Press Release:
Company joins select group of vendors that can use industry standard eNote registry

TORRANCE, Calif., Feb. 17, 2015 -- DocMagic, Inc., the leading provider of fully-compliant loan document preparation, compliance, eSign and eDelivery solutions for the mortgage industry, announced that the firm has now completed its integration with the MERS® eRegistry, making it one of only a few industry vendors to integrate with the widely used system.

Launched in 2004, the MERS® eRegistry is the legal system of record that identifies the owner or holder (Controller) and custodian (Location) for registered eNotes and provides greater liquidity, transferability and security for lenders, according to MERSCORP Holdings, Inc. It was created in response to demand by the mortgage industry for a system to satisfy certain safe harbor requirements under the Uniform Electronic Transactions Act (UETA) from 1999, and the Electronic Signatures in Global and National Commerce Act (E-SIGN) from 2000.

"The MERS® eRegistry system excels at effectively handling a vital service for eMortgage originations," said Dominic Iannitti, president and CEO of DocMagic. "Fannie Mae and Freddie Mac both require use of the MERS® eRegistry for all eNotes they purchase. DocMagic's integration with MERS' system fulfills the GSEs' requirement and thus allows us to pass the benefits that the service offers along to our customers."

Using an eClosing platform such as DocMagic's eSign platform, the borrower simply signs the eNote, and the lender then immediately and efficiently registers it on the MERS® eRegistry, where it securely resides and can easily be referenced at any time. Thereafter, the lender is able to simply transfer control to investors.

Notable is that DocMagic's recent acquisition of eSignSystems, the mortgage industry's leader in eSign and eVaulting Solutions, also has MERS eRegistry connectivity through its SmartSAFE suite. SmartSAFE facilitates secure eDelivery, eSigning and eRetention with a legal "system of record," providing detailed audit trails from the beginning to the end of transactions.

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. 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 http://www.docmagic.com/.

Press Release:
Adherence to MISMO’s latest dataset helps prepare DocMagic for the CFPB’s Integrated Disclosure deadline

TORRANCE, Calif., Feb. 11, 2015 – DocMagic, Inc., the mortgage industry’s leader in compliant loan document preparation and driver of complete eMortgage adoption, announced that its entire solution set now adheres to version 3.3 of the Mortgage Industry Standards Maintenance Organization (MISMO) Reference Model.

The Consumer Financial Protection Bureau’s (CFPB) Integrated Disclosure Rule combines the mortgage disclosures required under the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA). It requires lenders to use the new integrated disclosures beginning on Aug. 1, 2015. Successful compliance with this rule depends on use of the latest version of the data standard.

Version 3.3 of MISMO establishes a common dataset that is essentially a prerequisite for lenders to use the CFPB’s new integrated disclosures and share the information about the disclosures with their industry partners. The CFPB's Integrated Disclosures will replace the current Good Faith Estimate (GFE) HUD-1 Settlement Statement, and Truth in Lending (TIL) disclosures for most residential mortgage loans as of Aug. 1, 2015. DocMagic is the first document preparation software vendor to implement MISMO version 3.3.

“Our early implementation of MISMO version 3.3 is significant because it is yet another step that we are taking to proactively prepare for the CFPB’s new Integrated Disclosure rule, as well as industry innovation involving the disclosures,” said Dominic Iannitti, president and CEO of DocMagic. “Any software provider that is involved in loan closings or data exchange must update their respective systems to implement the new dataset in order to effectively support their partners and lender clients. Those organizations that wait will likely not be ready to meet the CFPB’s deadline and as a result will encounter serious compliance issues.”

In March of 2014, the GSE’s introduced the Uniform Closing Dataset UCD, which is based on the MISMO v3.3 Reference Model standard used to support the Closing Disclosure under the CFPB’s new Integrated Disclosure rule. The Closing Disclosure is the form that combines the final TILA and HUD-1 Settlement Statement. As a result, closing documents will change significantly come Aug. 1, 2015. Lenders will be responsible for the Closing Disclosure and will need to automatically and seamlessly exchange the data from this disclosure with its settlement agents and other partners. DocMagic is ready to effectively and compliantly transition to this new disclosure for its entire customer base.

Other organizations that will be affected by the rollout of version 3.3 of MISMO, the GSE’s introduction of the UCD, and the CFPB’s rule include settlement software and loan origination system (LOS) providers, among others.

DocMagic’s early implementation of MISMO version 3.3 has allowed the company to already begin working on standardizing closing document forms for its clients and partners.

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. 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.

The new mortgage wave is now.

Executive Conversations is a HousingWire web series that profiles powerful people in the financial industry, highlighting the operations and the people that make this sector tick. In the latest installment, we sit down with Don Iannitti, president and CEO of DocMagic, to see how the company how the company thrived in 2014, along with its plans to grow in 2015.

HW: DocMagic has announced some key acquisitions in 2014, how are these coming along and where does the company plan to grow in 2015?

Iannitti: We made two outstanding acquisitions in 2014 that will have a significant impact on our business moving forward: eSignSystems and Doc-Tech Corp. Both were executed flawlessly and are integrating exceptionally well with the existing DocMagic family. While both acquisitions bring layers of new benefits and opportunities to DocMagic from an asset, customer and opportunity standpoint, I think that the best part of each of those deals is the incredibly talented people that we were able to bring on board. They have already added tremendous value to DocMagic and are both perfect fits within our corporate culture and level of commitment and intensity our organization has.

We also recently secured an exclusive agreement with a complementary technology vendor that we will be announcing shortly, which puts us in a unique position to achieve a 100% paperless eClosing. In addition, we will be evaluating other deals of interest throughout 2015 that add to our competitive advantage. With many of the new and constantly changing compliance rules that are being enacted, we see huge opportunity for us to serve as a single-source vendor for fully compliant, highly efficient eMortgage processing from end-to-end.

HW: The CFPB will again be front and center with compliance throughout 2015 that will impact the entire mortgage supply chain. Are you working with them on compliance initiatives to help?

Iannitti: Part of the CFPB’s “Know Before You Owe” mortgage initiative, which is designed to improve the home-buying experience for consumers is its eClosing pilot program. It analyzes how technology can improve the borrower experience.

DocMagic is one of the lead vendors participating in the CFPB’s eClosing Pilot, which is in direct response to providing an automated solution to the new Integrated Disclosure, (TRID) regulation for August 1st. Much of that encompasses providing a consistent electronic process and streamlined consumer experience to ensure borrowers are better informed and educated before they go to closing and on the lender side to ensure the lender has an electronic documented process (audit trail) to ensure proof of compliance around delivering the disclosures to consumers.

Although the pilot itself is currently only focused on the delivery of the “Closing Disclosure Form,” the lenders we are working with already provide an initial electronic disclosure, (eDisclosure) with much of the verification being paperless up to providing an electronic pre-closing and full eClosing process that includes eNotary, eRecording and eDelivery to the investor via MERS eRegistry.

In short, we’ve already satisfied the pilot’s initial objective and have actually taken it much further, achieving a full eClosing from soup-to-nuts using DocMagic’s single solution.

HW: There has been a lot of talk about achieving a true eMortgage. How close do you think we are?

Iannitti: There are many different components that all need to work very well together in order to achieve an actual eMortgage from start to finish --- completely electronically and without the use of any paper whatsoever. The industry has made significant advancements with eMortgages over the years from e-documents to e-signatures, e-notaries, e-delivery, e-closing, e-recording and e-vaulting. What we’re finding, however, is that there are currently too many vendors involved to make it work smoothly. This is why we are evolving into a single-source provider of comprehensive services. At DocMagic, we have the technology and are eMortgage ready; but, the next challenge is in getting major investors and other industry players to embrace and accept it. So, when will broad-based market adoption occur is the billion dollar question.

What we have seen in recent years is a confluence of eEnabling events that have risen out of a combination of 1) technology adoption, 2) government mandates and 3) the proliferation of data-centric models that we believe creates a paradigm of “eInevitablity” that will begin to show real leaps in market adoption in early 2016. The environment has become an environment where the only way to be compliant and competitive is to eliminate the paper. Many of our customers see this already, and are working with us to set up an eEnvironment.

HW: What are some of the biggest challenges that lie ahead in 2015 and how do you plan on overcoming them?

Iannitti: Had you asked me this question last year, I would have said our biggest challenge was going to be driving eAdoption, but I am pleased to say that certain marketplace drivers ended up getting that well underway.

Currently, our biggest opportunity is going to be ‘riding’ the eWave. This means that we will be material in transitioning increasingly greater numbers of our customers to an eEnvironment that is highly regulated and highly competitive. Customers are unique and one size doesn’t fit all. It will be a time of great learning for everyone in this market --- everyone. Maintaining balance while assimilating the knowledge we gain and continuing to innovate amid an incredibly fast-moving regulatory intensive business landscape is our opportunity, and we are very well-positioned to capitalize on it. We’ve been around for 25 years and have successfully navigated through many industry cycles, always coming out on top.

Compliance rules abound; they here to stay. We’re ultra-prepared to tackle them and serve as a very effective electronic single-source solution to clients. We’re quickly transforming from once being a document preparation company into an eServices company.

As featured by HousingeWire, January 2015

By Dominic Iannitti
President and CEO,
DocMagic, Inc.

When the Mortgage Bankers Association released the most recent MBA Quarterly Mortgage Bankers Performance Report, few industry professionals should have been surprised to learn that loan originators achieved the lowest average profit per loan since the MBA began tracking performance in 2008. Likewise, loan origination expenses were the highest recorded in any quarter since the Performance Report was created midway through 2008.

How far has loan origination profitability fallen? The average per-origination profit among independent mortgage banks and mortgage banking subsidiaries of chartered banks in 4Q 2013 weighed in at an anemic $150, according to the MBA report. That’s down from $743 per loan in the third quarter. Meanwhile, loan production expenses increased by $591, to $6,959 per loan from the previous quarter.

Certainly the drop in mortgage originations, approaching 40% for some of the nation’s largest lenders, along with the inclement weather much of the nation received earlier this year, contributed to mortgage bankers’ current financial performance. Coupled with the precipitous rise in compliance-related expenses the industry has been experiencing, the lending side of the mortgage business is feeling the squeeze. According to the MBA, lenders are earning only 7% of what they had been making just one year ago. Obviously, this is not sustainable.

Right now there is little that mortgage executives can do about the drop in loan volume aside from acquiring new business by taking it from someone else -- assuming it is even worth the modest financial return. Likewise, there’s no evidence to suggest that the regulatory compliance environment is going to get any simpler or less expensive in the future. The Consumer Financial Protection Bureau (CFPB) is still making rules and increasing the challenges of compliance, per its mandate. Compounding these challenges, much of the mortgage industry persists in using outdated methods of complying with the plethora of new rules intended to protect consumers’ financial interests.

As our business moves into this new era of low profitability, increased expenses, and intense regulatory scrutiny, virtually every mortgage executive needs to experiment with ways to increase productivity and CFPB compliance while reducing overall operating costs.

In this short article, I want to focus on just one change lenders can make to increase profits on each loan they close: managing third-parties contracted to perform CFPB-compliant loan production and quality control functions rather than performing them in-house.

Changing the way we think about compliance
Traditionally, regulatory compliance was built into the automation via business rules. Then, a quality control or assurance team at the end of the line would spot check certain loans for compliance problems. That no longer works today. That’s because checking boxes in a form -- a lot of forms -- at the center of a rules-based system, can do little to identify the intentions and motivations of persons shepherding borrowers through the mortgage application, underwriting and approval process. The old standard for underwriting was the safety and soundness of the financial institution, as evidenced by check boxes and if/then rules. The new standard is the protection of consumers’ financial interests. Where is the checkbox for that?

As rules-based underwriting becomes ever more antiquated, lenders are finding it challenging to analyze every loan coming through the pipeline. In a zero tolerance regulatory environment, spot-checking loans that fall outside a predetermined set of tolerance triggers isn’t enough. Lenders need to find ways to proactively identify and rectify problems earlier in the process if they hope to reduce costs. If all of the discussion that has led us to this point has not been effective in getting lenders to this realization, I feel confident that the current erosion of their profitability will do so.

Throwing more bodies at the situation is no solution
The first thought that may occur to lenders trapped in today’s situation might be to throw more bodies at the problem. This is a compelling solution, at first glance, because the new federal regulator can, and has already, imposed harsh penalties on firms that violate the regulations. Unfortunately, this is not a sustainable option for lenders. With only a few hundred dollars of profit per loan, they can’t afford more bodies. Staffing up isn’t a viable alternative.

Even if they could recruit, train, house and manage enough workers to guarantee compliance, the fix comes at a steep price. Mortgage lending is a cyclical business where volumes rise now only to fall later. Adding to headcount and then reducing it invites all kinds of costs, both hard and soft. The emotional turmoil that comes with downsizing alone is often not worth the cost.

Then, there are the risks to the bank’s reputation as an employment destination of choice. And there is the increase in costs associated with divesting the firm of now unneeded physical facilities, equipment, and all the sunken costs associated with the employee ramp-up. Not to mention the less obvious but equally expensive hits to employers, who must attend to unemployment claims, and potentially higher State Unemployment Insurance (SUI) tax rates, which can increase as more claims are filed.

Especially in the current economic and regulatory environment, lenders have to use automation to make compliance affordable, but if their database of record, the LOS, can’t keep up with the changes, how can they accomplish this? Put simply, they can’t. But they may be able to hand it off. This is where outsourcing selected processes and oversight responsibilities to third-party vendors enters the mix.

Finding the right partner to handle compliance
As soon as Dodd-Frank was signed into law, companies began springing up to provide compliance and quality control support to lenders. Many of these firms were started by former loan underwriters who had been displaced by automation and were now needed to solve some of the problems those automated underwriting systems allowed to happen. Others were technology firms that promised to provide QC automation that would solve the lender’s CFPB-related compliance problems.

Unfortunately, lenders did not find what they needed in this new crop of vendors. Changing rules, differences in the way lenders operate their businesses and, in some cases, incompetence rendered these vendors and their technological solutions ineffective. But that is not to say that the right partner wasn’t available. In fact, lenders are already working with them.

Very few loan origination systems come with built-in document design, preparation and delivery -- and for good reason. Technologists will tell you that it’s a full time job, keeping a good LOS up to speed and working well. Dealing with the documents is too much for them to handle. Documents are constantly changing in response to new rules, new investor requirements and new product development. Consequently, many LOSs are tightly integrated with a document preparation vendor.

Tight integration with document preparation allows the lender to send information from the LOS effortlessly to the doc prep team at any point in the process. It happens in the early stages, to ensure that the upfront disclosures are prepared correctly, delivered to the borrower in time, signed and returned. If anything in the deal changes, as often occurs, the doc prep provider re-discloses, using information provided directly from the LOS. Three days before the loan is scheduled to close, the document provider will deliver updated disclosure and related documentation to the borrower and finally, at the closing table, the final closing package is delivered.

By partnering with the doc prep provider to track the deal throughout the entire lending process, compliance becomes continual. As information is added to the file, it is validated against the document vendor’s compliance engine before documents are produced. Problems are identified, if present, and the system can stop the process in its tracks and before any documents are provided. The lender never falls out of compliance.

Today, the lender’s document preparation vendor is working alongside the originator from beginning to end. This partner sees all of the data, watches for changes and discloses those changes when they occur. The service these companies are offering today goes well beyond processing and providing documents. It can deliver a continuous audit of the data involved in the transaction. This is the perfect place for data validation, compliance checking and quality assurance to occur.

In fact, today some lenders have access to sophisticated compliance systems that check for QM, ATR, ECOA and every other rule and regulation that lenders must observe in order to originate compliant loans, all through the same compliance engine. When the price of this kind of continuous, experienced and active compliance validation is compared to maintaining an in-house staff of compliance and QC professionals, it is clear that the document preparation vendor IS the compliance partner of the future.

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About the author:
Dominic Iannitti is President and CEO of Torrance, Calif.-based DocMagic, a firm that offers fully-compliant loan document preparation, compliance, eSign and eDelivery solutions for the mortgage industry. He can be reached at don@docmagic.com.

Technology. Innovation. Service.
MBA's Annual Convention & Expo
October 19-22 | Las Vegas, NV

Stop by booth #321 or schedule a meeting to experience the magic of new Mobile Technology, Integrated Disclosure Demonstrations and New Construction Documentation. DocMagic is proud to celebrate its 25th year of continual innovation in providing end-to-end Document Production, Electronic Delivery, Execution and Compliance Solutions for the Mortgage Industry.

We're pioneering new technology!

BorrowerMobile
DocMagic's visionary mobile application for tablets and smart phones provides all of the features your Borrowers need to keep their finger on the pulse of their loan status.
■ Keeps borrowers on top of loan status in real-time
■ Lenders can communicate loan conditions instantly
■ Integrates with any loan origination software system

New Integrated Disclosure
Let us show you what we are doing to prepare for Integrated Disclosures.
■ Learn about our targeted testing beginning soon
■ Pick up an implementation timeline to better prepare yourself

Construction Loan Documentation
Construction-only and Construction-to-Perm loan programs are now available for all 50 states, District of Columbia, and the Virgin Islands.
■ Fixed-rate and ARMS Programs
■ LIBOR and T-Bill indices available
■ Accommodates either purchases or refinances

Meet us at the conference. Schedule a meeting now!

By Melanie Feliciano
ESRA Executive Board Member; and
Chief Legal Officer,
DocMagic, Inc.

I'm proud to be an executive board member of the Electronic Signature and Records Association (ESRA). Today I am sharing with you that eSignRecords2014, formerly the E-Signatures Conference, is taking place November 12-13 in New York City.

ESRA's annual conference serves as a platform for a wide variety of consumers, government entities and technology providers as well as organizations across several industries to share common goals, objective ideas, strategies and effective practices.

We will introduce a newly enriched and expanded program making this year a "must attend" event for both new and former attendees. I encourage you to join me and our fellow colleagues in the heart of Manhattan's Financial District to gain insight into emerging technologies, consumer engagement, contemporary industry practices, legal and regulatory matters, and evolving government trends.

The conference kicks off on Wednesday afternoon and concludes following a full day on Thursday. Additionally, an optional, pre-conference workshop will be held on Wednesday morning, offering an in-depth overview of e-signed records. Take a look at our information-rich agenda, which will include sessions offering CLE credits.

I look forward to seeing you in New York City, as we collectively help shape the future of eSignRecords . Last year's event sold out quickly, so please consider registering soon to ensure your participation.

Click Here to Find Out More