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Executive Summary
Mortgage Workflow & Compliance Solutions
Mortgage Content Ingestion
Content Capture
Workflow and Decisioning
Reconciliation & Auditing
Compliance, Quality & Retention
User Experience & Support
Loan Acquisition
Loan Resolution
Next Steps
About MetaSource, LLC
Contents
3. Executive Summary
Mortgage originators and servicers have never before faced as much
regulatory scrutiny, even as the sub-prime debacle fades into the past.
If that wasn’t challenging enough, competition is once again intensifying
to pre-housing bubble levels.
Mortgage originators and servicers need new ways to ensure the
accuracy, completeness and compliance of loans that are economical
and help to differentiate their quality of service.
This whitepaper identifies how an array of workflow and compliance
solutions streamline and ensure quality control in step with the mortgage
origination process as well as servicing these loans over their life.
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4. Mortgage Workflow & Compliance Solutions
Components of mortgage document solutions include
the following, broken down by each of the six steps in the
mortgage origination process:
Mortgage Content Ingestion: virtual mailroom and the capture of
all incoming document types (paper and electronic)
Content Capture / Automated Processing: document
classification, OCR and database look-up validation
Workflow and Decisioning: workflow automation and
document management
Reconciliation & Auditing: workflow automation and pre-fund
mortgage compliance audits
Compliance, Quality & Retention: post-close mortgage
compliance audits, retention scheduling and document
destruction, and CFPB compliance
User Experience & Support: call center and instant document
search and retrieval
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Based on our experience, specific
benefits of mortgage workflow and
compliance solutions include:
Increasing productivity by 65%
Cutting quality control costs
by 55%
Decreasing time to fulfill customer
or CFPB servicing file audit requests
by 70%
Competitive advantages in
mortgage turnaround time and
customer service
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5. Mortgage Content Ingestion
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During this phase of the mortgage lifecycle, mortgage workflow and compliance
solutions can do the heavy lifting by capturing every type of loan document,
through every ingestion portal:
Paper: documents needing to be scanned are typically 15-20% of overall
volume received by mail
Email: increasingly prevalent; attachments need to be extracted
Mobile: very small usage today but is a big thing coming down the road as
people can take snapshots of documents and upload them just as they do
with check deposits in mobile banking
Fax: declining volumes and very poor image quality but still represents about
25% of all document volume
Secure file transfer protocol (SFTP): for a high volume of documents
3rd party applications: pulling information directly from application software
via API, including the top loan origination systems (LOS) and insurance binders
Mortgage originators are increasingly
utilizing third-party virtual mailroom
services, i.e. mailroom outsourcing.
This service includes opening,
prepping, scanning, and indexing
incoming documents and email. The
best virtual mailroom providers also sort
documents by type and ensure loan
application completeness, which is
detailed in the next step: Processing.
Mortgage workflow and compliance
solutions are created to prevent your
loan processors, underwriters and other
expensive knowledge workers from
having to serve as $20/hr. clerks by
manually processing documents and
email. Management will also no longer
wonder why processing is so slow when
throughput increases dramatically and
they have the process visibility they
never had before.
6. Content Capture
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Once all loan documentation has successfully been captured, all content is sorted
and validated in two ways: by document type and fields within each document.
Data mapping for loan portfolios is also a valuable function – see the Loan Acquisition
section near the end of this whitepaper.
Document Fields
Within each document, fields are validated for
completeness. One of our clients has defined
800 document types. This validation is possible
through integration and database look-ups
with your loan origination system via API.
Exceptions are then manually processed by
your team or outsourced to a third party.
Document Type
Each incoming document needs to be
identified by type (document type by image
or DTI-debt to income) before any routing
or processing can begin – e.g. applications,
appraisals, W2s, 4506-Ts. This is increasingly
achieved with advanced document capture
software performing auto-classification with
optical character recognition (OCR). When the
technology results in a low confidence match
for a document, domestic labor exception
handling is used for reconciliation. This
technology-focused, domestic approach offers
a new alternative to 100% manual, offshore
methods employed in India and China.
7. Workflow and Decisioning
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Following both validation steps, each document is then routed with
workflow automation software for processing based on rules established
per document type. A document checklist can be created to help ensure
all documents are collected and, if something’s missing, an alert will be
automatically sent out to the responsible party.
All mortgage documentation has to reside somewhere, so mortgage
originators need document management software, either on-premise
or in the cloud. Some prefer the cloud because they have limited IT
resources and too many on-premise systems today and would rather pay
a reasonable and predictable monthly subscription instead of incurring
another capital expense and annual maintenance.
Workflow automation software is a function of document management
software so, to get automated routing, you need both.
8. Reconciliation & Auditing
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Reconciling Incomplete & Missing Information
Inevitably, there will be documentation issues as mortgages are processed
and income and assets are validated. Out of 100 W2s received, 99 are
correct but one is wrong, incomplete, illegible, or is missing in its entirety.
This creates a workflow between you and the borrower or loan officer to
ingest, process and validate this new information.
Considering that reconciliations need to be conducted every hour or
every day to conform to a litany of requirements, it’s imperative that
this process be streamlined as much as possible. A third-party mortgage
compliance advisor can perform these reconciliations with experience in
pre-fund and post-close mortgage auditing. Thus, if you send 500 objects
through the six ingestion channels, you will know what comes in from
where, with the option to have an audit performed on each transaction
with a report sent out and/or posted to a dashboard.
Pre-Fund Auditing
Fannie Mae and Freddie Mac are increasingly pressuring originators to
conduct quality audits pre-close, on every mortgage. The vast majority
of mortgage originators are not equipped to conduct these pre-fund
QC audits internally, so it’s best to work with an experienced external
mortgage compliance advisor.
Once all documentation and information for a loan is processed, your
mortgage compliance advisor can do the audit before it closes and
determine any findings that can be corrected prior to close. This minimizes
the risk of fines and/or repurchases from Fannie Mae and Freddie Mac.
Mortgage document solutions are
designed to automate the ingestion,
processing and routing of mortgage
documentation so that your team
can do what they do best: originate
zero defect mortgages.
9. Compliance, Quality & Retention
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While pre-fund audits help to
eliminate unnecessary defects,
Fannie Mae and Freddie Mac
require that you perform a
post-close audit on 10% of
all mortgages you originate.
Federal and state government
agencies additionally require
that you retain loan documents
for up to seven years.
Post-Close Audit
Mortgage originators have two choices to conduct post-close audits: conduct them
internally or use an external mortgage compliance advisor.
For those conducting post-close audits internally, third-party software exists to help ensure
these audits are conducted as thoroughly as possible. The challenge is that Fannie Mae,
Freddie Mac and the FHA continuously change their requirements, so make sure you’re
using current software.
Those using third party mortgage compliance advisors are in a much better position
to stay on top of changing requirements and they take advantage of deep auditing
experience that they may lack internally. The challenge is that most mortgage
compliance advisors do not invite discussion of findings, so we recommend you find
one that is open to discussions and makes it easy to provide additional information and
comments to address findings.
Document Retention
Document retention is a function of document management software that automatically
applies a retention schedule to each document so that it can be stored for only as long
as it needs to be and is destroyed when the retention period expires.
Compliance
The Consumer Financal Protection Bureau (CFPB) has grabbed headlines with huge fines
levied against GE Capital ($225 million), JP Morgan Chase ($36 million) and Wells Fargo
($26 million). In addition to going after the big guys, the CFPB are increasingly targeting
smaller mortgage lenders and servicers.
In this day and age of the mortgage industry, you cannot afford to think that the CFPB is
not watching you as they are. The best defense against the CFPB is to be proactive about
being compliant and evaluating your business practices with a compliance consultant.
10. User Experience & Support
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Having all loan documentation electronically and in a single document
management repository is the first step. Search capability within document
management software is the second. Combined with the information and
indexing information captured in the ingestion process, search functionality
makes documents instantly available and sharable.
Document management allows customer service reps on staff, those
outsourced to a call center, or for those who purchase and service mortgages
to answer mortgagee questions faster, and on the first call. This also allows those
conducting a future internal or external audit to search and retrieve whatever
documentation they need without any additional assistance.
11. Loan Acquisition
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Loan Portfolio Quality
It’s not uncommon for up to 15% of mortgages to have missing
information, discrepancies and errors. Auditing loan portfolio
quality ensures that you know the precise degree of quality for
that you wish to purchase.
For example, if you intend to purchase a loan portfolio of 1,000
mortgages, hundreds of fields from a sample of these loans
can be audited during the 30-60 day review period by an
external mortgage compliance advisor. This will determine what
information is missing and identify the overall mortgage quality
level and degree of fine/repurchase risk from Fannie Mae and
Freddie Mac.
Data Mapping
Establishing accurate data mapping is crucial when transferring
loans from one mortgage servicer to another. Ingesting and
verifying data fields from loan documents originated elsewhere
can be tedious and risky usually because different organizations
use different terminologies. Data mapping can assist you by
automatically renaming mismatched data fields so they correctly
map to yours.
For example, if you purchase 1,000 loans but need to rename
any document type, like “appraisal,” data mapping can do this
translation automatically for every loan in the portfolio.
For loan portfolios and servicers purchasing
mortgages, there are two services you
should be aware of: evaluation of loan
portfolio quality (and gaps) and automatic
mapping of data between their loan
management system and yours.
12. Loan Resolution
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Default/Loss Mitigation
Considering that 5% of all mortgages on average go through
default or loss mitigation, loan servicers need document capture
workflow automation to ingest new information related to this
event as well as utilize document management to store this
category of loan documentation separately from active loans.
Payoff
Another 5% of loans get paid off, so workflow automation
streamlines the process that servicers go through when sending
out tax info, escrow updates, recorded notes, and all other
documentation needed to close out the payoff, within the time
required by law.
Document capture, workflow automation
and document management software can
also streamline two additional mortgage
processes: default/loss mitigation and payoff.
13. Next Steps
11 Mortgage workflow and compliance
technology and services are
increasingly available today to
eliminate manual and error-prone
processing, to ensure compliance
and perhaps even to create a
new competitive advantage for
mortgage originators and servicers.
Contact us to learn how some combination of the
following will streamline loan origination and servicing:
Virtual mailroom outsourcing
Document scanning
Document capture software
Workflow automation software
Document management software/cloud
Pre-fund mortgage audits
Post-close mortgage audits
Call center outsourcing
Instead of tying up your knowledge workers with repetitive, low-value
tasks, mortgage companies can focus more on their core business by
using some combination of MetaSource business process management
services and software to streamline the loan origination process. We do
the heavy lifting and process massive amounts with a level of agility that
only a specialist can offer. There is no limit to the amount of information
that can be absorbed and indexed with exceptional accuracy.
MetaSource is not a loan origination outsourcing service but we instead
serve as a deeply experienced, third party resource to ensure mortgages
are done with zero defects, in as streamlined a manner as possible.
Learn More Today!
marketing@metasource.com
(888) 634-7684
www.MetaSource.com
14. About MetaSource, LLC
12 From automation to outsourcing, our mortgage workflow and compliance
solutions enable you to focus on your core business – we’ll do the rest.
MetaSource is a technology driven provider of Business Process Outsourcing
(BPO) / Business Process Management (BPM) services integrated with
Enterprise Content Management (ECM), workflow solutions and customer
experience processes to meet our clients’ goals and objectives. We service
a variety of industries for a national clientele through our global network
of PCI Level 1 / Version 3 certified, SOC / AT 101 Type II (formerly known
as SAS70) and HIPAA compliant processing centers, employing over 1,000
employees worldwide.
1900 Frost Rd, Suite 100
Bristol, PA 19007
marketing@metasource.com
(888) 634-7684
