Virtually every lender is trying to remove physical paper from their loan origination process and get to a true end-to-end digital mortgage. Unfortunately, the Consumer Financial Protection Bureau’s TRID rule made it harder for many lenders to do so.
While the new rule simplified some of the documentation and set rigid timelines for when it must be delivered to the borrower, it did not undo the important consumer protections built into the Federal ESIGN Act (15 U.S.C.A) and the Uniform Electronic Transactions Act (UETA).
These rules made electronic commerce possible but also gave consumers the power to opt out of the electronic signing process. Today, about 1 in 5 consumers we serve are opting out and asking for paper documents. But even if they are papered out, TRID requires lenders to meet the same statutory timelines and puts a high cost on non-compliance.
Before the Dodd-Frank Act was enacted, failure to deliver the upfront disclosures within prescribed timelines could have resulted in civil liabilities and/or criminal fines, with penalties typically running into the thousands of dollars. As steep as that is, the cost is much higher under the current Dodd Frank Act rules, which applies to TRID violations. Creditors who miss prescribed deadlines could receive a civil penalty of up to $1.1 million per day for the error!
But avoiding these high non-compliance costs also comes with a price.
The high cost of paper fulfillment
When we entered the business decades ago, paper document fulfillment was the only method available to lenders. Every required form had to be printed and shipped to the borrower, who then had to sign it and ship it back. That is still happening today for some borrowers.
If a lender wanted to handle this task on its own, it would incur heavy expenses for:
- Expensive print and mail hardware and software
- Managing inventory, storage and postage costs
- Managing staffing costs, including added coverage for volume surges
- Managing manual tracking for compliance and closing timelines
- Staffing and infrastructure costs
Consequently, virtually no lender takes on this task but rather relies on their doc prep partner to handle the details.
In House Print Fulfillment Blocks Lenders from Digital Migration
Docutech provides lenders flexibility and security with always ready print fulfillment centers, loan origination system data pushback, detailed compliance reporting, and a direct to fulfillment API to deliver all state and federally compliant, investor as well as custom documents and disclosures.
But most importantly, as a fulfillment expert we can generate and print the required documents, get them to the borrower within the statutory time limit and send back the electronic information the lender needs to keep the digital lending process intact. In our next blog in this series, we’ll dive deeper into this topic. For now though, download our Fulfillment Services solution brief to learn more.