way.

"It's pretty easy to hear when you talk to people in the industry the frustration they have that there are a lot of gray areas in the new rules," said Gavin Ales, DocMagic Inc.'s chief compliance officer. "There's a perception in the industry that the CFPB is filling out the gray areas through enforcement actions."

As featured by National Mortgage News, September 2015

By Rob Chrisman

Let’s lead off the letter’s I’ve recently received with this one from Nevada: “With TRID, I believe people in the industry and maybe a few outside are realizing what a horrendous rule TRID actually is. It is NOT just a couple of forms redone or changing how we get paid. TRID is an ‘invasion’ of the RE industry in historical proportion – no area is left untouched.” Yes, lenders know that the devil is in the details.

“Rob, do you have any data regarding the cost of compliance in a mortgage lending operation? Specifically I am seeking either % of loan amount or, basis point cost per loan as an average for a mortgage banker. Also, because our industry is going through a learning curve, is there any data on the first year implementation cost of compliance vs. the eventual cost of compliance?”

For expert advice I trotted off to the MBA’s Marina Walsh for the answer. “The MBA does produce a history in basis points and $ per loan for total production expenses from our quarterly Performance Report (represents costs for independent mortgage companies only – based on MBFRF reporting). This is a new FREE product to all MBA members so if you want quarterly updates, just go to: MBAProducts. Click here to learn more about the Performance Report. We don’t specifically track the cost of compliance but if you compare the costs for similar volume quarters, you can get a sense for the variance between now versus 2-3 years ago – a large part of that variance can be attributed to compliance either directly or indirectly.”

Regarding the ability to predict default rates by the size of the down payment (does size matter?), Steve Harney, the founder of Bridge Builders Inc. writes, “I very much enjoy your daily emails. However, I disagree with your thoughts on low down payments and default rates. Here is a blog I wrote that addresses that issue.

The discussion about eSignatures continues, and I received a note about the admissibility of them in court. “Documents that are signed electronically have all the same legal protections as those that are signed with a ballpoint pen. Despite this, the leading concerns among the majority of businesses interested in obtaining e-signatures on contracts and other important paperwork is whether these electronically executed documents will be both legally valid and admissible in court.

“In the United States, judges have ruled for e-signatures time and time again. Thanks in large part to the E-Sign Act, which states that transactions should not be ‘denied legal effect’ solely because of their electronic form, businesspeople and consumers can have full confidence that their e-signatures are legally valid. As long as an electronic signature is obtained in the appropriate way, using compliant technologies, certifications, and authentications, it will have full validity under the law. But will the document be admissible in court and will a judge enforce the terms of the contract?

“Businesspeople and consumers should know that legal validity, court admissibility, and enforceability are not the same thing. Each concept has a distinct definition, set of requirements, and, most importantly, contribution to the outcome of a legal dispute. The E-Sign Act states that signatures should not be denied legal validity solely because they are electronic, which means that a contract that is signed electronically can be brought into trial. However, a judge’s willingness to accept that contract will depend on how the electronic document was signed.

Certain criteria must be met in order for an e-signature to be admissible in court. Any person who hopes to present an electronically signed contract in front of a judge needs to be able to prove the intent of the signatory and the security of the signed document. If the document could have been tampered with or altered in any way after it was signed, there is a high likelihood that a judge will refuse to allow it to be admitted in court. Specifically, an e-signed document may be legally valid but ruled inadmissible in court due to weaknesses in security, audit logs, or authentication. This is why it is critical that businesses select an e-signature solution that is highly reputable and meets the highest standards of technical integrity.

“Lastly, the enforceability of a contract depends not only on its validity and admissibility, but also the contents of the agreement itself. In a dispute, a judge may examine whether the terms of a particular agreement were clear and consistent, there was consideration (an exchange of value between parties), the parties had legal capacity (ability) to sign, whether a party was under duress or undue influence, and whether a party signed by mistake or without knowledge of the agreement’s meaning. Most businesses have an attorney draft or review their agreements prior to execution with these criteria in mind in order to maximize enforceability in the future should the contents of the document face scrutiny in court.”

The note went on. “In examining the admissibility of an e-signed document in court proceedings, a judge will analyze the security, auditing, and authentication protocols of the e-signature technology and process.

“An e-signature system should be fortified with bank-level security protocols to ensure that documents and audit records may never be tampered with or accessed by unauthorized parties. If there is any security vulnerability which provides credence to an argument that an executed electronic document’s integrity may be questionable, a judge may rule the document inadmissible.

“From a judicial perspective, audit logs are an important part of legal compliance. Time stamped audit logs enable parties, including the court, to verify when a document was created, viewed, signed, and archived. Audit logs should be detailed and secured with a digital signature, checksum, or similar method to ensure they remain tamperproof.

“The more an electronic document can be authenticated, the higher the likelihood that a judge will accept that document as evidence in court. However, authenticating documents can be a slippery slope, and some authentication measures can be so burdensome that they detract from the accessibility and convenience that have made e-signatures so popular. The key, then, is to find ways to authenticate documents that are verifiable, admissible, and defensible, without overwhelming the parties involved. Best practices in e-signature authentication involve a multivariate approach that includes biometric authentication, audit logs, and signature certificates.

“Biometric authentication identifies people based on intrinsic physical traits. Right Signature, for example, has a proprietary biometric authentication technology that captures unique characteristics related to the speed and timing of a person’s signature. This type of data is representative of a particular person’s physical movements and establishes the proof of the signer’s identity and intent if either is questioned in court.

“By confirming access to a particular email account and capturing an IP address, e-signature systems are able to link the identity of a signer to the computer and software used in the electronic signature event. And by taking SHA-1 or similar digital checksums, sophisticated e-signature platforms are able to record evidence of every stage of the contract creation and signing process. This tracks every change and modification, and prevents anyone from tampering with a contract at any time.

“Photo authentication is one of the most cutting-edge tools used to validate the identity of signing parties. When a webcam or mobile phone camera captures the face of a signatory during the electronic signature event, all doubt is removed as to that person’s identity and capacity to sign. And court-admissible signature certificates offer judges and legal professionals a way to view and verify a document’s validity data, audit logs, and signatory information – such as full name, signature, IP address, email address, and any other identifying details. Signature certificates are a significant component in authenticating signed documents in court.

The note wrapped up with, “One of the toughest challenges for businesses that are trying to conduct transactions electronically is to know how far they should go when vetting and authenticating signatories. For many companies, the ultimate goal is to create a contract that is legally valid and admissible in court without establishing a process that is cumbersome to the people whose signatures are needed to complete the transactions.”

And another contributor wrote, “The Mortgage Bankers Association’s Residential Technology Forum recently created an eWarehouse Workgroup to inform and educate originators and warehouse lenders on the benefits of supporting an eClosing process and the secondary marketing efficiencies it provides.

“The eWarehouse Workgroup has been hosting monthly calls toward that goal. ‘We are encouraging collaboration and participation from all counterparties to develop industry standards for eWarehouse business processes, based on electronic exchange of data and documents, which improve operational efficiency among lenders, document custodians, investors and warehouse lenders,’ said Rick Hill, MBA vice president of industry technology.

“Hill said the Dodd-Frank Act, along with new Consumer Financial Protection Bureau requirements, such as Qualified Mortgages, Ability to Repay and the upcoming TILA/RESPA Integrated Disclosure rule (slated to go into effect Oct. 3 ) “almost mandate that all parties implement an electronic process in order to prove compliance and defend against future audits or challenges.” With the new regulations, all parties now must retain electronic evidence for a minimum of five years to prove that they met all compliance and regulatory requirements. Brenda Clem, CMB, eWarehouse director with Street Resource Group Inc., Cincinnati, and Tim Anderson, director of eServices with DocMagic, Saint Johns, Fla., are co-chairs of the eWarehouse Workgroup.  For more information on participating, contact Rick Hill.

“A lot of people are now connecting the dots with the upcoming TRID deadline and three-day delivery rule,” Anderson said. Many see the advantage in cutting down the delivery time from (six to ten days) with Mailbox Rule Vs advantage with eSign/eConsent to assure ‘receipt of delivery’ three days prior to consumption. Lenders and title companies/agents say ‘If I can do this with the one document, (electronic delivery of the Closing Disclosure) why can’t we do “all” the closing documents three days prior to closing?'”

“Anderson also noted increased interest from major warehouse banks on board now to start buying eNotes to differentiate themselves in the marketplace by providing a “new and better way of doing business” as well offering better execution and efficiencies on funding.  One of the significant benefits of eClosing is ensuring that all the data and documents are current, compliant and correct prior to closing so you don’t have to incur the time and costs of re-underwriting the loan post closing prior to funding.  “Another benefit of eClosing is to have a full electronic audit trail to show proof of compliance, (electronic evidence) around eDelivery, eAcknowledgement and eConsent of receiving the disclosure from application to closing which travels with the documents,’ he said.”

(Yes, the usual joke comes after this blurb, but this week I was fortunate to be accompanying 100+ folks from Utah-based Academy Mortgage on their public work project in the village of Amaru, Peru. Academy’s staff are helping villagers build an irrigation system and a production center where the villagers will make their local handicrafts; guiding the village school children with craft projects; bringing a doctor and nurse to provide much-needed healthcare services; and helping to paint a local church. Please excuse any delays in responding this week, and any potential delays in the daily commentary itself.)

Herb, a capital markets guy, decides to retire – which these days means still working but doing something entirely different. A road crew supervisor in Fayetteville hired Herb from Columbus County to paint the yellow line down the middle of route 32 heading up toward Hope Mills. He was skeptical about hiring him since he didn’t have any painting background, but he appeared enthusiastic and told him that he really needed the job. At least his wife Lorrie-Jane told him so.

He explained to Herb that his work day would be to complete 2 miles of centerline on the road.

He was set up with brushes and paint and his boss got him started.

After the first day, the supervisor was pleased to find that he’d painted 4 miles of road in his 8 hour shift, instead of the two expected of him.

He told Herb, that he did an excellent job, and said how pleased he was with his progress.

On the second day, Herb completed painting just the 2 miles of road that was asked of him.

His supervisor was surprised, because on the first day, he had completed twice as much work. But he didn’t say anything, since 2 miles of road was the amount that the job required anyway. He decided to just accept it, and to look forward to the next day when he was sure that Herb would pick up the pace again.

On day 3, the supervisor was disappointed to learn that in his 8 hour shift, Herb completed painting only 1 mile of road. Herb was called to the supervisor’s office and asked what the problem was.

“On your first day, you completed 4 miles of road, on your second day, 2 miles of road, and now on day 3, you were only able to complete 1 mile of road. What’s the problem, Herb?”

“Well,” Herb replied, “I’ll tell you watt is da problem dare boy, but I taught a smart man like you would figger it out fer yourself. Every day I got farder and farder away from da paint can.”

As featured by Mortgage Daily News, September 2015

By Brandon Ivey, Paul Muolo

Bay Pond Investors Bermuda LP has reduced its stake in Ellington Financial to 5.01 percent from 5.21 percent, according to a new filing with the Securities and Exchange Commission. Ellington, meanwhile, is a buyer of residential loans that don’t meet the qualified mortgage test. Bay Pond’s backers include – among others – the state of New Jersey, which has invested several million dollars with the hedge fund…

Ocwen Financial announced on Tuesday that it started a pilot program where its servicing representatives will speak in Japanese and Tagalog with troubled borrowers. The program was prompted by suggestions from Ocwen’s consumer advisory council. The servicer already provided such service for Spanish speakers, while translation services are provides for other languages via third-party interpreters who are conferenced into calls. Most of Ocwen’s back-office workers are in India and the Philippines, where call center workers make much less than their U.S. counterparts.

DATA POINT: U.S. Bank had $36.40 billion in home equity-related holdings at the end of June, up 1.5 percent from the first quarter of 2015. The increase to the bank’s portfolio was driven by HELOCs and HELOC commitments. For an exclusive ranking of the top 50 banks by HEL holdings, see Inside Nonconforming Markets, now available online.

VENDOR UPDATE: DocMagic has signed up Mid America Mortgage for its SaaS-based compliance and mortgage loan document engine together with other products, including its eSign system. Mid America President Jeff Bode said the lender’s goal with these technologies is to close loans electronically.

MORTGAGE PEOPLE: The Community Mortgage Lenders of America named Brooke Anderson-Tompkins the trade group’s chair for the 2015-2016 term. She is president of 1st Priority Mortgage, an affiliate of RealtyUSA, one of the largest independent real estate brokerage firms in New York state. New Residential Investment Corp. named Nicola Santoro chief financial officer and treasurer effective this week. Prior to joining the company, Santoro worked for FXCM, Inc., as chief accounting officer.

As featured by Inside Mortgage Finance, September 2015

Deal Represents Powerful Marriage of SaaS and On-Premise Technologies and Lays Foundation for True eMortgage

TORRANCE, Calif., Sept. 22, 2015 (SEND2PRESS NEWSWIRE) -- DocMagic, Inc., the premier provider of fully-compliant loan document preparation, compliance, eSign and eDelivery solutions, announced that Mid America Mortgage, Inc. will utilize DocMagic's SaaS-based compliance and mortgage loan document engine together with the on-premise solutions of DocMagic's recently acquired eSignSystems patented eSigning, eNotary, eVaulting, eRegistration and eRetention solutions.

This is the first time since the acquisition of eSignSystems in October, 2014 that the combination of technologies will be jointly utilized to facilitate a complete eClosing and validate DocMagic's eMortgage model.

"We made the decision to sign with DocMagic and its subsidiary division eSignSystems because of the unique capabilities of the combined technology components, together with the most powerful eMortgage reputation and expertise in the industry," said Jeff Bode, president of Mid America Mortgage. "The blend of these technologies integrated with our loan origination system (LOS), Mortgage Machine, establishes the path for us to close our loans electronically. DocMagic's solutions are ready today for eClosing, and now that the GSE's are accepting eNotes, their advance readiness for electronic closings is critical to Mid America's short and long-term eStrategy."

"The marriage of our SaaS and on-premise solutions delivers a unique value proposition for Mid America," said Dominic Iannitti, president and CEO of DocMagic. "DocMagic's SaaS model compliantly delivers dynamic, intelligent, data-driven loan documents and disclosures with a full eClosing for borrowers. 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 eMortgage." 

About DocMagic:
DocMagic, Inc. is a 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 constantly monitor legal and regulatory changes at the state, federal and international levels to ensure accuracy. For more information on DocMagic, visit http://www.docmagic.com/.

About eSignSystems:
eSignSystems, a division of DocMagic, Inc., is a leading provider of lifecycle management of electronically signed, legally binding documents, contracts and digital transactions. SmartSAFE XL™ enables companies 

to manage business processes and transactions entirely online. Organizations can adhere better to certain regulatory compliance issues, improve productivity and efficiency in processing transactions, and achieve significant cost savings through the elimination of document transportation costs, processing and storage. For more information, visit http://www.esignsystems.com/. 

About Mid America:
Additional information about Mid America Mortgage, Inc. can be found on the company's website athttp://www.midamericamortgage.com/about/. 

After the announcement of Tammy Butler as the editor of Mortgage Women Magazine came this tongue-in-cheek note from a fellow over in California. “It’s my opinion that men are underrepresented in the mortgage industry because we are overrepresented. Unless I’ve been missing out, I don’t believe we have the man version of specialized events (i.e., Lemon Drops), lectures (i.e. empowering women) and now apparently publications (e.g., Mortgage Women Magazine). What’s a guy supposed to do when he’s new to the industry? We only have our departmental boss to point to true north, but depending on who’s sitting in the VP chair that could point in a number of directions.

“There should really be a publication on stuff like, ‘The Top 10 Bourbon Cocktails to Order at an Investor Dinner’, ‘Acceptable Cars in Which to Drive to Client Visits’ (nobody wants to be picked up in a Chevy Volt or minivan), a ‘How to’ guide for the interns to tie a proper Windsor knot, acceptable Fantasy Football names and how to use ‘negative convexity’ in a sentence at work. You obviously don’t have this issue but even discussions on how to handle concerns at home like, ‘how to explain your job to your wife.’ I’ve run this by several AEs (disclaimer, we might have been heavily drinking) already and I’ve tried to pitch the idea for the MAN MBA (MMBA). Several suggestions have also included a golf day, skeet shooting and rush week for the MMBA fraternity.”

On to the usual topics…

Through the wonders of modern communication Aaron Ninness weighed in oncredit & low credit scores. “In reading your section on FHA loans down to 580, the broker who commented is incorrect on stating that ‘collections’ represent a higher credit risk. This generalizes collections when we should not be lumping medical collections into that category. We have all seen a medical collection as low as $18 drop someone’s score by 100 points. Regularly I work with veterans who have stacks of medical collections against them. They have paid all other bills on time, but because they have the collections they have a low FICO score. You are probably saying to yourself, ‘Why isn’t VA paying those bills?’ Because VA is so backed up that it could take well over a year for a disabled veteran to be approved for their claim all the while they still need help. This can be seen in many other issues such as sick children, major accidents with uninsured motorists, etc.  So in the end, we really need to have a much more refocused discussion about medical collections and their effect on credit scores. And big banks need to have clear guidelines as to help people who have good credit history minus the fact they have monstrous medical collections.”

“Rob, I have a client that is a residential escrow company and has a question regarding the TRID changes. As a result of the new TRID Rule (which goes into effect Oct 3, 2015) my client has been asked by a lender it is closing a purchase/loan for to sign an acknowledgment in the lender’s closing instructions that says holds the escrow company liable for lender’s losses resulting from escrow company’s failure to follow the lender’s closing instructions and that escrow co will indemnify lender for losses caused by, among other things, escrow company’s negligence. Is this typical of what lenders are requiring escrow companies to sign now in light of the TRID Rule?”

Andrew Liput with Secure Insight responded, “This is one direction lenders are taking to manage compliance risk under TRID, yes. The CFPB has made it clear that lenders will be held liable for negligent oversight in the event the settlement agent fails to properly complete, deliver and disburse in accordance with the new Closing Disclosure. Lenders are taking steps to minimize risk, which includes managing the document prep and delivery, requiring proof of disbursements, more vigorous vendor management as well as agreements for indemnification. These agreements will not of course prevent issues but will allow them to transfer all or some of any potential loss or fine to the agent, based upon the circumstances.”

Mike Munson, an underwriter with Oklahoma’s Bank2, writes, “If you’re like me you noticed that when the CFPB published it’s guidelines on what is now termed TRID, they were substantially different in a very important way: specificity. These guidelines are so specific, in fact, that lenders must not only now disclose the LE in rounded amounts and the CD in actual figures but must also re-disclose the LE on the same day the loan is locked. If you’re on your A-game TRID wise, then you know that one of the two things I just said isn’t true. After revision after revision of the proposed rules were released, commented on, re-released, re-commented on, etc., it’s no wonder that people are confused and often surprised when they realize their understanding of the guidelines is wrong. You swear you remember reading something about that…but maybe you read that in the second revision and you don’t remember seeing anything about it in the third…wait, how many revisions were there again? Have you read the most recent? Now you can’t remember which versions say what – what they do and what they don’t cover.

“Lenders, as of the writing of this article, are not required to re-disclose the same day a loan is locked and familiar RESPA standards requiring re-disclosure within 3 days of lock will go unchanged. Did you know which of the two things I said about TRID was untrue? How confident in your answer were you?

“The consequences of not following the rules in the mortgage arena are coming from a whole new playing field these days. Not only must a lender concern itself with regulatory oversight and the repercussions of a bad exam. Lenders must now consider every customer as a potential future foe. Did you send early disclosures out on day 4 instead of day 3? Sorry, but you owe the borrower some money now…some restitution…some punitive penalties.

“The venue of punishment for violations both real and imagined has shifted from board rooms to court rooms. With the advent of “default chasers” going after lenders for non-compliance with regulatory guidelines on behalf of the borrowers, compliance is becoming an ever increasingly risky environment. The question is – what do we do when our luck runs out?

Mike wrapped up with, “Smaller community banks will bear the brunt of the risk. With smaller compliance departments and legal counsel that is very rarely employed directly with the bank, how will these institutions cope with the requirement to do things perfectly on every loan, every time? In the event a mistake is made, how will they protect themselves from litigation? What will you do when you find yourself in front of a judge being asked to explain why you weren’t able to generate a simple LE & CD with accurate information? Compliance is changing. Are you ready?”

The conversation about eNotes, eSignatures, eFood, eCommentaries, eWhatever, continues. Tom Anderson with DocMagic writes, “Back in 2001 Fannie Mae announced a promotion of something called ‘a SMARTDoc eNote’. Part of the reason eSign has taken so long to get adopted in this industry is the promulgation of miss-information and opinions by people who are just not well educated or informed on what a ‘legal’.

“To that end I am compelled to correct the false statements and want to educate people on how the benefits of implementing a truly compliant eProcess address those issues:

“Robo-signing (anyone can sign or notarize) – eSign (if properly implemented) virtually ensures the verification and validation of all parties into the transaction using a multitude of user authentication tools and methods. From the simple issuance of a unique pass code and sign-on number to multifactor questions that only the borrower would know or to ensure even greater security and control issuing secure digital certificates, (certs) to enable notaries to eNotarize documents in the eSign world is significantly more secure to prevent unauthorized signature of documents by invalided parties than the paper would where a fake ID is enough to sign legal documents. In the case of multiple parties signing documents we can even ensure they sign in the right place on ALL documents or the loan cannot be closed.

“Lost notes – If everyone eClosed loans they’re would be no lost notes. Simple as that. Once the final signature goes onto the closing package the system automatically wraps the entire closing doc set in a secure, “tamper evident seal” (that includes all documents, source data and electronic audit trail) and immediately eDelivers it and registers it on the MERS eRegistry system and auto delivers it to where it needs to go, (investor, servicer, etc.) after that.  An electronic record of ownership (loans bought, sold, servicing transferred, paid-off, etc.) is maintained through the life of that loan.  This is so much more secure and efficient than the physical paper world where paper gets lost, mutilated, flood, fire or misplaced all the time. Not to mention the ongoing costs to store, maintain and ship it.

“Do not have to read the documents – Yes if you allow the ‘sign once apply many’ signature process but most eSign systems enforce/require the borrower to click on each page before they can advance to the next page and apply a signature and with each “click” a date and time stamp audit trail is logged providing electronic evidence (electronic proof) that they indeed did have to go thru each document before signatures were applied.  Again in the paper world there is no such method to show or prove compliance.

“Deed of Trust & Note must be ink signed – This is a bit miss-leading as well. We can produce SMARTDoc eNotes for every state and MERS can eRegister them. What I believe he is referring to is that some jurisdictions still require that any document that needs to be notarized needs to be papered out and ink, “wet” signed. The fact is that now over 1,324 counties allow eRecording representing close to 72% of total activity (population) and with only three exceptions (IL, NY & WA) all other states have adopted some version of UETA (individual State) or ESIGN (Federal) to support legal eSigning and notarization of documents.  It’s just that some attorney’s do not want to pursue eNotary until they see an actual state statute that says it’s legal. I feel this is a bit overkill and redundant since if no law or statue exists on the books that specifically precludes it, then the federal ESIGN and most state’s UETA’s have you covered. Again, I believe this is more of an educational issue than an actual legal one.

“I hope you will post this to educate people on just some of the benefits of implementing a compliant eSign process and I guarantee you the proof of delivery requirements around TRID and the ability to proof consent, receipt and intent is expediting the need not to mention the record retention requirement.”

(This week I am fortunate to be accompanying more than 100 folks from Utah-based Academy Mortgage on their public work project in the village of Amaru, Peru. Academy’s staff is helping villagers build an irrigation system and a production center where the villagers will make their local handicrafts, guiding the village school children with craft projects, bringing a doctor and nurse to provide much-needed healthcare services, and helping to paint a local church. I am sure the villagers are unconcerned about TRID, enforcement actions, or the price of a Fannie 3.50% security in October. I will do my best to respond to e-mails, but please excuse any delays in responding this week, and any potential delays in the daily commentary itself.)

At St. Peter’s Catholic Church, they have weekly husbands’ marriage seminars.

At the session last week, the priest asked Giuseppe, who said he was approaching his 50th wedding anniversary, to take a few minutes and share some insight into how he had managed to stay married to the same woman all these years.

Giuseppe replied to the assembled husbands, ‘Wella, I’va tried to treat her nicea, spenda da money on her, but besta of all is, I tooka her to Italy for the 25th anniversary!’

The priest responded, ‘Giuseppe, you are an amazing inspiration to all the husbands here! Please tell us what you are planning for your wife for your 50th anniversary?

Giuseppe proudly replied, “I gonna go picka her up.”

Rob

As featured by Daily Mortgage News, September 2015

By Xhevrije West

The one-month countdown until the TILA-RESPA Integrated Disclosure (TRID) rule is implemented is in full effect. This checklist of the critical items you will need to will not only ensure compliance, but more importantly deliver the electronic evidence when the Consumer Financial Protection  Bureau (CFPB) comes knocking on your door asking you to prove what you said you did to prevent paying fines that could run up to $1 million dollars a day per infraction!

It’s déjà vu’ all over again. I remember in 2010 when the last major RESPA overhaul occurred and the response by everyone, (Lender, LOS providers, DocPrep companies, Title system vendors) was to build a GFE/TIL calculator; however, no one stood behind them and rep and warranted their accuracy.

Now fast forward to 2015 with TRID and you have the same parties building Closing Collaboration Portals (so far I’ve counted twelve) to support the online exchange of fee data prior to closing to ensure more accurate disclosures. The key issue again is who is offering a solution that has all the required steps, features and functions needed to ensure a complete and compliant process (not just the LE and CD) and rep & warrants it to protect the creditor (lender) against future compliance risk, audits or legal challenges.

Clinging to the old paper process is just not going to cut it anymore

So much focus has been on the forms, specifically the CD and the three-day delivery requirement but implementing a true compliant process requires confirmation and tracking of the following critical milestone events.

Application
• Intent to proceed
• Three-day delivery of the initial disclosure package, (not just the LE)
• Changed circumstances and re-disclosure (s)

Pre-closing
• Three-day delivery of final closing disclosure (CD)
• Why just the one form and not all like we do with the initial disclosures?
• Show receipt of delivery

Electronic evidence
• RESPA reconciliation to verify tolerance and other compliance checks
• Date & time stamp audit trail of all consumer communications
• Record retention requirement of three years on LE and five years on CD

Implementing a full electronic (eSign, eDisclosure) process from loan application to closing is the only way to truly be and ensure compliance. There is a reason why the CFPB and now FHFA is standardizing on the MISMO 3.3 data spec and that is because they are moving to support a full automated audit of the data file for compliance and not wading through hundreds of pages of the paper file to verify compliance.

Additional To Dos

Technology Vendors – of course you’ve been working with your technology vendors over the past several months to understand the changes made to their software and how to use the new functionality. However, some lenders that I’ve talked to eased up working with their vendors because they now had more time. Not a good idea.

Training – not only should you be working with your technology vendors to get trained on their software, but you should be training your own people on the new process. A lot of your staff will be involved with TRID in some form or another; make sure they all understand processes, policies and procedures.

Test, Test, and Test Again – you can’t do enough testing. Try to see where their might be holes in your own processes and ensure the right staff has tested and understands how to apply technology that is affected by TRID.

Keep a Watchful Eye – After October 3, there will be a lot going on internally. Just make sure you observe how things are progressing and make necessary improvements or corrections along the way.

Fines - Sure. The CFPB says it will be lenient regarding TRID violations at first, but you want TRID compliance adherence to be air tight from the get go.

Going Digital – only way to truly ensure data and document compliance and integrity

If this reg does not get people to move to and support a full eMortgage process, I don’t know what will. I guess when the CFPB starts auditing for QM, ATR and TRID in earnest and begin accessing large fines for non-compliance, maybe then the origination side, like the servicing side of the business will wake up and finally change the way they do business.

Editor’s note: Portions of Tim’s response appear in the September issue of MReport. To view his response and additional responses from Black Knight Financial Services, NetDirector, ARMCO, Pavaso, Mid America Mortgage, and IDS click here.

As featured by TheMReport, September 2015