Consumers and regulators are pushing for mortgage transactions with less paper, more electronic signatures and the higher customer satisfaction that comes along with them. One challenge has been the need to keep the Loan Origination System (LOS), the lender’s database of record, in sync with the document vendors that supply modern electronic disclosure and closing documents. That’s changing now that innovative doc prep software is making it easier to accomplish a two-way LOS data exchange.
There are three general forms of information that must move between the LOS and the document management software system during the normal loan origination process: The loan data used to create the documents, the loan documents themselves, and events (viewing, signing) that occur with those documents. It’s the latter type of data sync that can really make life easier on lenders. To provide information back to the lender’s LOS on six different types of events and 26 specific document events, we developed our two-way LOS data sync capability, or LOS Pushback.
The disclosure and closing timing requirements promulgated by CFPB in the TRID rule created new challenges for lenders, with accompanying risk of costly audits and fines. Thankfully, advanced doc prep systems now provide lenders with the ability to issue electronic disclosures, enabling them to know exactly when their borrowers log into the eDisclosure portal, view their disclosures, and of course when they actually sign them.
This has advantages at the initial disclosure phase, arming the lender with far more evidence of compliance information than they would have if they simply printed paper disclosures and placed them in the mailbox. If the Loan Estimate must be re-issued due to a change in circumstance, the lender saves additional cost and time by eliminating repeated paper shipping events.
The advantages multiply as the loan nears closing. The Closing Disclosure must be received by the borrower three days prior to actual closing. This means a paper CD must be placed in the mail six days prior, to satisfy the Post Office Rule of three days’ presumed transit. But knowing that their borrowers have been reliably receiving and viewing their initial disclosures electronically, lenders can leverage tighter timeframes if necessary, issuing the electronic CD to the borrower and receiving confirmation that the borrower has received, viewed, and eSigned their CD, often within minutes of issuance.
Of course the LOS is the system of record, and is the most efficient location for lenders to store the audit trail of all disclosure events. Through Docutech’s LOS Pushback functionality, the lender’s LOS receives event-driven data packets each time an important event occurs for each disclosure. That audit trail of events is stored in the LOS, tightly coupled with all the other loan data, where it will be available when needed for investor review, or as CFPB Evidence of Compliance during an audit.
One lender client of ours tells the story of a portfolio of loans that was due to be sold to a large investor. A problem with the audit logs put the sale on hold, and there appeared to be no good method for getting the deal back on track. When the client matched our LOS Pushback notifications to timestamped items in their own audit trail, the investor was confident enough to complete the transaction.
Most lenders use LOS Pushback for a more mundane but still important purpose, loan status updates. Instead of calling the borrower every time an event is anticipated, our ability to push information back to the LOS saves lenders a great deal of time. Ultimately, it speeds up the loan origination cycle and increases customer satisfaction.