Collateral trailing document management—the movement, accountability, and storage of recorded security instruments, title policies, and the like—is a critical part of the mortgage post-closing equation, not to mention a required function for mortgage lenders. Late or missing trailing documents can result in investor fines, delayed payments for loan sales, or loan buybacks.
Despite these risks, document management rarely gets the attention it deserves, and neglecting it for too long can lead to chaos. The complexity in dealing with such a cumbersome process is partly what led First American Mortgage Solutions to launch CleanFile Solutions™, with the goal to assist clients in achieving “total loan quality, regulatory compliance, and file perfection from day one,” according to company President, Kevin Wall.
Take it from the post-closing professionals that prevention is better than looking for a cure. A small investment now can save time, money, and hassle later. Here’s what is needed to make your document management operations more efficient and effective:
Don’t skimp on resources.
If ensuring loan packages are complete before delivery is a priority for your business, so should the supporting efforts to make that happen. Post-closing is an area often tapped when extra hands are needed to manage volume fluctuations, but incomplete or inaccurate collateral files can pile up quickly. A dedicated staff should manage the tail end of the loan process continuously regardless of volume fluctuations.
Equally necessary are foundational resources. Allocating technical support is important, since systems inevitably need upgrading every time investor requirements change. Another must-have is adequate workspace for receiving, imaging, auditing, and shipping of all those trailing documents.
Resolve deficiencies before they become problems.
Half the battle of document management is identifying gaps, which requires knowing what to look for and being resourceful to quickly fix defects. Companies should perform this gap inspection upon receipt of a loan package to allow enough time to work with settlement agents to cure, perfect, and complete collateral files prior to investor delivery. Attempting to resolve document deficiencies at the last minute, prior to pool certification, can cause added expense.
Know what’s coming in and what’s going out.
Monitoring the flow of trailing documents requires more than an Excel spreadsheet or a few fields in a loan origination system (LOS). A comprehensive, 360-degree view of the process can greatly aid in effectively monitoring the status of documents.
Statistics are useful to management, such as the average number of days from funding to receipt, from funding to delivery, and the number of documents with defects. Invest in building a sophisticated database that automates the tracking of this information into a system of record as it flows through the process. If building a tracking system is not an option, research available applications from a technology provider.
It pays to be picky when outsourcing.
The trailing document process is strictly back-office, so outsourcing frees resources to focus on customer-facing operations and provides a competitive advantage by moving fixed costs to variable. When choosing a service provider, important considerations should include access to comprehensive and quality data, as well as trailing document proficiency and industry reputation. Ask probing questions to understand the source of the data, the depth of the organization’s title expertise, and what methods are used to obtain or replace missing policies quickly.
Although a clear-cut process, managing trailing documents is deceptively high-maintenance and complex. When left unattended for too long, incomplete or inaccurate collateral files will become an overwhelming chore, but a little attention goes a long way to make the trailing docs process a smooth-running machine, thereby mitigating risk.