Executive Says Trailing Documents Bedevil Servicers
After consecutive years of record payoff and loan boarding activity, the difficulty of managing problems associated with "trailing documents" has become abundantly clear, according to Stewart Mortgage Information senior vice president Matt Kilboy.
Because of the heavy pace of refinancing in recent years, lenders have had little time to make changes designed to improve their processes for managing loan boarding, payoff and related activities.
"Everybody has been running so fast the past few years. Now, people have time to execute the ideas they have had," Mr. Kilboy told Mortgage Servicing News.
In fact, in some cases, borrowers are refinancing before their current mortgage loan has even been recorded in county land records.
Stewart Mortgage Information has created a platform to help lenders manage post-closing services. Mortgage Management Services, that platform, includes a "trailing doc solution."
That allows lenders to delegate responsibility for tracking down and obtaining "trailing docs" to Stewart. Once Stewart receives the data file, it accepts 100% of the responsibility for delivering the trailing documents.
Typical trailing documents include recorded security instruments, title policies, assignments, mortgage insurance commitments and loan guarantees.
Mr. Kilboy believes this should be a popular service, especially after the experience of the recent refinancing boom. The issue of trailing documents usually creeps up on the industry at the tail end of a period of heavy lending, he said. Often, six to 12 months after a refinancing boom the industry finds itself dealing with a heavy burden trailing document workload.
That creates a problem, because the likelihood is that by the time trailing documents form a backlog of work, origination activity has usually slowed down, meaning the lender has seen a decline in revenue. That makes the lender reluctant to add staff to manage the trailing documents.
"That has been a painful part of the industry for everyone," he said.
But in today's low rate financing environment, lenders are so focused on loan origination activity that the issue of managing trailing documents sometimes eludes the industry's focus. Instead, resources are allocated into generating new loans.
Stewart hopes that by offering guaranteed service levels and an ability to go to any county and obtain documentation or reissue title policies, it can offer lenders a way to manage this issue. The company also has extensive experience working with Federal Housing Administration and Department of Veterans Affairs loans.
While Stewart's mortgage documents department has been handling bulk services on a project basis for several years, the company now sees an opportunity to expand by offering to manage lenders' needs on a flow basis as well, Mr. Kilboy said.
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