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Servicers Going Digital With eModifications

This piece originally appeared in the February 2022 edition of DS News magazine, online now.

Tim Anderson is President of the eMortgage Division for Evolve Mortgage Services, where he is responsible for overseeing the deployment of the company’s end-to-end digital closing platform and developing strategic partner relationships. A digital mortgage pioneer, Anderson has more than 35 years of industry experience and has held executive management positions with Pavaso, DocMagic, Docutech, Black Knight Financial Services, Stewart Title, Freddie Mac, and HomeSide Lending. He can be reached at [email protected]

What are some of the potential benefits of eModifications for servicers?
An eModification is a loan modification that is completely digital. With an eModification, the entire loan modification process—including notarizing the new loan—can all be done online paperlessly, electronically. An eModification enables servicers to process loan modifications more quickly and easily than they would under traditional antiquated, paper-based processes. Recently, eModifications have become popular as many borrowers are coming off of forbearance plans and need to resume mortgage payments. MISMO, in fact, recently created an eModification reference guide for servicers that outlines best practices on how to create, eSign, store, and deliver electronically signed loan modifications.

With every loan modification, servicers must be able to show they’ve complied with all loan delivery, acknowledgement, acceptance, and execution requirements. In other words, everything must be documented. For example, this summer, the CFPB issued new rules to ensure borrowers have plenty of time to explore their loan options before foreclosure procedures can begin.

When combined with SMARTDocs, today’s eModification technology gives servicers a simple way to provide electronic evidence of compliance that they’ve met the agency’s new rules. SMARTDocs include time and date stamps of when they received, viewed, and executed documents and automatically creates a digital audit trail to prove what they said, they did. This enables servicers to prove they’ve met deadlines and other requirements involved with a loan modification with zero effort.

Couldn’t servicers just use emails or phone logs to verify that they have met the required deadlines? What are the additional benefits provided by eMods?
Sure, they can. However, email and phone records are typically not attached to the loan file—they are kept on different systems and must be assembled to show compliance. That’s going to be extraordinarily difficult with so many borrowers looking to modify their loans as we emerge from the pandemic. SMARTDocs, on the other hand, already have all the information about where and when they were sent and who signed them embedded within them. Because eModification technology can be integrated into a servicer’s existing systems, SMARTDocs can also auto-populate the signatures to ensure they do not miss any. This is immediately available for the borrower to eSign, just minutes after the appropriate loan workout is selected. In terms of efficiency and convenience, there’s no comparison.

How do borrowers benefit from an eModification?
For one thing, eModifications do not involve any paper, so there’s no risk of the borrower misplacing loan documents, signatures, or something happening to them. Secondly, eModifications take borrowers through each step of the loan modification process and create a digital audit trail as each step is completed, so they’re much more secure and compliant. An eModification is convenient, too. The borrower can fill out all the necessary documents online via their laptop or on any digital device, no matter where they are. It’s fast, easy, safe, and secure.

How are borrowers able to bypass the in-person notarization?
With eModifications, the borrower can sign closing documents through remote online notarization, or RON, which requires no in-person interaction. Instead, the notary joins the borrower on a video conference call, reviews the documents electronically with the borrower, and witnesses the borrower’s eSignatures. The entire signing process is recorded and saved for servicer compliance. At any point up to 10 years after the modification has taken place, Fannie Mae or Freddie Mac can ask the servicer to provide proof that the signing happened as it should have. The video provides irrefutable electronic evidence.

However, not all eModification technology is the same. Many providers do not enable borrowers to sign their loan documents using a remote notary, and some don’t even use SMARTDocs. In order to take advantage of the full value from eModifications, it’s important for servicers to choose technology that includes all the components of the loan modification process, including RONs, and is capable of producing every document as a SMARTDoc. By doing so, servicers can scale easily to handle high volumes of borrower requests while producing fewer errors, creating efficiencies in the process, saving time, and, ultimately, providing a better consumer experience.

About Author: David Wharton

David Wharton, Editor-in-Chief at the Five Star Institute, is a graduate of the University of Texas at Arlington, where he received his B.A. in English and minored in Journalism. Wharton has nearly 20 years' experience in journalism and previously worked at Thomson Reuters, a multinational mass media and information firm, as Associate Content Editor, focusing on producing media content related to tax and accounting principles and government rules and regulations for accounting professionals. Wharton has an extensive and diversified portfolio of freelance material, with published contributions in both online and print media publications. He can be reached at [email protected]
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