One of the challenges for lenders in delivering the new TILA-RESPA Integrated Disclosures to borrowers is ensuring that each borrower has read and actually understands the disclosures before they sign-off on them. Just because the new forms are electronic and borrowers can sign-off with just a click of the mouse doesn't necessarily mean they'll have better comprehension. In all likelihood, borrowers will only skim through the closing disclosure before signing, just as they've done with the HUD-1 disclosure for many years.
But what if the information in those disclosures was distilled down into a brief video that a borrower can watch from any Web-enabled device? Studies show that millennials are many times more likely to watch a video to get information about a product or service than read a brochure – and, furthermore, research shows that comprehension often increases when information is presented neatly and effectively in a video format.
A new startup, VidVerify, aims to make video part of the mortgage process. The company – which announced its official launch at the Mortgage Bankers Association's National Secondary Market Conference & Expo on May 17 – offers video technology as well as video content that can be readily integrated into the mortgage process.
Although the company says it aims to ‘modernize interactions between lenders and borrowers,’ Timothy Stern, president of VidVerify, clarified during a recent interview with MortgageOrb that VidVerify does not offer a two-way video communication platform (in other words, this is not a video conferencing solution), but rather is developing short, well-produced, easy-to-digest videos that lenders can stream to borrowers' devices to help them better understand the mortgage process and guide them through it.
Using VidVerify, lenders will be able to standardize their messaging and enhance transparency, both of which are important for meeting compliance. The platform interfaces directly with a lender's loan origination system, so no manual inputs are required. Instead, the entire process can be automated. The system's reporting feature allows lenders to track and document consumer video watching, creating a valuable audit trail and safety net against lawsuits and regulatory investigations, virtually eliminating the ‘he said, she said’ problem.
Although there is no way to verify that a borrower actually watched a video (Stern admits they could simply click ‘play’ and then go to the kitchen and make lunch), the system can track whether the video was actually played to the end. As Stern points out, there's currently no way to verify that a borrower actually read a disclosure document either: The point is, under the new regulations a lender must be able to prove that the content was delivered to the borrower, that the borrower received it, and that the borrower had the opportunity to read (or in this case view) the material, and that's what this platform does.
The videos are created in-house by VidVerify's compliance partners – attorneys who are familiar with the mortgage regulations and who are experts at crafting compliant messaging, Stern explains. In addition, the videos are tailored for specific types of mortgages and can be branded for each respective lender. What's more, each video is vetted through a lender's compliance department before being distributed via the company's online video platform.
‘[Lenders] face a growing risk of regulatory violations and borrower misunderstandings stemming from a confusing disclosure process and informal discussions with loan officers,’ Stern says. ‘The CFPB has raised the stakes with its Know Before You Owe initiative, placing the onus of consumer education on the mortgage provider.’
The new integrated disclosures rules taking effect Aug. 1 ‘will further underscore the importance of borrower communications, leaving many lenders concerned about how to deliver and explain these new disclosures to borrowers,’ Stern adds. ‘VidVerify can tackle all of these regulatory obligations seamlessly and automatically.’