Integrating Mortgage Disclosures With Income Verification


Published on

  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide
  • As early as 2008/2009, many IVES vendors began recommending eSignatures to the IRSMBA began advocating in early 2010, formed the 4506-T workgroup in the ResTech forumWorkgroup started meeting in Jan 2011, developing recommendations for framework and requirementsJuly 2011 – Mar 2012, IRS conducted pilot study with several vendors and lenders, which was successfulJan 2013 IRS begins accepting electronic signatures on the 4506-TAuthentication – no particular method prescribed.Consent – can be very simple for this process: I consent to use an electronic signature to sign the authorization for the release of my tax records.Electronic signature – can be click to sign, check, entering of name, or use of peripheral device. Includes some quality checks such as matching name and signature, signature within 120 daysTamper proof seal – available from a variety of sources, proves that the electronic record was not changed after it was signed.Non repudiation – audit log, captures who, what and when of the electronic signingDocument retention – 2 yearsQuality check – monthly third-party audit, evaluates every 125 record. Results reported annually to IRS.
  • eSigning the 4506-T is very useful and has many benefits, but what it does is apply technology to a business process that was already fractured and inefficient.4506-T was holdup for underwriting decisioning. Could not get off paper until now. Artificially adds 5-10 days to process loan.Natural tendency is to rush out and fix this. But there are some learnings you need to know.
  • Percentages are the difference between each types occurrence in the general population vs. their occurrence in the population of closed loans.Small percentages on this chart indicate large differences in closing rate.E Average = +3.5; Paper Average +.5; Mixed Average = -5Talking Points:The percentages on the left is the percentage difference between the close rate and the occurrence rate. For example, in July All E loans were 60% of the general population of all the loans. However 64% of the closed loans came through the All E channel. That difference (64-60) is where the point comes from. Overall this allows you to examine the trends on closing within each channel. You can see that All E has a slight positive effect on pull through. All Paper is mixed positive and negative, but if you average the line it’ll be about flat at 0. Mixed is the interesting one. It was negative for every month of the year. Normally you’d expect some fluctuation and at least one outlier month that was positive but that didn’t happen. If you think about customer communication and behavior you can begin to understand why this might be – first you get something via electronic, then a mail, then another electronic – it can lead to borrower confusion. As we’ll see in the next slide not only is mixing a bad idea but sending out the first package non-electronic is also a bad idea.How this data was derived:The overall distributions of all loans, regardless of if they close or not, was calculated for each channelThe overall distributions of only loans that closed was determined for each channel The difference was then computed. This can be described as the propensity for channel to affect whether the loan closes.
  • Single document set solutionsFractures workflow, negative effect on pull through and cycle timeAny savings for the project is offset by the negative KPI’sMultiple vendors for each doc type (appraisals, 4506-T, disclosures, etc)Non-Integrated Print FulfillmentHurts electronic adoption rates, rework and creates extra cycles Compliance and audit difficult to track and gaps may existeDelivery and Customer Experience are not central to the project designNot a core competency of most vendorsCannot keep up with innovation and lender demandDisrupts borrower experience when technology refresh occursTechnology focused instead of Process AlignedDisparate processes spawn incomplete and fractured solutionsTend to result in weak adoption and very poor word of mouthShort term goals vs Long Term KPILong term vision of lender is typically not identified or supportedPoor management of adoption and performance metrics that support the project beyond initial deployment
  • Talked to customers – what do you want? Here’s what we heard.Solution can be implemented without a lot of resourceseLynx has dual service offering: Keep current IVES vendor, eSignature into current disclosure volumePremium – full embed processing of 4506-T into disclosure process using pre-existing eLynx connections
  • Application of eSignature technology allows the 4506-T to be included in the mortgage disclosure package.Could send just 4506-T or full disclosure set to us. Delivery, get it signed and returned. Hand this to your existing IVES Least disruptive, but there are considerations for this strategy.
  • To solve these problems, eLynx has created a premium 4506-T service that allows lenders to embed the 4506-T into a mortgage disclosure, and then receive the corresponding tax transcripts as part of the normal return service.eLynx is a registered IVES participant.
  • Let’s show you what this looks like.Next generation customer experience – Inbox. Integrated portal for customer interaction. Build for enterprise application, not just isolated process.
  • Customer convenience is key to the relationship. Both print and fax are integrated into the process.Important, as you culturally make move to electronic, support with transitionary technologies. Drive behavior through single channel.
  • Integrating Mortgage Disclosures With Income Verification

    1. 1. e-delivery | e-signature | e-collaboration | e-workflow | e-businessIntegrating mortgage disclosures withincome verification using the 4506-TWhat you need to know 03/13/13
    2. 2. Agenda IRS eSigning requirements Existing challenges Integrating 4506-Ts with mortgage disclosures Q&A 2
    3. 3. We Want To Hear From You Join the conversation: – Submit questions online using the Questions area in right panel – Make sure to grab key takeaways and get questions answered via Twitter. Tweet using: #e4506T – Summary of questions and answers provided:  eLynx LinkedIn:  eLynx Twitter: @eLynx_Buzz 3
    4. 4. IRS eSignature Requirements Authentication Consent Electronic Signature Tamper proof seal Non repudiation Document Retention Who When Where What Quality CheckSummary – complies with ESIGN and UETA legislation, most lendersusing electronic methods in other lines of business, almost allconsumer-oriented industries have adopted eSignature technology 4
    5. 5. Existing Workflow Challenges Lender Lender / eLynx Consumer Disclosures Disclosures Signed Docs Signed Docs Disclosure Disclosure Application Fulfillment Execution Avg 4-8 days Lender IVES Vendor IRS Servicing Center Order 4506-T 4506-T 4506-T Income Decisioning Tax Transcript Fulfillment Tax Transcript Verification Avg 1-2 days Disjointed workflow – separate processes require multiple interactions with consumer Process complications – multiple vendors, data handoffs lead to slowness and potential data issues, more system integrations Complexity – managing disclosure and 4506-T results differently or manually 5
    6. 6. Achieving the Benefits of “e”… … is not as simple as it seems. When converting from “All Paper” disclosures: For “Mixed paper For “All electronic” & electronic” conversion conversion Impact on Loan Duration is - 5.8 days + 4.3 days Impact on Pull-Through is ↑ 2-6% ↓ 3-6% Successful customer fulfillment is not a “walk in the park”  Electronic adoption rates poor  Customer experience less then ideal – fractured, phishing, incomplete 6
    7. 7. Five Common Missteps Single document set solutions Disconnected print or fax fulfillment eDelivery and customer experience are not central to the design Technology focused instead of process aligned Short term goals versus long term KPIs 7
    8. 8. New AlternativesIf you are looking to: Achieve efficiency of going electronic without disruptions Deliver and sign mortgage forms using the most convenient option for consumers Streamline interactions and processing hand-offs to shorten your loan cycles Deliver mobile technology your customers expect and close more loansYour options are: Collect eSignatures on a 4506-T (basic) Full service disclosure fulfillment (premium) 8
    9. 9. Basic Workflow Lender eLynx Consumer Documents Documents Signed Docs Signed Docs Disclosure Application Fulfillment Disclosure Execution Lender generates disclosure package with 4506-T or sends 4506-T alone eLynx returns electronically signed 4506-T to lender – Signing evidence includes tamper-proof form and audit trail – Compliant with IRS eSignature technology requirements Lender works with IVES vendor to obtain tax transcripts – Lender creates order and transfers signed form and signing evidence – IVES vendor retains data for 2 years and conducts quality checks 9
    10. 10. Integrated Disclosure Fulfillment Lender eLynx Consumer IRS Servicing Center Disclosures Disclosures Signed Docs Signed DocsApplication & Disclosure Disclosure Decisioning Tax Transcript Fulfillment Execution 4506-T Income Tax Transcript Verification  4506-T integrated with disclosure fulfillment, both electronically and on paper  Tax transcript requests automated in workflow  Includes automated fax/upload options for borrower documents – W2’s, tax documents, etc  All results returned to same loan folder or file system automatically 10
    11. 11. Let’s See it in Action Electronically signing a 4506-T as part of a mortgage disclosure package…. 11
    12. 12. Integrated fulfillment channels Fax Electronic signature Mail Integrated disclosure service 12
    13. 13. Benefits of Integrated WorkflowOperational Savings Transactional Speed Consumer Experience Eliminate extra or paper  Shorten processing time  Minimize disruptions 4506-T handling costs  Reduce data quality  Provide convenience of Automate storage of issues both electronic and paper disclosure and 4506-T  Integrate documents results Reduce vendor interactions 13
    14. 14. Service Value Signed Disclosures – Available same day if processed electronically 4506-T Processing and Handling – No longer required Tax Transcripts – Available within 48 hours – Imaged and returned to same loan folder as disclosures or back to your eLynx Gateway Borrower convenience integrated into workflow with RESPA and audit compliance built in Fast start implementation options – Existing customers 2-3 weeks – New customers 8-12 weeks 14
    15. 15. More Information Summary of questions and answers provided: – eLynx LinkedIn: – eLynx Twitter: @eLynx_Buzz Your eLynx account manager – – 800.466.5969 Michael Pelfrey – – Twitter: @pelfrey – 916.271.1705 Laura Venerable – – Twitter: @lauravenerable – 513.612.5950 15