PERSON OF THE WEEK: Sanjeev Malaney is founder and CEO of Capsilon Corp., a provider of document and data management solutions that enable mortgage lenders, investors and servicers to increase productivity and lower costs while ensuring compliance. MortgageOrb recently interviewed Malaney to learn more about how the Consumer Financial Protection Bureau’s TILA-RESPA Integrated Disclosure (TRID) rule is impacting wholesale lenders’ operations, as well as how wholesale lenders can improve the broker submission process using automation.
Q: Much has been written about the TRID rule’s lack of clarity for the third-party origination (TPO) channel. What advice would you give to wholesale lenders?
Malaney: Although the TRID rule has not clarified many issues specific to the TPO channel, the focus is clear: The timing and accuracy of the loan estimate are paramount. Loan setup is a critical step in the process, and I’d advise wholesale lenders to leverage technology to optimize the broker loan submission process for speed and accuracy. In order for lenders to ensure compliance, fast, accurate loan setup is critical.
Today, most wholesale lenders rely on outdated processes and systems for TPO loan submissions. These processes, even when aided by TPO portal technology, are labor-intensive, time-consuming and error-prone.
TPO portals give brokers the ability to securely submit loan documents to lenders but do little to reduce the labor required on the part of the wholesale lender. Lenders still need to manually review what has been submitted, ensure the documents are named correctly and notify brokers of missing documents. And, the more manual the process, the greater the risk of error, especially in the rush to generate loan estimates within TRID deadlines.
Loan setup is a frustrating experience for all parties in the TPO channel – and lenders carry the responsibility for any errors. Wholesale lenders are required to pay the difference if any party underestimates fees outside TRID tolerances. Worse yet, lenders are vulnerable to regulatory penalties if accurate loan estimates are not issued within TRID deadlines.
By implementing an automated submission portal, wholesale lenders are able to accelerate accurate loan setup while minimizing labor by automating key steps in the loan submission process.
Q: How can technology help wholesale lenders improve the broker submission process?
Malaney: In short, lenders are able to save time and money by leveraging automation to improve the broker submission and loan setup processes. Ideally, the entire broker submission process would be automated with little to no manual involvement on the part of the wholesale lender.
With the right technology, brokers would access a lender’s automated submission portal to submit loan documents just as they receive them without having to rename documents to conform to a lender’s requirements – a time-consuming, error-prone process. Rather, automated document recognition technology would automatically recognize, name and index the submitted documents according to the lender’s requirements.
As mentioned earlier, today, lenders must manually review submitted documents to determine what’s missing and what’s required to complete the loan file. Then, the lender contacts the broker for the missing information, and the email chain and phone tag begin.
The right technology would automate this process, too. The technology would match the received documents to the list of required documents and automatically notify the broker of anything that still needs to be submitted or corrected. This automated process would continue until all of the required documents have been received. The lender would then be notified only when a submission is complete and ready for review, eliminating the time wasted in hunting down missing documents.
This technology enables a much more efficient process for both the lender and the broker, as brokers get immediate feedback on what is needed to complete a loan file to the lender’s requirements and the lender only begins work on a submission once it is complete.
Q: What is the benefit to the wholesale lender in adopting technology that automates the loan setup process?
Malaney: Obviously, automation dramatically reduces the labor required to assemble a complete loan file that’s ready for lender review. By eliminating the back-and-forth between the lender and the broker, lenders receive complete, high-quality loan files from brokers faster, speeding up approval turn times.
In addition, all communications between the lender and the broker are securely maintained within the automated submission portal, eliminating “lost” emails and unnecessary communications.
Beyond the labor and time saving, another clear benefit is increased satisfaction of the lender’s broker community. Because the broker doesn’t need to rename documents to conform to the lender’s requirements, and can submit them as is, the lender gains a reputation for being easy to work with.
Plus, automation eliminates labor on the part of the broker, too, and provides welcomed verification that a submission is complete. At any point in the process, the broker knows the status of the loan submission, what has been submitted and accepted, and what still needs to be done to complete the submission. This transparency also increases broker satisfaction.
Because the technology increases the satisfaction of the broker community, the lender becomes the lender of choice for brokers, driving more business.