How Computers Can Transform the Mortgage Document Management Process | 2018
Mortgage is a document-intensive business. Each mortgage involves a great deal of preliminary paperwork and additional paperwork is required for completing it. Once a mortgage process is over, years of paperwork follows until the mortgage is fully repaid. Without an excellent document management system, a mortgage business could find itself in deep trouble.
Let us look at the kinds of documents generated at different stages, and finally see how computers can transform the mortgage document management process.
Before a mortgage loan is given, the lenders have to satisfy themselves about both the borrower’s creditworthiness and the property’s value. The last mentioned item, property value, is also affected by prior charges on the property and the lender has to check the liabilities under any prior charges.
In addition to the above, a lot of preliminaries for creating a valid mortgage is also attended to at this stage.
A great deal of documents are generated during the above processes and considering that a mortgage company would be handling several loan requests at a time, it is important to keep track of all the documents without creating an unmanageable chaos.
An idea of the variety and volume of documents generated at this stage can be gleaned from the following list of standard pre-mortgage documentation.
- Credit Report
- Escrow Deposit for Taxes and Insurance
- Title Company Closing Fee Payment
- Borrower’s Attorney Fee Payment
- Lender’s Attorney Fee Payment
- Home Inspection
- Title Insurance
- Flood Determination/Life of Loan Coverage
- Homeowner’s Insurance
- Down Payment
- Loan Discount Points
- Drafting the Mortgage Deed and Incidentals
- Payment of Transfer Taxes
- Recording at County Records
- Couriering Documents
- Prepayment of Interest
Mortgage Loan Documents
Creating a valid mortgage involves additional documentation as indicated below:
- Settlement statement listing all costs and fees
- Truth in lending statement disclosing annual percentage rate
- Mortgage Note detailing the terms and conditions of the loan
- Mortgage Deed of Trust identifying the property offered as security. The deed would affirm that a charge has been created and include other essential clauses.
- Monthly payment letter listing the amounts and due dates for all payments – principal repayments and interest payments.
At this stage, there is also the problem of selecting just the right kind of mortgage deed. There are several types of mortgages with each of them having their own legalese. To avoid creating these varied kinds of documents from scratch, companies typically use standard templates tailored to each kind of mortgage.
Post Mortgage Documentation
Repayments under a mortgage loan can extend to several decades, with payments being made every month. Each payment gives rise to documentation such as payment requests, payment acknowledgments, accounting, overdue reminders and even legal documentation if payment default persists.
Using Computers for Document Management
With computers, mortgage document management can be transformed into a highly reliable system. In addition to standard templates that can be filled in easily, computer based DMS can keep track of pending documentation and pending payments, and generate timely alerts. Each account would be tracked individually so that there is no confusion that can easily occur under a paper based system.