Daily Briefing Weekend Edition

Why Moving From Documents to Data Matters

By Anthony Garritano

As the mortgage industry looks to be both more efficient and compliant, moving from a process dictated by error-prone paper vs. fool-proof data is a viable strategy, but most are confused about the best way to adopt this technology. "The industry is really focused on moving documents to electronic form," said Roger Gudobba, chief strategy officer at compliance and document vendor Compliance Systems Inc., Grand Rapids, Mich. "However, it's not just about creating images of forms, there has to be intelligence. Lenders want to have a document that they can actually do things with and not just view.

"What it boils down to is the loan workflow," stressed Mr. Gudobba. "You'll have a system with both dates and triggers. For example, the system will know that another appraisal has to be drawn if a loan isn't closed by a certain date and that will be done electronically."

The answer is to move to a dynamic document that is created based on actual data and not a standard form. This allows for a more trusted process where data capture and recognition is easily accomplished.

Document recognition technology has progressed so that it is now possible for computers to recognize and interpret the content of an image-based document. A natural application of this advanced technology is the capturing of data from dynamic documents.

Documents are considered "dynamic" if they contain similar data elements but have varying page layouts. Dynamic document processing has the potential to revolutionize the document and data capture industry. Users will be liberated from the chores of locating and entering data from documents. It is now possible to create a comprehensive data capture product that will automatically scan, sort, batch, extract data, index, store, retrieve and route all the business forms passing through an enterprise. "The reason dynamic documents are important is because the data is driving the selection and creation of the documents," explained Mr. Gudobba. "Also, the data within the document is dynamic so there aren't challenges when fitting the data in the white spaces on the document. Surely, there will be a continued increase in e-notes being delivered to Fannie and Freddie. This is one way to make a better process there.

"It's apparent now, given the crisis, that everyone is trying to push the loan onto someone else. Dynamic documents make for a better process because once the data and rules are established you have consistency. It's about recognizing the data needed to perfect the transaction and the documents just support the data, not the other way around."

Dynamic document technology also allows for the number of documents needed in a mortgage transaction to be decreased, thus resulting in a thinner loan file overall. "Typically document vendors provide a unique document for every instance," noted Mr. Gudobba. "In the case of the note there might be state variations, so they were created as separate documents. The challenge was mapping the data to the documents and the amount of quality control needed.

"With dynamic documents the data recognizes the variations and creates just those documents needed. This also reduces the number of custom documents needed. Why? With dynamic documents you decrease the number of custom documents because the need for the added information on a custom document is recognized by rules so it's included automatically without needing a separate document.

"And the industry is ready for this technology," concluded Mr. Gudobba. "For example, one problem with disclosures is identifying the signature field. A dynamic document solves that problem. This will facilitate the move to e-signatures because it's dynamically created and easily identified. It is time for the mortgage industry to embrace change. Technology will be the enabler for that change."