Hyland Software's Document Management Blog

How to Keep Your Mortgage Documents Safe and Secure

// March 21st, 2011 // 1 Comment » // Financial Services, Lending // Tom Tennant

Did you happen to read The New York Time’s Bucks Blog on March 14? Blogger Jennifer Saranow Schultz ponders whether a “mortgage cloud of sorts exists” for mortgage lenders. The answer, I gathered from both the post and from reader comments, was, “Eh, kinda.”

Schultz reached out to Bank of America and Chase to see if they still handled paper applications or turned that paper into electronic documents for faster retrieval (alluding to increased customer satisfaction and a reduction in lost documents). Only Chase responded, saying it has scanned mortgage docs since 2009.

No word on how Chase handles the docs after they’re scanned, but a spokesperson says the company has a way to workflow mortgage documents and determine if a borrower’s file is missing critical pieces. And underwriters can access docs from their computer rather than by marching over to a filing cabinet.

Good stuff.

But, it would be even better if a disconnect between lenders and borrowers didn’t persist, as readers passionately commented on. Citing various financial institutions, they lamented lost mortgage documents and delays in the application process – some resulting in deals gone sour.

Delays are one thing. In some instances, you can trace that back to inefficiencies on the employee side (heavy workload, pressing priorities, extended vacation). But lost documents are quite another.

Lost documents present a security issue. If a financial institution cannot account for documents brimming with a customer’s personal information – well, that’s bad. Who has that information? Why do they have it and how will they use it? This is the kind of stuff that drives a bank’s customer service, public relations, legal department and management team nuts.

If it’s not a flat out security breach but rather the matter of an outdated and complicated filing processes, how best to retrieve the lost information? Asking the customer for duplicate paperwork – as evidence by Bucks Blog reader response – does not inspire confidence.

Many banks were early adopters of imaging technology. But, articles like this have me scratching my head. Why did they stop with scan and retrieve?

Today, enterprise content management solutions are addressing many more problems than the inefficiencies of paper. Auditability and security of documents is paramount, as is a solution that keeps pace with new and emerging industry banking regulations. An example: Payment Card Industry (PCI) compliance. Some ECM solutions are doing their part by encrypting images and index values, helping banks comply with new PCI laws.

No note, no foreclosure: The records management issue in mortgage lending

// December 21st, 2010 // 1 Comment » // Document Management, Financial Services, Lending // Tom Tennant

It’s a delay tactic that might make George Bailey proud.

Rather than walk away, homeowners facing foreclosure are asking banks to show proof they owe what the bank claims. Some lenders are failing to do so, turning a follow-the-dotted-line process into both a drawn-out court battle and a tangled, twisted paperwork nightmare.

The revelation comes via a recent USAToday article titled “Homeowners use ‘show me the note’ to fight foreclosure.” Struggling borrowers argue lenders’ alleged devil-may-care attitude during the wild days of subprime lending created a document gap that’s muddying proper mortgage ownership.

Read the article and you’ll see courts are listening to homeowners who claim shoddy document management by their mortgage lender. For lenders, that means no note, no foreclosure. Or at the very least, time to rethink that denied loan modification.

But let’s nevermind the foreclosure issue for a moment. Nevermind because it’s Christmas and no one wants to see a family lose their home. Least of all, lenders. (It’s true. I have seen broken-hearted mortgage lenders do whatever they could to keep families in their homes).

Instead, let’s look at the records management issue.

At its core, this is all about customer service – big-time customer service. Smart financial services companies understand that trust is their primary commodity. All that other stuff – free checking, online banking, retirement planning, wealth management – that’s all secondary.

If a bank wants to capture the most share of wallet possible, nurturing customers throughout their financial lifecycle, from the moment they open their first checking account through retirement and generations beyond, it has to establish a trusting relationship with the customer.

How do you do that if – whoops, sorry ­– we can’t locate your loan application, you’ll have to do it again and, geez, I hope you weren’t on any kind of deadline. Or, more realistically, you can’t quickly and securely access information for a customer whose time is limited – and patience even more so. For kicks, make that customer a $10 million commercial client.

See? Scary.

The right document and records management solution can effectively manage all documents associated with mortgage, installment or commercial loan. It can capably administer retention and destruction protocols, helping out with that old friend compliance. And information can be accessed any time, almost anywhere. Maybe even in court.

More importantly, the right enterprise content management solution can help customers like those referred to in the USAToday article by allowing lenders to see a worldview of the customer’s financial situation – and offering solutions like the Home Affordable Modification Program (HAMP).

Homeowners can apply for HAMP through their mortgage servicer. The lender collects documents (like paychecks, tax returns and so forth) and submits them through its paperless workflow process. This system can expedite the approval process by instantly routing electronic documents to the right decision maker at the right time, regardless of where they are geographically. No fax machines, interoffice mail, or overnight packages.

In the end, peace of mind for the homeowner, efficient record keeping and workflow for the lender – and trust between them both.

Is it me, or did an angel just gets its wings?

Bringing front-line lending efficiency to compliance

// December 9th, 2010 // No Comments » // Financial Services, Lending // Sam Mazzola

In the last post about back office automation, I mentioned that while the back office functions do affect the whole lending organization in one way or another, there’s an even bigger issue at hand: compliance.

It’s a topic that every employee has had to be aware of at one time or another. In fact, most employees have had to take action based on it.

What makes compliance so ubiquitous in lending? It’s because compliance simply isn’t an option for today’s financial institutions anymore. It’s a way of being. And to add to that, it’s also constantly evolving. The reality now is that the ongoing internal efforts and the cost to remain compliant can be staggering.

That last point begs the question: What is the best way to contain the cost of maintaining compliance efforts as the financial sector faces tighter regulations?

From an ECM perspective, here’s a short list of issues that I’ve seen and how they can be solved:

• Sensitive information being misplaced or put into the wrong hands.
  For most people, this is the first thing that comes to their minds about ECM and compliance: no more paper. While this is a clear benefit that’s easy to relate to, ECM’s more than just scan and retrieve these days.
• Too many systems.
  One of the major issues with achieving compliance is maintaining consistent, accurate and up-to-date information. Oftentimes, organizations fall into the “one system, one job” syndrome – they buy piecemeal parts to handle individual processes without looking at the bigger goal. When this happens, not only are the systems scattered and hard to manage – the information is, too. While ECM isn’t the cure-all, it can serve as that “hub” of information, bringing together the documents, processes and other content it owns and integrating it with the data in other systems.
• Slow responses to urgent compliance issues.
  Not every compliance issue is something that can be planned and handled two years in advance. Often enough, issues come up that need to be solved now. And that means that the systems managing the information need to be able to accommodate that change – now. This is where CIOs get passionate about needing flexible systems. They don’t want to make a tech support call. Rather, they want to be a few clicks away in their own configuration to make the changes happen. This capability is something that lending organizations need to consider when buying an ECM solution.
• Not having a standard way to push out and track employee compliance.
  Have you ever received a document from HR in your inbox about reading a policy by a certain date? Wouldn’t it be easier to have a system to do all that – not to mention track the outcomes? Certain ECM solutions offer this capability, allowing the organization by extending policies and procedures across multiple business units, and then being able to track who’s in compliance and when the acknowledgments need to be renewed based on the policy.
• No retention schedules.
  Most times, documents have to be kept for a certain amount of time, by law. But when a lending organization has a few million documents to keep track of, there’s no way that a manual retention schedule will work. ECM automates this process, making sure that a document is destroyed, or even reevaluated if there’s an extra layer of approval, at the right time to stay in compliance.

These are serious issues that lenders are dealing with today. The biggest problem, though, is that when they’re dealing with these issues, they’re not focusing on their more valuable day-to-day tasks. Therefore, ECM shouldn’t just be thought about as the way to ensure compliance with the most recent regulations. It’s also how lenders can focus on how to grow their business.

Bringing front-line lending efficiency to back office operations

// December 1st, 2010 // No Comments » // Back Office, Financial Services, Lending // Sam Mazzola

Process automation isn’t a new concept for the mortgage industry. Over time, lenders have realized that the processes – new loan and renewal – are very paper-intensive. Not to mention, there’s a lot of sending documents back and forth among lenders, support staff and underwriters.

So, naturally, they did something about it. In many cases, that something was software, a combination of document management, imaging, workflow and process management.

However, that’s where the efficiency stopped – the front-office. Lenders found the competitive advantage they were looking for, and that was enough.

Today, it’s not enough anymore.

With any advantage being a competitive one, there’s (finally) a rapidly increasing trend in taking that automation to the back-office– and with big results. In fact, at a recent presentation at the MBA’s Mortgage Operations conference, it was reported that lenders can save $2,000 per loan in those back-office, operational expenses by going paperless.

I’m usually pretty skeptical of stats, but that one stuck with me. It put the back-office benefit in the context of the front-office – exactly how it needs to be positioned to be heard.

So where is this $2,000 savings coming from?

Looking at the primary administrative functions, the ones that usually come to mind are accounting and human resources. Let’s take accounts payable. Through integrated document management and workflow, organizations have the ability to set up automated processing for purchase orders, invoices and exceptions. This significantly decreases turnaround time and allows institutions to take advantage of early payment discounts and eliminate late-payment penalties.

In human resources, it’s all about employee productivity. Much of this department’s time is spent manually performing administrative tasks such as performance evaluations, compensation plan changes and time-off requests, or more routine functions, like changing name and address data, entering vacation dates, and filing or retrieving employee records. By streamlining and automating these processes, HR employees are able to be more efficient and spend time on more critical tasks, like recruitment.

These benefits are all well and good. But lenders need to go beyond even these departmental views of the back-office. There are huge opportunities for savings in other areas, areas that almost all employees touch every day.

I have a few ideas in mind of what these areas are, but what do you think? What else is the mortgage lending business missing right now in automating the back-office?

Three steps credit unions can take to tackle the lending slump (yes, one involves document management software)

// June 1st, 2010 // No Comments » // Financial Services, Lending // Sam Mazzola

If you’ve ever worked at a credit union, you know that most of its business comes from loans. In fact, when the economy was stronger, loans accounted for approximately 85 percent of their overall asset portfolio. Now, according to those I’ve recently worked with, it’s dropped severely, down to about 65 percent.

But on the bright side, they’re usually more flexible and able to make quicker fixes than other financial institutions. To help get on the right path to relieving their lending woes, here are three tips for credit unions to consider:

1. Sharpen your expertise.
Business is slower than usual, and staffs need to find innovative ways out of the rough. It’s the perfect opportunity to get caught up on the latest trends and technologies, like document management and loan processing software. These technologies are helping credit unions solve many of the same problems you’re having. Think about attending webinars or conferences, such as The One Credit Union Conference and the NAFCU’s Annual Conference.   

2. Look internally first for opportunities to improve.
You’ve probably heard it before, but it’s worth repeating – you can’t control what’s going on outside your doors, so focus on what you can control. Now’s the time to cut out inefficient steps in processes and eliminate wasteful costs.

Many credit unions are turning to software like enterprise content management (ECM). It automatically routes loans through appropriate approvals to keep costs low and member service high. This way, employees can focus on the jobs they were hired to do, rather than putting lots of time into manual processes and chasing paper files. And just as importantly, this productivity boost is helping credit unions process more loans with fewer resources.

3. Focus on improving one area.
I recently read an article in Credit Union Journal that described how one credit union grew member business loans (MBL). They focused on just this one area, creating an indirect lending program combined with aggressive marketing and community outreach campaigns. And boy did it pay off! This Pennsylvania credit union grew its member business loans by an impressive 2,900 percent over just two years.

So at some point, you’ll have to convince the influencers and decision makers that you need to the latest in servicing software. Here are some things to keep in mind. Yes, the technology will help your credit union run more efficiently, more effectively and it will likely save you money in the not too distant future. But what it really comes down to is improving member service, and the right software from a proven vendor will deliver on that most important account. That’s a fact you can take to the…credit union.