Our Blog

Get all the latest news, advice and insights from SigniaDocuments right here.

3 Reasons Why Investors Will Prefer SMART Docs

A wave of change is upon us. One of them is in how investors do business.

Recently, a significant number of lenders have adopted SMART Docs for the first time. A major driver was the COVID-19 pandemic, which placed pressure on mortgage lenders to adopt new digital processes to stay in business while social distancing.

From an industry-wide perspective, SMART Doc adoption still has a way to go before it reaches critical mass. One hurdle is the fact that investors and loan aggregators have been slow to accept SMART Docs. But there are three very big reasons why that’s likely to change. They’re as follows:

Better Loan Quality

The “SMART” in SMART Docs stands for “securable, manageable, archivable, retrievable and transferable.” SMART Docs are indeed all of these things, and are far superior than PDFs.

SMART Docs can be presented to the borrower or the investor as a normal loan document. However, SMART Docs are comprised entirely of data and contain a secure signature and a tamper seal. That makes them far less prone to errors than PDFs or imaged files—plus they contain a digital record of everything that happens to them. If there are any questions about the loan in the future—even years from now—the documents can be electronically reviewed at any point in time to find out exactly what happened and when.

Faster and More Affordable

Because SMART Docs are created and delivered as a stream of data that can be machine-read with 100% accuracy, they can be reviewed by investors and aggregators far less expensively than PDFs. When entire loan files are comprised of SMART Docs, due diligence work that used to take hours or days can now be reduced to just minutes.

After loans are closed and sold, a significant amount of time is often spent reviewing or re-underwriting loans for quality. Because SMART Docs can be accurately read electronically, all relevant loan data can be quickly and easily extracted without having to spend hours “staring and comparing” PDFs on a screen.

SMART Docs also enable aggregators of mortgage loans to more quickly and accurately repackage them into bonds based on risk to appeal to the needs of different investors.

Greater Transparency

Currently, the vast majority of eClosing and document companies only provide the note as a SMART Doc, but it is possible to originate loans that are completely made up of SMART Docs. This not only speeds up the loan production cycle and generates better loan quality. It also creates greater transparency for all parties—especially investors, who are able to verify any data on any document in an instant.

To create entire loans based on SMART Docs, however, originators need an eMortgage partner that offers a complete library of Category 1 SMART Docs and the ability to create a SMART Docs out of any document in the loan file. Right now, only SigniaDocuments can do that.

It’s only a matter of time when the entire secondary market will prefer SMART Docs, simply because the benefits are too great to ignore.

If you’re ready to transition to SMART Docs, we can help. Just give us a call at 877-7SIGNIA or email us at Info@SigniaDocs.com, and prepare to dramatically improve loan quality, speed, affordability and transparency.