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Special Reports
Document Services
Seeing Documents as a Key Part of Compliance
By Brad Finkelstein
IDAHO FALLS, ID-DocuTech Corp. here is first and foremost in the compliance business,
an executive with the company explained. Documents are a necessary part of that, he continued.
"Our job is to make sure that lenders close loans that are compliant. That
means federal, state and local laws, and it means that they can then sell that loan to an investor and they are
not going to be penalized on it," said Scott Stucky, executive vice president, sales.
"Whether we do that with paper documents, whether we do that with electronic
documents, it doesn't really matter. Our job and the reason we get paid, is because we make sure that loan is compliant"
with laws such as predatory lending laws or high-cost loan laws.
The recent settlement with Bank of America/Countrywide and a number of state attorney
generals, he said, all the loans involved had initial disclosure compliance problems.
Failure to do the initial disclosures correctly, Mr. Stucky added, can put an
originator, especially smaller originators, out of business because of the penalties and likely loan buybacks involved.
With all the recent law changes and lawsuits, it has been a busy time for DocuTech.
There are some 2,136 on state house floors as of last month that deal with mortgages.
That is what the company's legal team focuses on. It tracks the laws, charting
which ones are likely to be passed, so that if they are signed into law, DocuTech is ready to provide the new compliance
to its customers.
The company's legal staff and technology staff are about the same size, representing
about one-third of the organization each.
DocuTech takes the worry away from lenders, guaranteeing its documents are 100%
compliant. Originators can worry about just bringing more loans in, he said.
DocuTech has upgraded its ConformX product, giving a Web 2.0 look and feel, Mr.
Stucky said. It also streamlined the process based on comments made by the product's users.
"We really changed not only the way it appears visually on the screen, but
we also increased some of the efficiencies that our technology allows us to do with the way that it flows,"
he said.
In the prior versions, there were places users took "two steps forward and
one step back," he explained. Now users can just move forward through the program. ConformX was first introduced
around 2005.
Before ConformX, DocuTech had a desktop program called Web Express, and an early
Web product called DT Classic.
Unlike most other firms in this space, DocuTech creates in essence what are customized
loan packages. "We take the data from the loan origination system, our engine runs and creates the document
set on the fly. It creates a lot of advantages as far as efficiency and as far as the quality of the document set
that get delivers to end user," Mr. Stucky said.
Being a Web product, it gives 24/7 availability and users can call up documents
on any computer with an Internet connection.
One of the things is that is happening in the market is that lenders are having
less of an appetite to do electronic disclosures and initial disclosures on their own. "The real risk to lenders
is on the initial disclosure side," Mr. Stucky said. If they use the initial disclosures that are part of
many LOS, the user has to update those on their own.
But given the current legal and regulatory environment, lenders don't want to
have to worry about that anymore, he said. Wholesalers see this as a big deal. They generally redisclose following
the mortgage broker's original disclosure. He said they want to make sure they are providing accurate disclosures
and not get caught in a situation where the consumer complains they did not understand that their payment was going
to change.
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