How many articles have you seen over the past year about the benefits of digital mortgages? At the time of this writing, Google News turned up 130 stories about digital mortgages in a single month. Those are just stories captured by Google—there are certainly countless more, not to mention a plethora of white papers, webinars, and eBooks all focused on the topic. Who has time to digest them all?
There are many ways to go about adopting a digital mortgage strategy, and certainly reading up on the subject is a good place to start. But to be successful, there is no more important piece to the digital mortgage puzzle than having an experienced and trusted fintech partner at your side—a partner with the right blend of technology, resources, experience, and skills to fit your company’s needs and goals, and one that will take all those stories and synthesize them so they make sense to you.
What Makes a Good Partner?
A solid fintech partner is one that understands the intricacies of the digital mortgage process from all angles, from origination to pre-closing, closing, and post-closing. They also understand not only the technologies and services you need to achieve your goals, but also the needs and goals of your business partners and other relationships, so everybody is working toward the same plan.
The right partner will work with you to determine which digital processes are right for your company. For example, do they have experience in the areas of your business, whether that is conforming and nonconforming loans, or both? Will they develop a relationship with you and create a timeline for adopting a digital strategy? During the relationship, will they act as your advocate throughout the entire project, not just through the implementation stage but during the production stage and beyond?
Perhaps the most important question to ask a prospective partner is how much practical, digital experience they have. Do they have experts on staff who have developed and implemented fintech solutions for companies like yours? Do they understand digital processes and their impacts from the perspective of all life-of-loan participants? And will they educate and train your team and your partners on an ongoing basis?
Truly effective partners are constantly innovating to incorporate new technologies, as well as staying abreast of new data interchange standards, best practices, and innovations.
The Importance of SMART Docs
Perhaps the most critical attribute a digital partner must possess is a deep understanding of the impact of eNotes on all parties, throughout the life of a loan. That includes your trading partners and their trading partners, too.
A capable partner will be able to deliver documents in a standard data format, which requires access to a doc engine built entirely on SMART Docs. This is an important point, as many outsourcing providers use PDFs instead of SMART Docs, and PDFs are not nearly as efficient or accurate.
Before a borrower can electronically sign a PDF file, for example, someone must manually ‘tag’ the file to accept the borrower’s signature. PDFs can’t be read by machines with 100% accuracy, either, which means they are reviewed by humans for errors. These extra steps are inefficient and introduce opportunities for error.
A good partner will provide a complete library of SMART Docs that encompass all types of loan documents. Because SMART Docs can also be rendered in PDF, they allow you to choose XML or PDF for each doc type. They also allow you to change that mix to meet borrower and trading partner demands. While many providers concentrate on just having the note be a SMART Doc, having access to an entire library of SMART Docs enables truly digital versions of every document so they can be electronically reviewed for due diligence after they are executed.
The ideal partner will offer a wide range of mortgage services beyond eClosings. By being able to take on loan application, underwriting, and due diligence services through closing, delivery, custody, and secondary stages, a capable partner can help you better manage staffing levels, especially when there is a rapid increase or decrease in volume. If your partner offers these types of services, they should have digital capabilities imbedded into them.
Where to Start Your Search
So, where to find capable partners? Two of the best sources are the eMortgage vendor lists that are maintained by Fannie Mae and Freddie Mac.
The GSEs have conducted actual tests with the eNote delivery systems. If a vendor is on the list, that means the GSE has worked with them to ensure their technologies were developed to meet the GSEs’ requirements. While neither Fannie Mae nor Freddie Mac will endorse any vendor—they encourage companies to conduct their own due diligence when selecting a vendor—the GSEs are a great place to start.
Identifying the fintech partner that fits your needs takes time and effort. But, as Mary Poppins would say, “Well begun is half done.” Of course, learning how to “begin well” can be confusing. That’s why it’s best to choose a partner that will educate you on the concepts and possibilities. Let them keep up with the articles and white papers, customize all that information to your needs, and put all the pieces together for you. Once you do, you’ll be “well begun” and well on your way to success.