The Consumer Financial Protection Bureau has announced that it is rescinding seven policy statements that were issued last year to assist financial institutions during the height of the pandemic. Issued between March 26 and June 3, 2020, the policy statements provided some flexibility in complying with certain regulatory filings and consumer finance laws.

The rescission date for the policy statements was April 1, 2021. The CFPB stated in each policy rescission that it would not be providing a notice and comment period as it would with rulemaking. The statements are intended to provide information regarding the CFPB’s plans to exercise its supervisory and enforcement discretion, which does not impose any change to existing legal requirements.

The rescinded policy statements include:

• March 26, 2020: Statement on Bureau Supervisory and Enforcement Response to COVID-19 Pandemic. The statement provided that the CFPB would look at good-faith efforts to assist consumers while taking into consideration staffing and related resource challenges related to the pandemic.
• March 26, 2020: Statement on Supervisory and Enforcement Practices Regarding Quarterly Reporting Under the Home Mortgage Disclosure Act. The statement provided that until further notice, the CFPB would not bring an action for failure to report HMDA data quarterly as required. The rescission states that financial institutions must resume quarterly HMDA data submissions starting with 2021 first quarter data.
• March 26, 2020: Statement on Supervisory and Enforcement Practices Regarding CFPB Information Collections for Credit Card and Prepaid Account Issuers. The rescission statement provides guidance on how supervised entities should follow information collections requirements for credit card and prepaid accounts.
• April 1, 2020: Statement on Supervisory and Enforcement Practices Regarding the Fair Credit Reporting Act and Regulation V in Light of the CARES Act. The rescission statement advises the CFPB will resume full supervisory and enforcement activity, but still encourages financial institutions to provide and report payment relief actions.
• April 27, 2020: Statement on Supervisory and Enforcement Practices Regarding Certain Filing Requirements Under the Interstate Land Sales Full Disclosure Act (ILSA) and Regulation J. The rescission ends flexibility provided to land developers and other entities subject to ILSA related to filing annual reports and financial statements.
• May 13, 2020: Statement on Supervisory and Enforcement Practices Regarding Regulation Z Billing Error Resolution Timeframes in Light of the COVID-19 Pandemic. The rescission ends flexibility of enforcement for the handling of consumer dispute requests by financial services entities.
• June 3, 2020: Statement on Supervisory Enforcement Practices Regarding Electronic Credit Card Disclosures in Light of the COVID-19 Pandemic. The statement provided that the CFPB would not cite a violation or bring an enforcement action if an issuer did not obtain oral consent for certain electronic disclosures. As financial institutions have now had time to improve operations and servicing procedures, the CFPB will no longer provide flexibility in enforcement of TILA and Regulation Z violations.

Additionally, the CFPB released Bulletin 2021-01 on March 31, 2021, which rescinds and replaces Bulletin 2018-01, issued on Sept. 25, 2018. The new Bulletin announced that the CFPB will no longer issue formal written Supervisory Recommendations. Instead, examiners will issue Matters Requiring Attention (MRAs) to express expectations to supervised entities, with or without a related finding of a violation. The MRAs should include specific goals and corrective actions to be taken, along with a specific timeline for actions.

Related Content:

• CFPB issues statement on financial institutions serving LEP customers (2/3/2021)
• CFPB's 5-year TRID assessment produces mixed results (10/15/2020)
• FHFA, other agencies announce extension of COVID-related policies (9/16/2020)

The first step of a closing is for a massive amount of information — about the borrower, the property and the type of loan — to be entered into the lender’s loan origination system (LOS). Data validation is the process by which that information is audited and verified.

Good data validation is crucial. For a variety of reasons (such as how the data is received, the size of the required data set and the complexity of the information), information may be incomplete, incorrect or improperly formatted — potentially causing major disruptions for lenders later on in the process. Lenders need a data validation system that confirms the loan data they’re collecting is complete, accurate and compliant at the state, federal and investor level.

“It’s a health integrity check of all of the loan’s data, to ensure that you have a complete and accurate data set prior to a document generation event,” said Chris Lewis, DocMagic’s Director of Enterprise Solutions.

An effective data validation system should be able to analyze this data as it’s being submitted in order to catch errors and inconsistencies, such as if the zip code doesn’t match the state or if information such as the interest rate is missing, to name a few.

The best data validation systems should have a multilayered error-detection program, such as an audit engine that’s constantly analyzing the loan data. In addition to that, the system should generate a loan report that highlights any inaccurate, missing or questionable information. At the touch of a button, lenders should be able to pull up a laundry list of any issues that need to be addressed.

Of course, even if they lack an audit engine or loan report, lenders could still start plugging data into their LOS and generate a document package — but it's much more likely this would result in errors they won’t spot until much later.

“Maybe it’ll have an unpopulated field or generate documents in a non-compliant way,” Lewis said. “The old way is where lenders would generate documents and then look at them and realize, ‘I still need to add this or that,’ instead of being able to ensure everything is correct beforehand. Lenders could generate documents that way, but it would take a lot longer and be a lot more error prone.”

As part of data validation for both its document generation and 100% paperless Total eClose solutions, DocMagic offers an audit engine and Loan Detail Report that guarantees lenders can generate compliant document packages. The Loan Detail Report can be provided in both XML and browser-ready HTML formats.

On top of that, DocMagic also offers lenders the ability to configure custom audits according to their needs (for example, to flag things such as if a property in a specific zip code is over a certain price threshold). Additionally, after over 30+ years of operation and millions of closings, DocMagic has developed thousands of prebuilt audits that instantly spot potentially questionable data.

“Lenders are doing all the legwork to do their best to get complete and accurate data into the documents they generate, but using an automated data audit and validation engine can greatly reduce errors and double as a quick way to know what data you have left to collect,” Lewis said. “DocMagic’s platform gives lenders the benefit of all these other loans that have been closed in a compliant way on our platform, and of us providing rulesets that ensure they’re collecting quality data. That’s the endgame: quality data that’s complete.”

Related Content:

• The new URLA: The No. 1 thing to do ASAP to ensure you're ready (2/17/2021)
• The current state of eClosings: A Q&A with DocMagic's compliance chief (12/17/2020)
• DocMagic offers clients automatic audit of NMLS identification numbers (12/8/2020)

Millennials are much more likely than other generations to say they would be comfortable buying a home online — and their younger Gen Z counterparts aren’t far behind, according to a new Zillow survey.

When asked how comfortable they would be buying a home online, 39% of millennials (ages 27-41) and 36% of Gen Z, aka “Zoomers” (ages 18-26), answered affirmatively, compared with just 19% of Gen X (ages 42-56) and 7% of Baby Boomers and the Silent Generation (ages 57 and older). Across all groups, 23% of respondents responded positively, the survey found.

“It’s clear that strong demand from the next generation of buyers will keep real estate technology in place long after the pandemic is over,” Zillow Senior Vice President of Product Matt Daimler said in a statement. “Digital tools rapidly adopted during the pandemic not only make home shopping safer, they make it faster and easier. … Many transactions can now close remotely, too, saving time and hassle."

Numbers were even higher when respondents were asked how confident they’d be making an offer on a home after touring it virtually, without having stepped foot in it. A majority of Gen Z (58%) and millennials (59%) said they were “somewhat/very/extremely confident,” while 39% of Gen X and 23% of the Baby Boomer/Silent Generation respondents said the same.

Millennials, the largest generational group in the country, have made up the largest share of homebuyers since 2014. They continue that streak at 37%, according to the National Association of Realtors’ 2021 Home Buyer and Seller Generational Trends report, which also found that 82% of younger millennials and 48% of older millennials were first-time homebuyers — more than any other age group.

With a huge number of millennials hitting their mid-to-late 30s (the typical age of a first-time homebuyer is 34), Zillow estimates there will be 6.4 million more households formed by 2025, driving housing demand for years to come.

The data clearly shows millennials both dominating the homebuying market and eager to use online tools for the home search and buying process, including virtual tours and interactive floor plans that allow them to shop from their couch.

These current and future customers will no doubt also expect a digital mortgage experience, including the ability to track their loans on mobile apps and a 100% remote closing process. Lenders should prepare for this incoming wave now.

Related Content:

• Magazine survey shows overwhelming demand for eClosings (2/24/2021)
• Relive some key mortgage industry milestones in 2020 (12/29/2020)
• Survey: Homebuyers adapt to eSignings, remote closings during pandemic (10/29/2020)

DocMagic is teaming up with New Jersey-based Secure Insight to set up a training program on remote online notarization (RON) technology and processes. The move will establish a database of notaries who have been fully trained and certified on DocMagic’s industry-leading, 100% paperless Total eClose platform. The partnership combines DocMagic’s technology and Secure Insight’s unique database and individual training for notaries.

Amid rising demand for digital closings, lenders have a growing need to tap well-qualified eNotarization professionals who can ensure deals close smoothly and on time. This new certification program, which reaches the greatest number of notaries with a working knowledge of Total eClose, is poised to significantly move the adoption needle.

"Ultimately, this partnership creates a better RON process for lenders and borrowers alike, benefiting all users involved in the eClosing process," says Dominic Iannitti, president and CEO of DocMagic. "Lenders are operating at maximum capacity right now with an influx of mortgage applications that they must ultimately close on as efficiently as possible amid heavy loan volume. Our new certification process will ensure lenders that RON eClosings will be handled quickly and efficiently by a ready supply of proficient eNotaries.”

Secure Insight’s extensive national notary database can now be easily accessed to find notaries who are qualified to complete seamless, compliant eClosings using RON technology.

"One of the primary challenges in facilitating RON transactions is that lenders are hesitant to entrust the closing process with a notary that may be ill-equipped to effectively perform an eClose transaction," says Andrew Liput, CEO at Secure Insight. "Teaming with DocMagic allows us to identify properly licensed, experienced and trained professionals whom lenders will feel comfortable leveraging to perform the specialized functions surrounding these unique transactions.”

Related Content:

• RON update: First new remote online notarization law of 2021 passes (2/12/2021)
• Remote online notarization (RON) has several benefits beyond safety (10/22/2020)
• RON update: Remote online notarization sees forward momentum—and a setback (6/26/2020)

DocMagic has been named to HousingWire’s 2021 Tech100 Mortgage list, which recognizes the mortgage industry’s most innovative and impactful companies.

HousingWire noted that this year’s winners are revolutionizing the mortgage process.

“After the uncertainty and unpredictability of last year, we expected a greater adoption of technology. However, these 100 real estate and mortgage companies took digital disruption to a whole new level and propelled a complete digital revolution, leaving a digital legacy that will impact borrowers, clients, and companies for years to come,” said Brena Nath, HousingWire’s HW+ Managing Editor.  

DocMagic had a record year in 2020, achieving 128% growth over 2019 and helping more than 130 lending institutions successfully implement eClosing strategies and solutions amid a pandemic and an unprecedentedly high-volume lending landscape. Demand spiked for DocMagic’s eClosing solutions, particularly its award-winning 100% paperless Total eClose™ platform and document preparation solution. The company concluded 2020 having performed the most eClosing transactions in its history, to the tune of a 724% increase in eClosings.

DocMagic has received the honor every year since HousingWire announced the inaugural list in 2014.

“Earning HousingWire’s Tech100 award for the eighth straight year is a testament to the incredibly dedicated team we have here at DocMagic and the passion they hold for continuous innovation,” said Dominic Iannitti, president and CEO of DocMagic. “We are elated to receive this award from HousingWire for digitizing key areas of the mortgage process and creating a superior experience across the supply chain.”

HousingWire Editor in Chief Sarah Wheeler, who has been helping to select winners since 2014, said every year the program becomes more competitive. “These companies are truly leading the way to a more innovative housing market.”

Related Content:

• Brian D. Pannell honored with HousingWire's 2020 Tech Trendsetters Award (12/4/2020)
• DocMagic's Lori Johnson honored with HousingWire's 2020 Insiders Award (9/3/2020)
• DocMagic earns a spot on the HW Tech100 for the sixth straight year (3/29/2019)

Welcome to Ask the eClosing Team, a new series where DocMagic’s eClosing pros tackle real questions that we’re hearing from lenders. Today’s response is supplied by eClosing Team leader Dan McGrew, president and CEO of Elite Digital Advisors.

What do lenders need to do to get set up for eNotes?

When a lender wants to produce eNotes, Dan McGrew says one of their first steps should be to get integrated with the MERS eRegistry, which is where the closed eNote will be registered (and ultimately transferred, if it’s sold to an investor down the line). This step could take some time. Lenders should follow the steps on this checklist to prepare for integration. They will also need to sign a MERS eRegistry Addendum, which includes additional terms and conditions related to their use of the eRegistry. After that, a MERS representative will reach out to the lender to continue the integration process.

Free article: Everything you need to know about eNotes

Lenders will also need to set up an eVault to access, manage, and store electronic files such as eNotes, and which can connect to the MERS eRegistry. There are several technology vendors, including DocMagic, who offer such eVault technology.

After that things get a little more complex: Lenders need all of their secondary partners to also be set up for eNotes. “One of the biggest challenges is, do their secondary partners participate in either the funding, servicing, or purchasing of electronic notes?” McGrew said.

Each stakeholder in the chain — including warehouse lenders, sub-servicers, and investors — needs to become a MERS member and to have their own eVault (though they can use different technology vendors for their eVaults. For example, Freddie Mac and the Federal Home Loan Banks system use DocMagic’s eVault technology, but Fannie Mae doesn’t).

Depending on the partner’s willingness to go “e,” getting secondary partners on board can be one of the more difficult parts of the process. McGrew says he usually asks the lender to introduce him to their current partners, such as their warehouse lender. He then reaches out to the warehouse lender, gives them a demo, answers their questions, explains the compliance requirements, and more.

“Once we take the mystery out of it, that typically does the trick,” McGrew said. “But a lot of times they’ll say they’re still not ready. So, in that case I have to go back to the lender and ask them, would you like me to introduce you to some other warehouse lenders that will fund eNotes and have an eVault? And typically, they’ll say yes.”

McGrew may also help lenders find new sub-servicers, investors, or aggregators who are either ready to offer eNotes or willing to do what it takes to begin offering them.

“I can have a lender that's fully committed and fired up to do eNotes, but if their secondary partners don't participate, that’s a big roadblock,” he said.

How long does the eNote setup process take?

That depends entirely on how prepared the lender and their secondary partners are. If the lender’s partners already have eVaults — or are willing to get one — and the lender plans to sell to an investor who already accepts eNotes such as Fannie Mae or Freddie Mac, then the whole process can move fairly quickly. After the lender signs their agreement with MERS, they need to conduct grid testing (the process of testing any eNote being closed), register the eNote with MERS, and then deliver it to the next partner in the chain.

“In an ideal world, from day one we could set them up, do the grid testing in a week and a half, and get them live to producing eNotes in a couple of weeks,” McGrew said.

However, that's rare because the secondary partners usually aren’t already ready for eNotes; it may take everybody a few weeks just to get set up with MERS. “If all the parties in the chain still need an eVault, or if the lender needs to find new partners willing to play ball, then we're looking at 45 to 60 days, at least, to get them set up to produce eNotes,” McGrew said.

The time factor is one of the benefits of choosing DocMagic as a technology vendor — the process can go a lot quicker with the help of experienced eClosing experts. “Our eClosing Team is going to help them get there,” McGrew said. “At DocMagic, we hold your hand like a fishing guide, to walk you through every step of the process."

What’s the main issue stopping more lenders from offering eNotes?

The biggest obstacle — bigger even than recalcitrant secondary partners — is that lenders need to shift their mindset away from the idea that paper is the be-all, end-all in the mortgage industry.

“About 85 to 90 percent of lenders still rely heavily on paper. They’ve spent all their time and energy trying to make paper processes more efficient,” McGrew said. “We’re introducing them to a totally new way of doing things, so the biggest challenge for them is committing to that new mindset.”

McGrew recalled a recent meeting with an investor where the head of the compliance department admitted to having a hard time understanding eNote concepts such as the “controlling location,” “authoritative copy,” and the fact an eNote has multiple copies. The executive said, “We're just accustomed to getting a paper note and taking our thumb and smudging the ink to make sure we have the original.”

During the pandemic, McGrew has seen a sharp uptick in lenders wanting to offer eNotes; however, he’s noticed that many back off when they realize the amount of effort involved.

“They didn't realize what they had to do with MERS, or that their secondary partners had to have eVaults.” he said. “When they discover that, it causes many of them to stop and say, 'We'll figure out a different solution and come back to this at another time.'”

McGrew encourages lenders to bolster their commitment to eNotes because the benefits — which include greater efficiencies and fewer errors — are worth the effort. One lender he works with has been producing eNotes for several months now, but McGrew recalled that when they first started the process, some internal stakeholders were slow to embrace it. He recently asked his contact at that company: “If you went to the folks on your team that were previously hesitant and said, ‘We're going to go back to the old way, to the pure paper process,’ what would be their reaction?”

She laughed and answered, “They would shoot me.”

The eClosing Team can be reached at eClosingTeam@docmagic.com.

Related Content:

• Paradigm shift: 4 key mortgage industry changes over the last year (1/27/2021)
• Relive some key mortgage industry milestones in 2020 (12/29/2020)
• The current state of eClosings: A Q&A with DocMagic's compliance chief (12/17/2020)

By a large margin, PROGRESS in Lending magazine’s 90,000+ readers say that eClosing technology is in high demand. 

The magazine ran a reader survey asking whether, in their experience, demand for eClosing technology was poor, average, or huge. The response: 75% said demand was huge, 25% said it was average, and 0% said poor.

“Whereas in previous years eClosings were a ‘nice to have,’ the events of 2020 made them a ‘need to have,’” Michael Chaney, DocMagic’s National Sales Director, told PROGRESS in Lending. 

“Although most lenders were aware of the benefits that borrowers could gain from automating and removing paper from the closing process, it simply wasn’t enough of a driver to create widespread adoption. However, the need for social distancing, stay-at-home requirements, and safety as a result of the pandemic ended up catapulting eClosing technology to the top of lenders’ must-have technologies pretty much overnight.”

There is increasing evidence of the industry’s growing embrace of eClosings. In January, Ginnie Mae — which announced last year that it would start accepting eNotes as digital collateral — issued its first mortgage-backed security (MBS) backed by digital pools consisting entirely of eNotes, with a total value of approximately $24 million. Ginnie Mae says it expects to see even more growth in the volume of eNotes securitized under its MBS Program in 2021.

“The issuance of securities backed by digital pools validates the viability of the securitization model outlined in our Digital Collateral Program and sets the foundation for broader and more rapid adoption of digital mortgages,” said Angel Hernandez, Ginnie Mae’s Director of Policy and Program Development, in a statement. “This event is the culmination of efforts by numerous internal and external stakeholders in our digital initiatives, including issuers, document custodians, warehouse lenders, technology providers, and other industry partners.”

Vendors have responded to growing demand by enhancing their offerings.

“Whether a lender takes a phased approach to implementing eClosing technologies with various hybrid models or they elect to establish a 100% paperless eClosing workflow complete with RON technology, eNotes, and eVaults, it is nonetheless refreshing to see the industry as a whole working to create a better mortgage experience for borrowers,” Chaney said.

Related Content:

• Survey: Homebuyers adapt to eSignings, remote closings during pandemic (10/29/2020)
• DocMagic's CEO honored with Lending Luminary Award (10/27/2020)
• Ginnie Mae, 3 FHLBanks start accepting eNotes (8/5/2020)

The first remote online notarization (RON) law of 2021 has passed, and it has a surprising detail—it also expressly enshrines remote ink-signed notarization (RIN) in the state’s statute.

On Feb. 9, Wyoming Gov. Mark Gordon (R) signed SF0029, which the state Legislature had passed during an eight-day virtual session. This move means there are now 29 states with permanent RON laws on the books.

In addition to RON, the new Wyoming law also includes clear provisions allowing for RIN, a lower-tech alternative to RON in which a borrower connects with a notary via an audiovisual program (such as Zoom) and then ink-signs a paper document before mailing it to the notary to complete the process. Before the pandemic, Wyoming was one of a dozen states that did not allow either RON or in-person eNotarization (IPEN).

Take a look at the state of RON around the nation:

• Here are the 29 states with permanent RON laws: Alaska, Arizona, Colorado, Florida, Hawaii, Idaho, Indiana, Iowa, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Missouri, Montana, Nebraska, Nevada, North Dakota, Ohio, Oklahoma, Pennsylvania, Tennessee, Texas, Utah, Vermont, Virginia, Washington, Wisconsin, and now Wyoming. 
• While a RON law is on the books in 29 states, some haven't taken effect yet (or are only currently in effect due to emergency orders). For example, Wyoming’s new law isn’t effective until July 1, but the state currently allows RON via emergency guidance that expires the same day the new law takes effect. Louisiana’s law will take effect in 2022, unless a federal law is enacted sooner.
• Vermont is another RON state with an asterisk. It passed a permanent RON law in 2018, but RON transactions aren’t allowed until the Vermont Secretary of State issues guidelines for it, which hasn’t happened yet. However, last year the Secretary of State did issue emergency rules allowing RIN—while expressly clarifying that RON was still not allowed.
• South Dakota had previously been lumped in with the RON states, but its law actually permits a very limited version of RIN. The state only allows remote notarization of paper documents, and only by notaries who can identify signers through personal knowledge. South Dakota's law was enacted in 2019, a year before the concept of (and term for) RIN became popularized due to the pandemic.
• Wyoming’s new law appears to be the first time since the pandemic that a state has passed a permanent law allowing RIN. The move is surprising because RIN laws have largely been seen only as temporary measures—not as permanent legislation. When Fannie Mae issued its RIN guidance, it noted, “We do not expect these temporary governors’ executive orders and authorizations related to RIN to extend beyond the COVID-19 national emergency” and encouraged lenders to only consider RIN if RON wasn’t available. (A dispute over the validity of emergency RIN orders caused a brief dustup in Michigan late last year.)
• With the exception of California and South Carolina, almost every state has taken action to allow some form of remote notarization via permanent legislation or temporary emergency orders, several of which have been renewed multiple times as the pandemic continues.

Wyoming may be the first state in 2021 to enact a permanent RON law, but in all likelihood it won't be the last.

Related Content:

• Remote online notarization (RON) has several benefits beyond safety (10/22/2020)
• RON update: Remote online notarization sees forward momentum—and a setback (6/26/2020)
• RON vs. RIN (remote ink-signed notarization): What's the difference? (6/10/2020)