PERSON OF THE WEEK: Paul Clifford is president of Simplifile, a software company offering a suite of collaboration, e-recording and post-closing solutions. MortgageOrb recently interviewed Clifford to learn more about why communication is becoming paramount in the mortgage closing process and how the company's collaboration platform can help mortgage lenders comply with the Consumer Financial Protection Bureau's (CFPB) new TILA-RESPA Integrated Disclosure (TRID) rules.
Q: One of the main challenges facing lenders in complying with the CFPB's new TRID rules is establishing simple, transparent and auditable communications between all parties involved in the closing process, especially title and settlement agents. How is this new level of collaboration best achieved?
Clifford: In the current regulatory environment, especially under TRID, the lender is responsible for accurate and timely delivery of key disclosures to the borrower. Historically, the lender prepared early disclosures, often without collaboration with the settlement agent, and the settlement agent carried the burden of preparing the HUD-1 settlement statement. Now, due to the strict tolerances on fees and high potential fines to the lender, most lenders are preparing the new forms (i.e., the loan estimate and closing disclosure) themselves and requiring information from the settlement agent earlier in the process.
Today, collaboration is often via phone or email and is not centralized or audited. Because lenders are on the hook for completing these forms correctly, they need stricter controls and more streamlined processes to reconcile data between their main system, the loan origination system and the settlement agent's system, the title closing system. To do this securely and effectively, an electronic portal or document-data exchange solution would be required to effectively collaborate.
Q: What are the benefits for lenders in using such a portal?
Clifford: Such a portal enables lenders to collaborate effortlessly and seamlessly – they have the ability to readily share, receive and validate documents and data with a vast network of settlement agents. It also provides visibility into settlement agent processes and provides a platform for collaborating on fee data, documents and transaction details.
This allows lenders to share changes, updates, deficiencies and statuses within one system, making it easier to audit and ensure compliance.
Once lenders can collaborate with settlement agents within one independent platform, they can complete a fully auditable and electronic system – from loan application to recording and back. Among the potential benefits are the ability to track, share, receive, and validate documents and data; share changes, updates, deficiencies and statuses; visibility into settlement agent processes; fee data sharing and reconciliation; configurable notifications and activity alerts; and complete audit trails and reporting.
With the TRID changes, it is critical to be able to connect lenders to their settlement agents to get the fee collaboration and transaction details right.
Q: Lenders are also feeling increasing pressure from investors to deliver final documents, such as the recorded documents and the final title policy. How can this new type of collaboration assist?
Clifford: With lenders now responsible for the closing process, visibility is more important than ever. An electronic portal that addresses post-closing provides the visibility lenders now need into settlement agent processes, along with the reception of recorded documents, fee data and final title policy.
Documents e-recorded through this type of portal can be instantly delivered to lenders the moment they're recorded. Among the potential benefits is the ability to view when and how documents are sent to the county; the ability to view estimated recording time, fees and transfer taxes; and the ability to track recording status and rejection reasons.
Q: How has the legal understanding of e-recording assisted with adoption?
Clifford: Thanks to laws like Uniform Electronic Transaction Act, the Electronic Signatures Act and Uniform Real Property Electronic Recording Act, a contract cannot be denied validity, legal effect or enforceability solely because it was formed using an electronic signature or an electronic record. Once the legal construct was in place, we just had to drive adoption. As you can imagine, the usage grew steadily as counties came online.
Over time, there has been much less fear and confusion over what e-recording is, and instead, more and more people embrace and advocate for the tremendous benefits that come with e-recording adoption.
Q: How is Simplifile's approach different and unique?
Clifford: First, we are independent of the lender or settlement agent systems. Integration is available for ‘lights out’ interaction, but a lender or agent can change these other systems. We also allow the lender or settlement agent to log in one place and have a one-to-many relationship instead of having to manage multiple logins, depending on the lender-settlement agent relationship for each loan.
Second, our settlement-agent relationships are second to none. We offer lenders a quick adoption because we have so many settlement agents who already know Simplifile and have confidence in us as a company and in our software. We have modeled the workflow and the look and feel of the lender solution to be similar for the new functionality, so the agents don't have a steep learning curve. Plus, our agents are in our system every day. We will also support the quick addition of new agents – so a lender can theoretically add a new agent any time.
Another key differentiator is our ability to deliver post-closing solutions. Many solutions end at the closing process – but Simplifile can continue to offer the lender visibility into what happens after the loan closes. Trailing documents continue to be a big pain point for lenders, and our solution watches the loan documents and data until the file is complete.