Integrating Mortgage Disclosures With Income Verification
1. e-delivery | e-signature | e-collaboration | e-workflow | e-business
Integrating mortgage disclosures with
income verification using the 4506-T
What you need to know
03/13/13
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:
http://www.linkedin.com/company/elynx
eLynx Twitter: @eLynx_Buzz
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4. IRS eSignature Requirements
Authentication
Consent
Electronic Signature
Tamper proof seal
Non repudiation
Document Retention
Who When Where What
Quality Check
Summary – complies with ESIGN and UETA legislation, most lenders
using electronic methods in other lines of business, almost all
consumer-oriented industries have adopted eSignature technology
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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
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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
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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
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8. New Alternatives
If 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
loans
Your options are:
Collect eSignatures on a 4506-T (basic)
Full service disclosure fulfillment (premium)
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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
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10. Integrated Disclosure Fulfillment
Lender eLynx Consumer IRS Servicing Center
Disclosures Disclosures
Signed Docs Signed Docs
Application & 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
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11. Let’s See it in Action
Electronically signing a 4506-T as part of a mortgage disclosure
package….
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13. Benefits of Integrated Workflow
Operational 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
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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
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15. More Information
www.elynx.com
Summary of questions and answers provided:
– eLynx LinkedIn: http://www.linkedin.com/company/elynx
– eLynx Twitter: @eLynx_Buzz
Your eLynx account manager
– sales@elynx.com
– 800.466.5969
Michael Pelfrey
– mp@elynx.com
– Twitter: @pelfrey
– 916.271.1705
Laura Venerable
– lvenerable@elynx.com
– Twitter: @lauravenerable
– 513.612.5950
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Notas do Editor
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.