Innovating to Manage a Complex Origination Paper Trail

Lenders originate $2 trillion in U.S. residential mortgages every year. Over the last decade, new regulatory requirements have made residential loan files larger and more complex than ever. Closing packages can run hundreds of pages, including loan applications and disclosures; documents to evidence ownership, title, and liens; promissory notes and affidavits and declarations, to name just a few. These packages are sent to Document Custodians, who must maintain every piece of documentation throughout the life of a loan, and adhere to all federal regulations, retention and storage guidelines. 

The enlarged file volume and increased complexity create risk for investors. Often errors and omission are not identified until the loan is subsequently included in a secondary-market sale, securitization or financing. Loans that are missing documentation, execution or notary can be at risk of losing lien and title. If such loans are included in a transaction, typically the end investor has a right to require the seller to buy them back, with the potential to incur material losses.

Technology is evolving to address the risk inherent in antiquated manual processes. For example, SitusAMC’s proprietary emBTRUST software enables Document Custodians to manage every piece of loan data throughout its life, and satisfy program compliance requirements for safekeeping, certification, release, and reporting of loan and document status. The emBTRUST solution ensures the asset is properly supported and secured by systematizing business knowledge, automating business logic and integrating audit logs to monitor and control the line of business activity across complex internal and external relationships.

To solve the paper trail dilemma altogether, investors and Document Custodians are beginning to adopt electronic solutions, such as SitusAMC’s Electronic Vault application. These Electronic Vaults (e-vaults) store legally binding financial assets using electronic documents in place of paper. Additionally, these e-vaults can integrate with systems of record (such as emBTRUST), integrate with and support MERS transactions, and even validate ownership and authoritative copies of an eNote.

To learn more about emBTRUST, click here.