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. 

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.

TORRANCE, Calif., September 1, 2017 

Mike Zarrilli thrives in the fast-paced, dynamic environment at DocMagic. As COO, he has a critical role ensuring that company operations run smoothly and efficiently. 

Amid an ever-changing, compliance-intensive mortgage landscape, DocMagic has experienced major growth during the past five years, realizing a 42% increase in revenue for 2016, the second time revenue has increased by more than 40%. Zarrilli is instrumental in helping to effectively manage this hyper-growth from an operations and budgeting perspective, ensuring the company expands at a healthy, controlled rate.

Zarrilli was heavily involved in the integration of DocMagic’s acquisition of Document Express in 2014, leading the project plan to integrate the two companies’ infrastructures. Zarrilli recently helped organize the strategic alignment of DocMagic’s enterprise sales team with its customer service department, improving transparency, ease of communication and collaboration.

“Mike is masterful at bringing different teams members together to coordinate and understand DocMagic’s different undertakings for the benefit of partners and clients.”

For more information, visit https://www.housingwire.com/.  

App opens a pivotal avenue for lenders to capture more market share

With every passing year, consumers rely even more on portable mobile devices for their personal and business activities — this includes obtaining a mortgage. Millennials in particular expect to handle every step of the process  on a phone or tablet, from starting the origination process to checking status, eSigning documents and completing the closing process. DocMagic’s BorrowerMobile app satisfies every aspect of this expectation. 

Because BorrowerMobile integrates with DocMagic’s single-source, comprehensive Total eClose solution, it revolutionizes the lender’s eClosing process into  a seamless, sophisticated and easy digital mortgage experience for not only the borrower, but also the lender and closing agents. Lenders who use BorrowerMobile gain efficiences, exceed borrower expectations for collaboration and communication and ultimately open a pivotal avenue for capturing more market share.

“At DocMagic, we identified a critical mass of issues and challenges that occur around lender-borrower communication and extend into virtually every aspect of the mortgage process,” said Dominic Iannitti, president and CEO. “BorrowerMobile provides lenders with a way to avoid potentially costly challenges and delays while delighting the borrower at the same time.”

BorrowerMobile provides the missing link that not only connects lenders and closing agents with borrowers for real-time secure communication and updates, but also enables borrowers to use their mobile devices to fulfill their part of an end-to-end, 100% paperless, fully electronic mortgage. 

It also answers the consistently growing consumer demand for a mortgage process that can be completed entirely on a portable mobile device. BorrowerMobile gives lenders a competitive advantage by aligning the entire mortgage process with borrowers’ typical app-centric buying experiences; creating a more secure, efficient process; and providing much needed transparency for all parties — the borrower, lender and closing agents.

BorrowerMobile’s seamless connectivity allows lenders and closing agents to communicate loan conditions immediately through a secure central location, giving borrowers a real-time “to do” list with complete visibility. As borrowers satisfy conditions through BorrowerMobile, the application instantly updates the lender and closing agent. 

Borrowers get the efficiency and convenience of tracking the real-time status of their mortgages, getting estimated target dates and accessing expanded milestone descriptions and specific loan information at any time, without ever having to initiate a phone call, text message or email.  

In addition to enhancing efficiency, BorrowerMobile makes compliance easier by providing a completely secure environment for transmitting documents and data, thus protecting data integrity and reducing errors and oversights. 

“BorrowerMobile helps lenders reach a larger market by fulfilling the demands of the growing number of consumers — many of them Millennials — who expect to use mobile devices to transact personal and business activities,” Iannitti said.

As featured by HousingWire, September 2017

Join Tanya Brennan, DocMagic's eService Product Specialist, for a FREE educational webinar.

Learn what you need to know to prepare for the Uniform Closing Dataset (UCD) Requirement before the September 25, 2017 deadline. Our special guests Daniel Miller, Digital Alliance Manager & Sejal Patel, Financial Service Manager from the Single Family Digital Products division at Fannie Mae will be on hand to answer your questions about UCD.

We'll show you DocMagic's GSE-Verified solution — available NOW! Learn how to generate & deliver UCD files directly to Fannie Mae and/or Freddie Mac, satisfy the requirement to provide borrower data (and seller data, if available) in the UCD file format, create UCD files that include an embedded PDF of the Closing Disclosure, and how to integrate via DocMagic's Application Programming Interface (API).

REGISTER NOW

Join us for a Free DocMagic Webinar: Get Prepared for the UCD Requirement! 
July 11th  |  10AM PDT

Join our own Tim Anderson, Director of eServices, along with Kathy Scanlon, Lead Project Manager – UCD / Loan Closing Advisor at Freddie Mac, for a FREE educational webinar! Learn what you need to know to prepare for the Uniform Closing Dataset (UCD) Requirement before the September 25, 2017 deadline.

Find out what you need to know about the UCD requirement and step-by-step instructions for how to: 

• Generate & deliver UCD files, directly to your GSE of choice
• Provide both Borrower and Seller data in UCD file format
• Create a UCD file that includes the PDF representation of the CD
• Integrate via DocMagic's Application Programming Interface (API)

We'll show you DocMagic's GSE-Certified solution — available NOW!

REGISTER NOW >

Press Release:
Company’s dual certifications enable lenders to fulfill GSEs’ recommendations of advanced preparation and testing for both 2017 and 2018 UCD delivery deadlines

TORRANCE, Calif., June 21, 2017 (SEND2PRESS NEWSWIRE) — DocMagic, Inc., the mortgage industry’s leading provider of document production, automated compliance and comprehensive eMortgage services, announced that its technologies are now capable of supporting both phases of the upcoming UCD (Uniform Closing Dataset) requirement.

The company’s technology solutions, which have been certified by Fannie Mae and Freddie Mac for both phases of the UCD file delivery mandate, enable lenders to start immediate testing of full UCD delivery – well in advance of the phase one 2017 deadline and the phase two 2018 deadline – as has been recommended by both GSEs.

The Uniform Closing Dataset (UCD) is a common industry dataset that allows information on the Consumer Financial Protection Bureau’s (CFPB’s) Closing Disclosure to be communicated electronically.

On September 25, 2017, the GSEs will require lenders to deliver borrower data and the Closing Disclosure in the UCD file. Later, in 2018, the second phase of the mandate will require seller data to be included as well. However, according to a joint statement issued by the GSEs, both Fannie Mae and Freddie Mac are recommending that lenders start to “submit files with both Borrower and Seller data, if available, in order to test their processes and become familiar with the messaging from each GSE’s collection system.”

DocMagic’s technology solutions allow lenders to fulfill the GSEs’ recommendation by generating and compliantly delivering UCD files that include both borrower and seller data to the GSEs. DocMagic can also accept UCD XML data from third parties and deliver it to the GSEs. In addition, the company offers an API for direct, seamless connection to the GSEs’ technologies.

“At DocMagic we went above and beyond attaining the initial GSE UCD certification because we want our customers to have the option to implement the GSE-recommended testing, which allows them to implement phase two requirements now,” says Tim Anderson, director of eServices at DocMagic. “Phase one addresses the XML file for the borrower CD and associated data, but the GSEs have definitively recommended that lenders complete everything before the phase one September 25, 2017 deadline. We find that lenders that are serious about sustained profitability and growth tend to follow GSE recommendations and take action ahead of time. Now with DocMagic, all of our lender clients have that option.”

To assist lender clients in preparing to meet the entire UCD mandate, DocMagic recently launched its ‘UCD Control Center,’ a one-stop, go-to resource for everything lenders need to know about the UCD requirement. It offers tools, documentation, interactive communication for Q&A, webinars, updates, and most importantly the ability for lenders to test for the entire UCD mandate ahead of the complete 2018 deadline.

The company says its goal is to have the bulk of its clients fully prepared to meet the requirements for both phases this year.

“Our customers and partners rely on us to do everything we can to assure they transact the safest, most compliant loans—and helping them prepare for a major new mandate like the UCD requirement is no different,” said Dominic Iannitti, CEO of DocMagic. “Lenders, settlement providers and other organizations must prepare now or run the precarious risk of being unable to sell their loans. DocMagic is proud to be leading the way, yet again, to help them avert these costly risks.”

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/.

Press Release:
TORRANCE, Calif. — DocMagic, Inc., the mortgage industry’s leading provider of document production, automated compliance and comprehensive eMortgage services, announced that it has been accepted into the Elite Provider Program for American Land Home Title Association (ALTA).

Applicants to the ALTA Elite Provider Program must provide their five most recent balance sheets demonstrating the company’s financial stability and a list of ten references. Each is assessed based on its financial strength, its commitment to the overall industry, its national distribution capabilities, and reference checks with existing customers.

Acceptance into this program means that DocMagic now joins an elite group of premier service providers that promote the highest industry standards and benefits for the title and settlement services industry. In addition, as an Elite Provider DocMagic is now able to offer all ALTA members various discounts on its solutions and services.

“This designation underscores DocMagic’s mission to deliver critical, robust technology solutions that address complex compliance issues and needs for both lenders and title companies,” said Tim Anderson, director of eServices at DocMagic. “ALTA’s rigorous vetting process and high standards mirror DocMagic’s own internal guidelines, and we’re pleased not only to be named to the Elite Provider Program, but also to demonstrate the soundness of our solutions and our practices to the title community.”

DocMagic’s solutions, which are currently being leveraged by the title and settlement services industry, deliver a comprehensive, easy-to-use collaboration system for live fee data exchange and paperless eClosing between lender and title systems. To date, solution adoption has been well-received and continues to gain momentum.

Key initiatives that helped make DocMagic an ALTA Elite Provider:

• SmartCLOSE™ – a robust collaborative closing portal for TRID compliance that connects lenders, settlement provider and other real estate entities to ensure that all data is accurate, complete and compliant before documents are drawn.
• Total eClose™ – a comprehensive digital mortgage solution that ensures all documents (not just the final CD) are completed consistently, compliantly and more efficiently, which greatly increases loan funding turn times by reducing any post-closing trailing docs and potential buy back issues.
• Uniform Closing Dataset (UCD) approved technology – DocMagic is now certified by both Fannie Mae and Freddie Mac to deliver copies of the borrower CD and XML data at the time of closing, as well as any data changes made 90 days after closing.

DocMagic’ solutions have been proven to solve the title and settlement services industries’ mounting challenges regarding data integrity, document versioning, process accuracy and compliance via real-time collaboration tools and final approval by lenders. Data updates are automatically validated inside DocMagic’s industry-leading compliance engine to ensure that clients are always within tolerance thresholds; final documents cannot be generated until all conditions are cleared.

DocMagic will be attending the 2017 National Settlement Services Summit (NS3) being held June 7-9 at the Marriott Rivercenter in San Antonio, Texas. To arrange a meeting with DocMagic at the show, contact Tim Anderson at 904-608-3966 or tim@docmagic.com.

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/.

Going to the National Notary Conference in June? Stop by booth #2 and learn how DocMagic unites eNote, eSignature, eNotary, MERS eRegistration, eDelivery and eVault solutions inside a single offering  — with Total eClose™.

Lender's are going digital. Are you prepared?

Total eClose™ is giving notaries, settlement service providers an edge.

• A regional settlement service provider slashed closing times 70%, while satisfying TRID’s “receipt of delivery” requirement
• The state of North Carolina made history when it hosted its first paperless, 
  all-electronic e-closing — complete with eNotarization
• A Massachusetts settlement agent reduced closing times by over 30% and virtually eliminated trailing doc issues

See Total eClose™ in action... and start offering a completely new customer experience! 

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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/.