Press Release:
DocMagic participates in offering industry platform to support paperless lending

TORRANCE, Calif.-August 21, 2014-DocMagic, Inc., the leading provider of fully-compliant loan document preparation, compliance, eSign and eDelivery solutions for the mortgage industry, announced today that its strategic alliance with Pavaso will be expanded to allow the two firms to serve Franklin First Financial, Melville, New York, in the Consumer Financial Protection Bureau's eClosing pilot program.

"Lenders are now ready for a completely paperless loan closing process," said Dominic Iannitti, President and CEO of DocMagic. "Digital Close from Pavaso is designed to be a neutral technology platform that seamlessly integrates with other systems. That, along with DocMagic's eSign, eVault and eDelivery offerings, provides a fully supported, shrink-wrapped solution for anyone to do an eClosing. This partnership will show the industry and the CFPB that any lender can make the closing process better for consumers through the use of a completely electronic process without incurring the time and cost of creating or maintaining their own systems."

Pavaso and its Digital Close platform have been approved by the CFPB for participation in the eClosing pilot program.

"One of the prior issues with getting adoption for eClosing was providing the title and closing agents with a simple solution they could use to support their part of the closing process," said Tim Anderson, Director of eServices for DocMagic. "Pavaso has developed a system that can easily be implemented as a web service, allowing all participants involved in the transaction to sign up, log on and use it."

On its website, the CFPB says it expects its new pilot program to make it easier for borrowers to understand the closing process, and give borrowers more time to review the closing documents while providing them time to find and fix errors in documents prior to closing. All of these goals relate to complaints the agency has received from consumers.

"Paperless lending is the future for our industry and our Digital Close opens up a world of opportunity for stakeholders who want to better serve consumers and comply with new federal regulations," said Chris Ayoub, Pavaso's chief operating officer. "We can drive costs out of the equation for lenders and give borrowers the experience they've been seeking in the home finance process."

About Pavaso
Pavaso is an innovative technology company in the Real Estate Closing industry. We've created a powerful digital closing platform that takes the best of the web's collaboration and social features, integrations, analytics and enterprise scalability to bring everyone in the closing process together on the same page. For more information on how our platform and solution offerings can help you meet TILA-RESPA compliance, digitally transform your organization, and dramatically enhance the consumer experience, call us at 214.377.1795 or visit www.pavaso.com to request a demonstration of this revolutionary solution.

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. DocMagic guarantees and warrants that all agency forms are up to date and in compliance with GSE requirements. The company's compliance experts and in-house legal staff constantly monitor legal and regulatory changes at both the federal and state levels to ensure accuracy. For more information on DocMagic, visit www.docmagic.com.

Press Release:
Leading Doc Prep and Compliance Firm Plays Key Role in Historic eClosing Pilot Program

TORRANCE, Calif.-August 21, 2014-DocMagic, Inc., the leading provider of fully-compliant loan document preparation, compliance, patented eSign and eDelivery solutions for the mortgage industry, announced today that the Consumer Financial Protection Bureau has granted DocMagic approval on another eClosing pilot. In this second pilot, The CFPB approved DocMagic's joint proposal with Mountain America Credit Union to participate in its eClosing pilot program. DocMagic will play a key role in the pilot for compliance and loan documentation. DocMagic was also approved in a joint proposal with Franklin First Financial and Pavaso.

"We're excited about being selected to participate in this pilot program as it will demonstrate proven solutions to problems faced by both borrowers and industry participants," said Dominic Iannitti, President and CEO of DocMagic. "Lenders must find more efficient ways to ensure compliance without increasing their loan origination costs or cutting corners. Implementing a secure electronic process with built in compliance audits is the best way to accomplish efficiencies, ensure compliance and keep costs down. Lenders who take advantage of these new technologies will have a competitive advantage over their peers and will see higher borrower pull thru and customer satisfaction levels as well."

Mountain America is among a small group of financial institutions chosen to participate in the study. The institution has been supporting hybrid eClosings for some time now. In fact, the credit union partnered with DocMagic for its eSign compliant loan documents to eClose one of the industry's first electronic FHA loans in March.

The CFPB pilot is designed to further evaluate eClosing solutions and to determine how these solutions can help achieve the proposed vision for an improved closing process.The CFPB lists three primary goals for the eClosing pilot program: to make it easier for borrowers to understand the closing process, to provide borrowers adequate time to review closing documents, and to enable borrowers and lenders to identify and correct errors in documents prior to closing.

"Going electronic is more efficient for all parties involved in the origination process," said Tim Anderson, DocMagic's Director of eServices. "Origination costs are reduced, compliance is improved, consumers are better protected, and loans will simply close faster than in a paper environment. The ability for all parties to collaborate, view and execute online will significantly reduce issues at closing and ensure a much more enjoyable, compliant and transparent closing experience. DocMagic is happy to be one of those chosen to lead the charge."

For its part in the pilot program, DocMagic will provide fully compliant eDocuments in coordination with Mountain America's platform for electronic document management, Quick Close. All documents will then reside within Quick Close, where they can be shared and eSigned by all participants (lender, seller settlement and real estate professionals) online in real time. DocMagic will also provide MERS eRegistry and eVaulting services. This platform is certified by MERS® eRegistry, having successfully passed all certification tests. DocMagic's MISMO category one SMARTDoc® eNotes have been vetted by FannieMae.

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. DocMagic guarantees and warrants that all agency forms are up to date and in compliance with GSE requirements. The company's compliance experts and in-house legal staff constantly monitor legal and regulatory changes at both the federal and state levels to ensure accuracy. For more information on DocMagic, visit www.docmagic.com.

By Tim Anderson,
Director of eServices, DocMagic, Inc.

As we all know (and can’t get away from by now), the Consumer Financial Protection Bureau (CFPB) has issued a rule that they state will simplify and improve disclosure forms for mortgage transactions. For applications received on or after August 1, 2015, the Loan Estimate must be provided to the consumer three business days after the application, and the Closing Disclosure must be provided to the consumer three days before closing.

The new Combined Disclosure Regulation is going to force lenders to connect to title agents at the time of application and prior to closing to ensure compliance. As some of the recent posts on Closing Call have discussed, there are tolerances and limits on the increases to closing costs. Here’s the official word on closing-cost increases, extracted straight from the CFPB’s Final rule on simplified and improved mortgage disclosures:

Limits on closing-cost increases

Similar to existing law, the final rule restricts the circumstances in which consumers can be required to pay more for settlement services – the various services required to complete a loan, such as appraisals, inspections, etc. – than the amount stated on their Loan Estimate form. Unless an exception applies, charges for the following services cannot increase: (1) the creditor’s or mortgage broker’s charges for its own services; (2) charges for services provided by an affiliate of the creditor or mortgage broker; and (3) charges for services for which the creditor or mortgage broker does not permit the consumer to shop. Charges for other services can increase, but generally not by more than 10%, unless an exception applies.

The exceptions include, for example, situations when: (1) the consumer asks for a change; (2) the consumer chooses a service provider that was not identified by the creditor; (3) information provided at application was inaccurate or becomes inaccurate; or (4) the Loan Estimate expires. When an exception applies, the creditor generally must provide an updated Loan Estimate form within three business days.

If the creditor makes certain significant changes between the time the Closing Disclosure form is given and the closing – specifically, if the creditor makes changes to the APR above 1/8 of a percent for most loans (and 1/4 of a percent for loans with irregular payments or periods), changes the loan product, or adds a prepayment penalty to the loan – the consumer must be provided a new form and an additional three-business-day waiting period after receipt of the new form.

Additionally, they go on to summarize details covering Proposals not adopted in the final rule:

The proposed rule would have redefined the way the Annual Percentage Rate or “APR” is calculated. Under the Proposal, the APR would have encompassed almost all of the up-front costs of the loan. The proposed rule would also have required creditors to keep records of the Loan Estimate and Closing Disclosure forms provided to consumers in an electronic machine readable format to make it easier for regulators to monitor compliance.

Based on public comments the Bureau received raising implementation and cost concerns regarding these two proposals, the Bureau has determined not to finalize these provisions in the final rule. The Bureau continues to believe these ideas may have benefits for consumers and the industry, however, and intends to continue following up on both issues. For example, the Bureau intends to work closely with the industry on private data standard initiatives to promote consistency in data transmission and storage. After additional study, the Bureau may propose rules on either or both topics.

There’s a business problem that arises from these changes; let’s look at it for a minute. With the faster and more accurate delivery requirement of the charges between the Loan Estimate and Closing Disclosure forms, constant and reliable communication will be key between lenders and title agents. During the new process, you’ll have to:

• Ensure accuracy of the Loan Estimate form at time of application

• Reconcile fees (with stricter RESPA tolerance guidelines) between the lender's system of record and title closing production systems on the final Disclosure document that must now be delivered three days prior to closing to ensure compliance prior to drawing docs

• Face challenges with the new requirement to support MISMO 3.3 intelligent data standards. For instance, if a lender is not using the same system and doc provider for the initial Loan Estimate form as well as the final Closing Disclosure, they are not going to easily reconcile data, documents and calcs to be compliant

• Be aware that most systems don’t even stand behind their GFE/TIL and APR calculations with a rep and warrant for compliance

• Provide an audit trail as proof of compliance. Recognize that it is now even more important that the data and documents are shared and synched between the lender's system of record and title production systems and easily and quickly accessible

The primary issue is not only delivering the closing documents to the consumer three days ahead of closing (consummation), but now, with the delivery deadlines and tolerance requirements, the lender is on the hook to ensure even greater accuracy of the GFE/TIL at time of application. So what does that have to do with you and technology? It means introducing new electronic processes to replace traditional paper processes and making sure you use the same provider so you have compliance consistency and integrity of the data.

It’s critical that your technology solution can facilitate the electronic sharing and collaboration of data & documents. On top of that, you will need to keep the process electronic to provide evidence and proof of compliance around receipt of delivery, acceptance and execution of documents that the CFPB is going to want to see and audit. Something, by the way, that both DocMagic and Pavaso already provide to their customers.

There has been much ado about the CFPB Combined Disclosure Regulation. There have been numerous seminars and webinars on the operational impact this is going to have on the traditional disclosure process. But are lenders really cognizant and looking at an overall “solution”?

For a variety of information on solutions to these issues, visit the TILA-RESPA Knowledge Center, where you can register for a free account to browse a knowledge base of articles and documents, or join conversations in the forums.

All information and views expressed or implied are provided without warranty and are only opinion. Each participant should seek legal representation for legal interpretation of the ruling and the CFPB directly for final instruction and interpretation. The final rule can be found here.

Tim Anderson
Tim Anderson brings more than 30 years of industry experience, having worked on both the lender and vendor side of the business. He has held executive management positions with LPS, Stewart, Fidelity, FreddieMac and HomeSide Lending, where he ran the eCommerce Division and worked at technology companies like Dexma, Microsoft and Tuttle Information Services. He was also the original founder of the eMortgage Alliance™ which promoted MISMO standards for delivering legal paperless processes. He currently is Director of eServices for DocMagic, Inc.

As featured by HousingWire, August 2014