Whether you’re a mortgage banker, broker or federal credit union, mortgage lending requires a lot of documentation. There are all kinds of loan application documents that need dates and signatures. These are all important and help to reduce consumer and creditor risks. The concern is lenders can’t clear to close in a single day. To alleviate this, lenders mistakenly try to improve their processes from the inside out. But, several loan processes or too many silos end up delaying the loan process. What lenders need is a linear digital process, i.e., e-sign controls, quality controls, and compliance policies. These can all help to protect loan documentation.
Lenders understand that borrowers are more tech-savvy. Borrowers – especially millennial’s, expect simplicity, speed, and convenience when doing business and sharing data. They compare experiences to what they would find on Google or Amazon. Only without the paper documents. And, that’s the problem. Lenders mistakenly set up micro-services when breaking from LOS formats.
Today’s borrowers want everything convenient and electronic. Hence, having them fill out paper mortgage documents by hand is a big mistake. Humans are subject to, well, human errors. This can lead to increases in operational costs. Further, it’s easier for fraud and unscrupulous practices to occur especially if someone wants to add a few extra zeroes to their income. What’s more, paper documentation jeopardizes the borrower experience by slowing it down. Fortunately, the digital shift to electronic processes mitigates risks and optimizes borrower experiences.
Reduce Mortgage Fraud Incidents
Mortgage fraud happens every day. And, it costs lenders millions of dollars every year. In 2018, the U.S. Sentencing Commission reported 69,425 cases of mortgage fraud offenses. Additionally, last year, 1 in 123 mortgage applications included fraud.
Examples of mortgage fraud schemes include:
- A former New Jersey loan officer defrauded her bank out of millions of dollars. She conspired with others to inflate income and assets on loan applications.
- Two Florida men made false bank statements for a 392-unit condominium complex.
- The former president of an Oklahoma City mortgage company defrauded two banks. He also defrauded Fannie Mae.
To reduce fraud, mortgage companies are converting to digital dashboards and online lending. And, why not? It saves time, reduces paper clutter and lowers operational costs (fewer paper files). Additionally, storing documents or saving them online leads to errors with multiple formats. A digital system lets you download and process large volumes of documents. You can move at a faster pace, consistently, and more accurately. Furthermore, you and your team can instantly retrieve the data you need. With timely transactions, you’ll have better communication with borrowers. And, your data is right at your fingertips – or only a few clicks away.
Leverage Your Capture Capabilities
In 2018, a Fannie-Mae scheme exposed first-time buyers creating fake employers. Their goal was to validate their borrowing income. They used valid addresses and legitimate phone numbers and websites. Other fraudulent data included fake transcripts and diplomas and red flags like less than a year on their job. Their short employment times helped them avoid fraudulent income detection through the IRS.
With multi-channel capture and process automation, it’s easy to sort PDFs, emails and critical files in one system. This allows for more efficient, automated workflows and you can reduce operational costs. It reduces the need for labor-intensive verification’s and duplicate data entry mistakes. Additionally, reducing errors and missing data helps reduce compliance risks. You can meet your specific regulations and lower potential fines and financial penalties. Further, freeing staff from repetitive tasks gives them more time. They can focus on customer interactions. And, with efficient and accurate documentation, you can improve team collaborations.
Maintain Compliance with Digital Mortgage Solutions
More mortgage companies are striving to maintain a positive borrower experience. That along with maintaining compliance is top of mind. To ensure this, consumer emails, texts and PDFs must meet specific guidelines. And, it’s the Federal Financial Institutions Examination Council (FFIEC) that establishes these. They include regulations about sharing information on social media and ensuring rules adhere to the E-Sign Act.
The E-Sign Act states that consumer disclosures only occur electronically with consumer consent. For Federal Reserve Board compliance, the consumer consent process should include:
- Giving the consumer the right to receive paper copies of their documents. They also have the right to withdraw their consent to receive electronic records.
- Letting the consumer know the limit of their consent for electronic records. This should outline if consent is for single statements and transactions or everything.
- Outlining how consumers can withdraw their consent and update their contact information.
- Stating the software and hardware requirements for retrieving and accessing their records.
- Confirming that consumers provide their consent electronically for electronic records.
- Updating consumers on revisions required for access to software and hardware. The consumer then has to give consumer affirmative consent to access electronic records.
Shift to a Fully-Automated Mortgage Service
To enhance borrower experiences and maintain compliance, adopt a fully digital mortgage solution. This new generation of borrowers is tech-savvy. They demand online transactions and instant access to loan documents and payment information. A digital experience can shrink the timeline for funding and it’s convenient. Digital platforms seamlessly integrate with or replace your existing system. With it, you can raise borrower retention. With faster data captures, single access points let you quickly retrieve your data. And, you won’t have to switch screens or software. With a competitive advantage, you can cross-sell products, maximize growth and scale.
Are you ready to switch from conventional to digital mortgage service? Don’t go at it alone. Let Mortgage Defense, Inc. help.
Mortgage Defense, Inc. works with small to mid-sized mortgage bankers, mortgage brokers and federal credit unions. We provide expert witness testimony on mortgage fraud cases. With cost-effective compliance solutions, we can help you remain compliant, viable and competitive. Contact us today!