By Melanie A. Feliciano
Chief legal officer
DocMagic Inc.
Prep Yourself for Success
grow your business with the right document-preparation provider
Finding a quality document- preparation provider can be vital to any origination business.
Mortgage brokers and originators
should be able to continually rely on
their document-preparation providers
— even as the industry and its technological needs continue to evolve.
as such, mortgage professionals
should take care when choosing providers for their businesses. First and foremost, brokers should determine which
providers offer the same loan programs
and packages that their own businesses
originate. Whether your company specializes in niche loans or conventional
loans, Federal Housing administration
(FHa) loans or U.S. Department of
agriculture (USDa) loans, a document-preparation provider’s products should
be compatible with all aspects of your
origination business.
In short, you should have confidence
in the customer-service specialists who
are attending to your company’s needs.
When it comes to working with a customer-service staff member, ask yourself several key questions:
• does the staff member answer my
questions comprehensively and
accurately?
• does the staff member know if and
when to escalate an issue to the
provider’s compliance department?
• is the staff member helping to
alleviate my workflow?
Be sure to check references in order
to validate vendors’ claims about superior customer service. The mortgage
industry can be a small world; ask your
partners or connections about a given
provider’s reputation.
Further, any excellent document-
preparation provider should have
initial disclosures and re-disclosures
are mailed in a prompt enough time
frame to comply with all pertinent poli-
cies and guidelines.
determine — among many other things
— any of the following:
• whether the loan passes the real
estate settlement procedures
Act (respA) zero or 10 percent
tolerance thresholds
• whether the loan passes the fannie
mae points and fees test
• whether re-disclosure to the borrower
is required, in the case that a loan’s
annual percentage rate (apr) exceeds
Mortgage Disclosure Improvement act
(MDIa) tolerance thresholds
an adequate auditing system should
automatically analyze your company’s
loan data, itemize all applicable audits
and then provide a report of warning-
and-error messages. In addition, the
audit system should take you directly
to the relevant data in the worksheet
and enable you to correct any warn-
ings or fatal errors — an error that
completely halts the processing of a
loan package until the error is correct.
additionally, a good auditing system
should allow you to configure the doc-
ument-preparation provider’s system
and add your own warnings and audits,
all of which could be customized to
your specific business practices.
“providers should have competent staff members
that promptly analyze and synthesize legislative
bills and adopted regulations, and make
required changes to related documents.”
For instance, do you need application packages? What about initial disclosure, adverse action, underwriting,
re-disclosure or closing-loan packages?
The best document-preparation providers should be able to meet all of your
organization’s needs, however specific
or varied they may be.
It also should be noted that some
document-preparation providers allow originators to upload their own
custom documents and disclosures in
addition to the provider’s inventory of
forms. Some providers may even allow
originators to manually delete and add
forms from a particular loan package.
although these are a few of the most
important particulars to note, they’re by
no means the only features and func-tionalities that originators should look
for when choosing a provider. If you
want to ensure a provider’s quality and
adaptability, be certain to thoroughly examine the following six aspects of that
provider’s business model.
seamless integration with all major loan-origination systems (LOS). as such,
make sure that the vendor has an integration department that can work with
your LOS and assist you with related
questions about mapping and managing your loan documents.
3. compliance
With increased statutory and regulatory
changes, mortgage loans are subject
to enhanced scrutiny from federal and
state examiners, as well as investors
buying loans. This enhanced scrutiny
can lead to more risk for originators, as
noncompliance can result in penalties,
fines or borrower refunds.
Considering this, quality document-preparation providers should act as yet
another way to ensure proper compliance. providers should have competent
staff members that promptly analyze
and synthesize legislative bills and adopted regulations, and make required
changes to related documents.
This staff should be easily accessible to ensure that any compliance-related questions are answered in a
timely fashion. an experienced team
of in-house compliance specialists and
support staff can be essential to the
health of any business, and a quality
document-preparation provider can
help give your business just that.
2. disclosure and signing
With the mortgage market quickly embracing digital delivery and communication, brokers and originators also
should consider providers that are capable of electronically delivering loan
packages, including initial disclosures
and re-disclosure.
providers also should have the capability of enabling borrowers to affix their electronic signature to loan
documents, in compliance with the
Electronic Signatures in Global and
National Commerce act (aka the
ESIGN act) and the Uniform Electronic
Transactions act. alternately, where
traditional signatures are required,
giving borrowers the ability to print,
sign and return documents automatically in the loan package can be a
great benefit, as well.
Finally, for borrowers who do not consent to the electronic delivery of loan
documents within a certain time frame,
a quality document-preparation provider
should have in-house fulfillment services. These services will ensure that
4. errors and omissions
although any good document-preparation provider should promote
thorough compliance, mistakes may still
invariably occur. In these cases, brokers
and originators should be certain that
the provider offers effective representations, warranties and remedies for any
possible compliance problem.
as such, be sure that measures would
be taken to mitigate your potential liability. For instance, in the case that your
loss is a significant one, make sure that
the document-preparation provider has
a robust errors-and-omissions policy
to compensate for noncompliant documents or data-security breaches. This
policy may reveal the difference between an excellent provider and a less-than-satisfactory provider.
6. certification
Finally, a good document-preparation
provider also will be compliant with the
Statement on Standards for attestation
Engagements (SSaE) No. 16 Type 2 attestation standard, as developed by
the auditing Standards Board of the
american Institute of Certified public
accountants. In short, this helps to assure your customers and borrowers
that their sensitive information is secure because of operational controls
implemented by the provider.
These operational controls also
can further assist with compliance, as
they allow your company to meet the
rigorous controls associated with the
Sarbanes-Oxley act.
• • •
Brokers and originators who find a doc-
ument-preparation provider that satis-
fies all of the above criteria can rest as-
sured that their provider will be a good
one. remember: Quality providers can
deliver more than just efficiency, safe-
guards and better service. Ideally, the
best providers should allow your com-
pany to evolve and grow with the indus-
try itself. •
1. customer service
It’s important for a document-preparation provider’s customer-service
department to be staffed with individuals who fulfill a number of expectations.
a provider’s customer-service staff
should be professional, knowledgeable,
communicative and prompt in its delivery of required tasks and services.
5. Audits
a quality document-preparation provider should have software that’s
equipped with tests and audits that ensure loans comply even with laws that
are not related to mortgage-loan documentation. For example, a provider
should be able to audit loan data to
Melanie A. Feliciano joined DocMagic Inc. in
October 2004 as assistant general counsel,
serving as editor-in-chief of DocMagic’s electronic compliance newsletter, The Compliance
Wizard. She also oversaw the maintenance of
DocMagic’s forms library, handled compliance matters and negotiated agreements.
In June 2010, Feliciano became DocMagic’s
chief legal officer. She received her juris
doctor degree from Georgetown University
Law Center and is licensed in California and
Texas. reach Feliciano at (800) 649-1362 or
melanie@docmagic.com.
