TheMReport

28 | TH E M R EP O RT FEATURE Without technology, underwrit- ers face the arduous and error- prone task of manually entering data into a spreadsheet, calculator, or loan origination systems (LOS) before they can calculate the numerous financial ratios—like debt-to-income, for example—used in the loan evaluation process. Any mistakes made while reenter- ing data into evaluation systems could lead to bad underwriting decisions, which can be very costly to lenders, negatively affect their ability to sell these loans to investors, or even worse, lead to loan buy-backs. Using ADE, underwriters save time and elimi- nate errors by leveraging technol- ogy that provides a standardized, repeatable process—something auditors require. Automating the Closing Process A utomation also provides huge benefits to the closing process, especially in the current regulation-rich environment. This brings us back to TRID. The right technology can help here, too. In a post-TRID world, closing person- nel must be able to communicate and exchange information seam- lessly and securely with settlement agents. And, as many of us have experienced, lenders lose valuable time trying to resolve issues with loans in time-draining ways, as ef - ficient collaboration is impossible to achieve by exchanging emails and searching through email threads for documents or information. This problem is magnified in today's highly regulated environment, as efficient collaboration with partners and service providers is critical to ensuring compliance. The right technology solution gives a closing department a secure digital workspace where they can gather, prepare, and validate fee information for the final CD that is now 100-percent the lender's responsibility. Fee data from a preliminary CD is automati - cally populated on an electronic worksheet, organized by tolerance categories, and in a format that matches an actual CD. Within an electronic fee sheet, lenders' closers are able to update fees, add com - ments about specific line items, and invite settlement partners to collaborate on the fee data for use in the CD. Fees that fall outside of established tolerances are automati - cally highlighted, and all changes to fees are also indicated. Settlement agents are then noti- fied via email that a settlement request is ready for review, and once signed in to the portal, they can view the fee sheet, exchange comments and questions with the lender, and submit fee modifica - tions. Once the lender finalizes fees, the CD can be ordered from a document preparation provider directly from the closing solution. This secure, electronic workspace speeds the closing process by enabling efficient collaboration on fees, giving the lender the final word on fees, and providing them with total control over creation of the final Closing Disclosure. Additionally, since all fees are reviewed and validated from within this electronic workspace, the CD itself is not being passed between parties, so the risk of in - advertently presenting the wrong CD to the borrower is eliminated. Only one, approved CD is created once the lender approves all fees. Automation in Auditing, QC, and Post-closing T his solution also maintains an audit trail of all versions of CDs and all fee changes, indicating what changes were made and by whom—critical information in the event of an audit. Efficient collaboration helps resolve issues faster, shaving more valuable time off the loan cycle. And, all communications and actions in the secure workspace are included in a comprehensive audit log, which aids with compliance. Automation also speeds the quality control step. Because of the costly and time-consuming nature of manual quality checks, lenders typically send only a small fraction of loans through a quality control process, even with today's mounting regulatory oversight. Quality control is typically performed by in-house staff or an outsourced third party late in the origination process—sometimes even after a loan closes. This dras - tically reduces the ability to take cost-effective corrective actions and leaves the lender vulnerable to compliance risks. With a more automated approach, quality con - trol moves to the front of the loan process, and it becomes feasible for lenders to perform quality control for 100 percent of loans— just not a small sample. Overall, automation also offers enormous benefits in the post- closing step. It's typical for a post- closing function to manually work through a post-closing checklist that might contain hundreds of items that require verification. This is a labor-intensive, time- consuming, costly process in which errors are common. The right technology is able to automate most, if not all, of the checklist items to accelerate the post-closing process and eliminate manual errors. By leveraging the automated data extraction technology (ADE) mentioned earlier, data can be extracted from documents re - quired to complete the post-closing checklist, and any items that "fail" validation are highlighted for investigation. This exception-based process ensures that personnel are devoting time to items that need individual attention, while the vast majority of checklist items are veri - fied in seconds, cutting the time in post-closing by 80 percent or more. More Labor is Not the Answer T he mortgage industry has undergone transformational change in recent years, and lenders are challenged with accelerating time-to-close and ensuring compliance while keeping loan production costs in check. Although adding labor may seem like a sound approach to handling compliance issues, the additional labor is a major contributor to rising costs. Only technology is able to deliver the results lenders need to stay competitive. By implementing the right mortgage technology, lenders are able to automate key steps in the loan production cycle, from onboarding to post-closing, reduc - ing up to 80 percent of the labor required at each step. And, by automating the process, lenders speed turn times, ensure compli - ance, and dramatically reduce total loan production costs. As loan production costs continue to increase—with rising labor costs a big component of that increase— smart lenders are embracing technology to increase profits and gain a competitive edge. SANJEEV MALANEY is Founder and CEO of Capsilon Corporation, a provider of comprehensive cloud-based document and data management solutions that enable mortgage lenders, investors and servicers to increase productivity and lower costs while still ensuring compliance. For more information, visit www.capsilon.com. Only technology is able to deliver the results lenders need to stay competitive.

• Cover