Tim Stern has been keeping busy since he and his brother Scott sold the Lenders One mortgage cooperative they co-founded to Altisource in 2010.
His new company, VidVerify, produces a series of videos that explain and educate borrowers on the various milestones of the mortgage process, while providing lenders with a consistent and transparent process for ensuring regulatory compliance.
Regulators are placing heightened scrutiny on compliance with consumer disclosure policies throughout the origination process. The management team at St. Louis-based VidVerify saw a need for lenders to prove that to examiners.
It is important for mortgage companies to standardize the information and the dialogue that the borrowers receive during the loan process; however, large companies with originators around the country really have no way of knowing what those LOs are telling customers, Stern said.
So VidVerify worked with the law firm of Offit Kurman as well as mortgage company compliance officers to create the video content. The service, launched at the beginning of this year, includes a library of more than 120 videos that can be sent to consumers. The videos typically run from 30 seconds to four minutes. Each explains the milestone the customer hits, how that affects them and what that means for the loan process.
There is connectivity to the lender's loan origination system so "when the borrower hits a particular milestone, they get a notification that they've got a video waiting for them at VidVerify. When they log on they can view that video that explains whatever important information that needs to be conveyed to them," Stern said.
In the wake of the mortgage crisis there were many borrowers who claimed that their lenders did not tell them of all of a loan's terms. The only proof mortgage companies had was signed disclosures, which are looked at skeptically, Stern said.
"We know that nobody reads them, nobody understands them even though they are signed. They're not a very good indicator that mortgage companies have done the proper disclosure," he continued.
So the system looks to provide lenders proof that will hold up when regulators come in to audit files.
For St. Louis-based Delmar Financial, using VidVerify gives it a "compliance edge," said Todd Solomon, an owner and senior vice president.
Rather than having to worry about consumers who say they were not notified about certain aspects of their loan, "we could see the videos that they've watched and we know that they've watched them. That helps us with compliance issues and in this era, compliance is becoming a mountain of responsibilities that lenders need to keep up with," he said.
His sales staff likes the fact they can customize their own videos. They believe they have a competitive edge because those videos provide consumers, especially first-time home buyers, with a better understanding of what is happening. People are very visual, so even though the originator explains the information, these videos help to reinforce it, Solomon said.
It "holds their hands through the process," plus the videos provide "good preparation for what going to come next," he added.
Delmar's sales team is able to create their own videos, including a good bye video to send when the loan closes, where they can thank the customer and ask for referrals, said Solomon. The sales staff is also creating videos to be used for client retention.
Delmar knows its clients are being "well informed" about the origination process, Solomon said.
VidVerify didn't start out with a compliance offering. Stern's original plan was to develop technology for borrowers and loan officers to communicate via video, "but it was a little ahead of its time," particularly given that consumers may not be comfortable with the concept of video chatting yet, he said.
So approximately one year ago, the management team "pivoted" the three-year-old technology and for the rest of 2014 worked on creating the current technology platform.
The relaunched platform lets mortgage companies send information to the borrower via video, not just for disclosure but to help them understand what is going on during the origination process.
Stern and his brother Scott were two of the three founders of the Lenders One mortgage cooperative. The same challenge of standardizing messages applies to companies large and small, something Stern observed from his experience as Lenders One's president.
Videos can be customized with a lender's branding, giving even small lenders access to content with a high production value. Plus, VidVerify gives loan officer the ability to customize their messages, with review and approval functions for a lender's compliance team.
VidVerify is able to track the borrower's activity, "so that we know if they've watched a video, when they've watched it, that they've watched it to a conclusion," Stern said. "And in a worst-case scenario, where a borrower claims something wasn't explained to them, we can go back through an audit trail, show exactly what was watched and when, and show a judge or a jury what was explained to this borrower that they saw."
For borrowers and new loan officers, VidVerify is a training tool, while at the same time, it offers lenders a unique tool for compliance and marketing.
"Instead of giving your LOs carte blanche to send out emails to their past customers, this is a way to ensure compliance with any restrictions or rules around borrower communications, be it through the loan origination process or marketing," Stern said.