IRVINE, Calif. -- By his own admission, Rick Triola has kept his company Settleware Secure Services in what he describes as "stealth mode" for the last seven years. But in late September, the company officially debuted among credit unions at the Credit Union Real Estate Network conference, and now the electronic mortgage solutions developer has taken the wraps off its electronic mortgage solutions that Triola says put CUs on a competitive level playing field with other mortgage lenders.
Triola, president/CEO and founder of the privately-owned Settleware, had been involved with the real estate business for about 25 years working on both the broker and settlement sides, when he took a step back, took in all the paperwork that was involved in the process and realized the competitive advantage that could be gained if the process could be streamlined into an electronic transaction.
"Study after study have shown the dramatic savings in money, work effort and need for storage that's gained by moving paper out of the mortgage transaction process and doing the transaction electronically," Triola said. "Credit unions are early adopters of new technology, and that turned the light on and got me thinking."
He began working on his vision in 1999 by developing a platform that would connect all parties and documents to facilitate a complete real estate and mortgage transaction electronically over the Internet by offering a legally-binding, secure signing solution. Then Triola began working on the selling of the eNote to secondary investors so Settleware could provide a complete end-to-end closing solution.
In 2006, Settleware came out with its electronic reconveyance/substitution (lien release) solution that provides for the electronic transfer and control of the title and recording transactions back to the borrower when a mortgage loan is paid off.
The next step for Settleware was developing an electronic mortgage signature product. Triola approached a small company based in Herndon, Va. called Exostar that has a line of Evincible(TM) products for secure information exchange, including allowing for secure documents to be signed and sent over the Internet. Settleware acquired all the rights around Evincible's real estate space.
In California a collaboration began with the county recorders of Orange County, one of only two counties in California--the other being San Bernardino County--to electronically record documents. Triola has been working with them for about five years. He said getting all the parties such as the title industry and the California Secretary of State for e-notaries to agree to collaborate was "like a domino effect. One said they'd do it if the other one did it, and so on until we had everyone on board."
He added, "We found them receptive to the idea of electronic signatures, but they wanted to understand the back end of the technology and make sure it was secure. Settleware is always increasing its security levels to guarantee security. We punch holes in scenarios to test our security capabilities."
According to Triola, Orange County has been doing electronic filings since 1997, but these have mostly been recordings. So Triola had to integrate that with Settleware's back-end system with no paper involved.
Triola also has been talking with Fannie Mae. About three years ago he met with representatives from Fannie Mae to find out if they'd buy electronic mortgages, and Fannie Mae agreed.
At the time, Triola said Fannie Mae was the only GSE with guidelines on how they'd purchase an electronic mortgage on the secondary market. Since then, Freddie Mac has also begun purchasing some e-notes.
Triola said Settleware's platform allows credit unions to decide to whom they want to sell their mortgages, but Fannie Mae is the only company that's made any considerable investment in e-notes.
American First Credit Union, La Habra, Calif., is one of the credit unions that has been involved in the pilot phase of Settleware's eSignature solution. The $670 million credit union converted from a federal charter to a state community charter in 2000. In addition to counting 200 select employee groups in its field of membership, the 70,000-member CU also serves Orange County.
Initially American First was using Settleware's electronic reconveyance product to release liens against properties when members paid off their mortgages. Vice President of Lending Carlos Miramontez said American First CU has realized a lot of efficiencies since it began e-reconveyances in May.
"Before the process would take about a week, and now it's done in about a day. The member likes the fact that when they pay off the mortgage they get the reconveyance almost instantly. That wasn't possible before," said Miramontez.
"The e-reconveyance eliminated a lot of expenses for us like Federal Express overnight courier service and printing costs. Now we just email one set of documents," he said. Miramontez explained that American First had explored going into electronic mortgage transactions before it got involved with Settleware, "But it was very expensive, and we thought it was outside our reach. With Settleware, we just pay a licensing fee and a per loan use fee, which is more affordable since we don't have to expend fees for hardware and software." American First's mortgage portfolio includes $270 million in loans it services for the secondary market and another $230 million it services for loans on its books. In addition to using Settleware to do electronic reconveyances and first mortgages, American First is also piloting with the company to do complete electronic second mortgage transactions.
Miramontez said American First is almost finished piloting Settleware's e-mortgage. He expects that to be accomplished by early November, when American First will begin the pilot for second mortgage e-transactions.
"Our goal is by 2007 to have all our mortgage transactions be electronic and take the whole process electronic end-to-end including allowing our members to sign online," Miramontez said. With Settleware's e-mortgage, members can get a copy on CD for their records, he added.
American First CU officials said the credit union's goal it to give its members a choice whether they want to have an electronic mortgage or facilitate the transaction the conventional way. --firstname.lastname@example.org