With TRID Beckoning, Lenders Implement Originator, Borrower Portals

(Cy Brinn is COO of VirPack, McLean, Va., a provider of document management and delivery technology to the mortgage industry. The company’s website is www.virpack.com.)  

An unintended, positive consequence of the TILA-RESPA Integrated Disclosure rule is that more lenders are deploying web portals that synchronize material changes in loan documents made at the closing table with their loan origination software. It’s a stage in the mortgage process that before TRID–and its new October 3 deadline–was not a high priority of many mortgage executives.  

TRID has served as a catalyst for development of secure originator and borrower portals that can track the loan file and the documents in the loan file, from the initial inquiry stage through closing and beyond. An effectively engineered portal will track all document versions and edits made to each document as well as the status of conditions, and loan status within the lender’s loan origination system in real time. Given these capabilities and the increased risk of significant financial penalties, web document portals are proving to be an indispensable tool for smart mortgage lenders.   

Use of a borrower portal or originator portal ensures that the lender is automatically made aware of new loan applications and related documents. Portals that are integrated with full featured document management and delivery systems also track and store each version of each document creating a comprehensive audit trail and archival capability.   

The process of gathering documents from borrowers, including subsequent versions of each document if they have changes or too much time has passed during the origination process, for instance, is simplified and secure because borrowers simply enter their IDs and passwords into the secure portal. By using a secure portal loan documents containing personal financial information are not exposed to cyber-criminals via unsecure email communications.   

In the mortgage marketplace I envision after TRID takes effect, brokers will employ an originator portal, an easy-to-use, web-based site that makes it easy to gather the set of documents required to originate a particular loan type, to download them, and to quickly identify outstanding items. Brokers can access loan files at their convenience or upload loan documents and related artifacts in a secure manner directly to the lender.  

Moreover, an advanced document management and delivery system can be integrated to support an originator portal. Communication among lender staff, borrowers, brokers, closing agents and other authorized parties is secure and synchronized enabling each organization to be viewing and working from the same documents and information. Also, an electronic audit trail is created, making an audit far faster and easier than in the past.  

For consumers, the process of origination through closing is easier and faster because the borrower can simply upload documents through the borrower portal. Borrowers can securely upload or download documents, monitor loan status and exchange secure messages with the lender. An effective borrower portal will enable the borrower to see exactly what documents have been provided and what documents they are still required to provide. Gone are the multiparty emails and phone calls and confusion that periodically arises among the loan officer, broker, processor, underwriter, borrower and real estate agents.  

For instance, when documents are uploaded into the borrower’s file, lender staff are immediately notified, so they can review the documents and keep the lending process on track–and their firm in compliance. Technology-savvy lenders that are already using borrower portals have been able to eliminate using lender staff time to take phone calls or respond to emails.  

Given the nature of the mortgage business, it is quite common for closing agents to need to make last minute changes to loan documents but prior to the advent of document portals there was no fail-safe method for lenders to ensure that the changes were made to the data in their loan origination software. The result was two different sets of data for the same loan. That may have been good enough in the past but that approach is unlikely to satisfy the CFPB and may result in buybacks and other penalties if material changes are made and the lender does not comply with the regulatory requirements.  

Waiting for changes in documents and manually updating them is a luxury lenders simply can’t afford in an environment where regulations, such as TRID, threaten their businesses. Web portals bring the mortgage industry one step closer to the goal of zero-defect mortgages from the time the application is taken until the loan closes. This technology is already playing a significant role in preventing material inaccuracies from appearing in loan files, which was a factor in the mortgage meltdown. It was, at least in part, responsible for bringing an unparalleled level of regulatory scrutiny and innovations that make compliance easier, faster and cheaper.  

The effort to comply with TRID is a significant challenge, one lenders are grappling with, and that many lenders still have to address. Smart lending executives appreciate that web portals are essential to create a loan origination process that generates high levels of borrower and origination staff satisfaction, while decreasing compliance risk and increasing overall origination efficiency.  The focus on accurate documents and data, timely disclosure, with a comprehensive audit trail, has made web portals an indispensable and essential tool for competitive mortgage lenders to use.   

Few mortgage executives deny the importance of having the most recent version of borrower and loan documents and the latest data from those documents. But the difficulty lenders faced was to find a technology platform that would ensure that data is accurate, current, and maintained throughout the process in an automated, cost effective manner. Fortunately effective document management and delivery systems with integrated borrower and originator portals, such as VirPack’s DMDS, now exist to solve the document management challenge for mortgage lenders.  

(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor does it connote an endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions; articles and/or Q/A inquiries should be sent to Mike Sorohan, editor, at msorohan@mortgagebankers.org.)