Citi to Pilot Ellie Mae’s Correspondent Loan Quality Tech

CitiMortgage will be the second correspondent mortgage investor to use a technology and services offering from Ellie Mae that provides tamper-proof versions of borrower verification data on loans sold by correspondent lenders.

Citi joins Wells Fargo as the second correspondent aggregator to utilize Ellie Mae’s Total Quality Loan service, which eliminates investors’ need to order duplicate third-party reviews of loan files or go to each individual service provider for a secure original copy of borrower verification services. Ellie Mae says the service reduces the cost of compliance reviews for investors because all the information is in the same place and cuts down on the added expense of purchasing additional verifications.

Ellie Mae announced the partnership with Citi during a conference call with investors Wednesday, when it reported posting net earnings of $5 million in the second quarter of 2012.

“Participation by of the country's largest mortgage investors, and the attention that we have received from other major investors, speak to the interest in providing greater assurance of loan quality and compliance throughout the mortgage origination process,” said Ellie Mae CEO Sig Anderman during the call.

The TQL program builds on Ellie Mae technology that serves as a communication medium and delivery channel of third-party underwriting services like document preparation, income and employment verification, and credit checks. When participating lenders order verification services over the Ellie Mae Network, Ellie Mae will hold a copy of that data in a secure server, in addition to delivering it to the lender’s Encompass loan origination system. When an investor or aggregator is reviewing the loan, it can access that first generation verification data with assurance the lender didn’t tamper the data.

CitiMortgage will begin its participation with a pilot program, which Ellie Mae COO Jonathan Corr said will probably last 90 days. When Wells Fargo began its pilot program in October, the lender started by customizing which rules and requirements it needed for different secondary market participants to focus on the verifications it need to ensure loan quality and data accuracy.

Corr said that CitiMortgage will benefit from another large correspondent aggregator having already joined on to the program because many of the initial kinks have been worked out. He added that Wells Fargo has been supportive of the program, which is helping garner interest from additional investors.

“They're actually a real champion helping us lay out some of the benefits that they're seeing in their channel and with our joint customers,” Corr said of Wells Fargo during the conference call. “So our whole expectation is that we'll continue to see more investors come on, probably this year and as we continue into next year.”