As mortgage and capital markets become increasingly digital, most lenders, regardless of their lending strategy, will eventually need an eVaulting capability because eVaults are a requirement for moving electronic promissory notes, or eNotes, through the digital mortgage ecosystem. That’s according to Wolters Kluwer Compliance Solutions, sharing its digital lending expertise in a recently published byline, “Three Steps Lenders Should Take When Selecting an eVault Provider,” in HousingWire magazine.
“eVaults are an integral part of any end-to-end digital mortgage transformation. They enable lenders to originate and securely hold eNotes and accelerate capital market transactions,” writes Kevin Wilzbach, Director, Technology Product Management, at Wolters Kluwer Compliance Solutions. “eVaults also support an enhanced customer experience for borrowers and streamline interactions with other participants — warehouse lenders, investors, servicers, etc. — within the mortgage ecosystem.”
He points to some key considerations in selecting an eVault vendor, which starts with assessing one’s business needs and the “digital readiness” of counterparties, understanding the elements of a successful implementation, and conducting due diligence on the experience and connectivity of potential eVault partners. The evaluation includes assessing a provider’s ability to seamlessly interact with MERS, the breadth and depth of its counterparty working relationships, and its participation in all MISMO (Mortgage Industry Standards Maintenance Organization) groups, such as eMortgage, eDoc/eVault Interoperability, RON and SMARTDoc as a means of staying ahead of future requirements and an ability to work on different eVault platforms.
Wilzbach writes that a common misperception of eVaults is that they are just for the storage of eNotes and other documents, including paper documents that have been wet-signed and uploaded into the eVault as part of a hybrid transaction. “But they also must be compliant, provide a comprehensive audit trail to track various activities and actions, be seamlessly integrated with the Mortgage Electronic Registry System (MERS) eRegistry, and have the scale and connectivity to enable capital market transactions.”
“The true purpose of an eVault…is to reliably establish the person or entity to whom the single, transferrable record of the digital loan is assigned, issued or transferred,” Wilzbach says. “It provides an immutable, tamper-proof eNote that financial institutions can rely on when they pledge, sell and securitize eNotes.”
This capability, he writes, is crucial today for capital market transactions. Fannie Mae and Freddie Mac both use eVaults and encourage eNote sales. Having an eVault is a requirement for delivering eNotes to these entities— and an opportunity to increase capital market efficiencies.
“Various types of lenders may experience different advantages to using eVaults. A portfolio lender, for example, might want to add an eVault to offer eClosings and eNotes that enhance their borrower experience and help them compete more effectively against national retail lenders,” Wilzbach explains.
“As a critically important component in digital mortgage lending, it’s not a matter of if lenders adopt eVault technology, but when and how,” concludes Wilzbach. “And more importantly, how successful they are in selecting an eVault provider with a proven track record to deliver.”
HousingWire is one of the most influential sources of news and information for the U.S. mortgage and housing markets, with a readership that spans lending, servicing, investments and real estate market participants as well as financial market professionals. With more than 10 million annual unique visitors, HousingWire provides a community for mortgage and housing professionals to engage and connect.
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