Paperless Mortgages May Be the Key to Compliance

Article excerpt

Byline: John Adams

You generally have to take surveys conducted by tech companies with a grain of salt, given the mission of the research sponsors. But there were some findings in Xerox (XRX)'s eighth annual "Path to Paperless" survey that are eye catching, since they reveal discernible anxiety about mortgage regulations that's impacting the pace of innovation.

Xerox's findings on the growth of automated closings demonstrates robust adoption. More than 43 percent of the lenders believe that more than half of all loans will be closed electronically within the next four years, up from 28 percent who believed that in 2011. More notable is the 90 percent of origination, underwriting, archiving, investing/funding and servicing professionals who cited access to an audit trail as an important benefit of going "paperless"; and the 88 percent who consider how well a "paper reducing" tech product supports compliance when shopping for a solution.

"If you look at the last couple of years there's been a lot of turmoila[bar]you need to be accountable. The survey revealed [lenders] are under pressure to comply with standards," says Nancy Allen, vice president and general manager for Xerox Mortgage Services.

Mortgage laws, regulations and standards are evolving in a direction toward tighter lending controls, broader and more detailed disclosures and more standardized methods of delivering information to consumers, investors and regulators. "Lenders want an audit trail, and help in disclosures to borrowers," says Allen.

Mortgage regulations abound. A partial list of regulations in progress includes the Federal Housing Finance Agency's Uniform Mortgage Data Program, which increases electronic data delivery of documents to the government sponsored enterprises (Fannie Mae and Freddie Mac) for loans and appraisals. As part of that program, lenders faced a deadline this summer to deliver loans consistent with the Uniform Loan Delivery Dataset (ULDD), which leverages the Mortgage Industry Standards Maintenance Organization (MISMO) Version 3.0 standard

Additionally, the GSEs plan to further tighten standards for some groups of homebuyers and the Dodd-Frank law will include more mandates to expand disclosure requirements as part of the Truth in Lending Act and the Real Estate Settlement Procedures Act (RESPA), the laws that broadly govern mortgage lending in the U.S.

Adhering to these rules requires more data , documentation and document delivery, as well as agility, since new mortgage regulations are subject to almost constant change. …