By Tim Anderson

For years a core group of us has been telling the industry that it’s time to get the paper out of our systems. We’ve performed studies that show paper is more expensive, that it takes more time to process, is usually missing pages or signatures, or gets lost. It took the foreclosure crisis to really bring home to the industry the negative implications of lost or incomplete documents. After billions of dollars in settlements to federal regulators and attorneys, it looks like our industry is finally ready to say goodbye to paper forever, or at least a majority of it.

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:

In this edition of the DocMagic Moment, Ron discusses the efficiency of sending upfront disclosures electronically to your borrowers to speed up the document process. Ron also talks about recent press of Fifth Third Bank approving DocMagic as an eDelivery and eSignature vendor.
Listen Now: [audio http://www.docmagic.com/media/download/podcasts/2013/DocMagic-2013wk24.mp3]

Press Release
Lenders that sell their production to the bank can now use DocMagic for eDisclosure, eSign

DocMagic, Inc., the leading provider of fully-compliant loan document preparation, compliance and eDelivery solutions for the mortgage industry, announced today that it has been approved by Fifth Third Mortgage Company, a subsidiary of Fifth Third Bank, as an eDelivery and eSignature vendor for correspondent lenders who sell their production to the bank.

“We’re delighted by this approval and expect this to open up potential relationships between our existing clients and Fifth Third’s correspondent division,” said Tim Anderson, director of eServices for DocMagic. “This will also create opportunities for existing Fifth Third correspondents to take advantage of DocMagic’s free eSign technology and our industry-leading compliance services.”

Interview with Dominic Iannitti, President and CEO, DocMagic, Inc.

New compliance requirements don’t typically inspire the most innovative technology enhancements in the mortgage industry. But the upcoming overhaul of borrower disclosure forms has created an opportunity to re-engineer the way lenders and title companies execute mortgage closings, according to Document Systems Inc. CEO Dominic Iannitti.

The Consumer Financial Protection Bureau’s proposal to combine the final Truth in Lending Act disclosure and HUD-1 settlement statement into one document also includes a provision requiring delivery of this new “Closing Disclosure” three days prior to loan closing—which Iannitti says opens the door to provide additional disclosures at the same time.

“We’re seeing this particular new chapter in the workflow as being a great opportunity to deliver more of the closing documents upfront, perhaps even allowing for a complete review at that same three-day mark,” he said.

Efficient technology can avert delays as disclosure rules change

Following the housing crisis, disclosure issues have been brought to the forefront and tackled by regulatory changes. As a result, mortgage professionals have been adjusting their procedures to ensure that their businesses comply with current requirements. With more disclosure changes in the pipeline, now is the time for mortgage originators and lenders to review if their technology is adequate to deal with potential changes.

This past November, the Consumer Financial Protection Bureau (CFPB) closed the comment period on a proposal that introduces an integrated disclosure rule to replace disclosure forms currently required by the Truth in Lending Act and the Real Estate Settlement Procedures Act (RESPA). It’s not clear when the final rule will be published, but there are expectations that it will be this year.

When these changes take effect, mortgage professionals should ensure that they have the proper technology in place to comply with new disclosure requirements. If the new rule goes into effect as it is written today, many changes will take place, and most significant will be the three-business-day closing-disclosure rule. This rule requires lenders to disclose the final closing cost through a new closing- disclosure form at least three business days before borrowers close on the loan.

Many in the industry are wary of the potential closing delays associated with the implementation of this new rule. Regardless of whether or not these concerns are warranted, mortgage professionals must focus on how to comply in a manner that benefits consumers — without unduly disrupting the normal flow of businesses.

RESPA and TILA regulations require that initial disclosures be delivered or placed in the mail no later than three business days after the lender receives the borrower's written application. Satisfying this requirement can be a labor-intensive endeavor requiring paper, toner, postage fees and late night runs to the post office. Moreover, preparation delivery, signatures and return can take time and delay the origination process.

DocMagic has the technology to safely deliver compliant disclosure into the hands of your borrowers in seconds.

In this webinar learn how the MDIA impacts the loan origination process and how electronic delivery and acknowledgment provides simple resolution.