DOCUMENT CUSTODY
and is governed at the state level by separate bodies, resulting in inconsistent rule-making across the US.
Since 2014, Deutsche Bank’s document custody has modernised and invested in a suite of technology platforms. These include:
• Providing clients with secure web portal access to their accounts through DB Autobahn into Document Custody Manager
• The roll-out of Deutsche Bank’s licensed eVault in 2018 to allow full participation in the expansion of the eNote adoption in the marketplace
• Investment in high-speed scanning and electronic image processing
• Use of intelligent character recognition (ICR) and optical character recognition (OCR) technologies, with an emphasis on machine learning (ML) and artificial intelligence (AI) to perform data analytics and document classification within its operations group
In addition, newer initiatives have included client-by-client application programming interface (API) web services, radio frequency identifiers (RFID) for file tracking and the ongoing expansion of the ML and AI, and the expansion of eVault services for certain uses. Alongside these technology investments, document custody has expanded its physical footprint by increasing its Santa Ana file room capacity, and acquiring a second facility 50 miles away with many more file
room chambers. Following the eVault launch in 2018, Deutsche Bank now handles the majority of eNotes in the US, and partners with large lenders and agencies that have made eNotes part of their overall strategy. The bank’s online Document Custody Manager tool allows clients to query the status of their collateral, generate reports, and source and download images of their documents: increasingly an industry- wide requirement. The combined pillars of a loyal
workforce and intuitive technology have put the business in a good position.
21 million Number of files held in
safekeeping on Deutsche Bank’s document custody premises
Source: Deutsche Bank
Deutsche Bank Corporate Trust Director Chris Corcoran reflects: “Our seasoned, knowledgeable staff and our embracing of eNotes have strengthened our relationships with Fannie Mae, Freddie Mac and GNMA, making us the largest third-party custodian for all three entities.”
Trusted repository All participants, from loan originators to warehouse lenders, need evidence that each underlying loan complies with the underlying custodial agreement shared between all parties. “In the mortgage world right now we exist to provide review, certification, safekeeping, wire disbursement and securities settlement services, so that warehouse lenders can finance the mortgage companies,” says Deutsche Bank’s Vaughan. While some banks that lend directly to borrowers may retain their own documentation, Deutsche Bank is the largest service provider to non-bank lenders, servicing around 40% of the US housing market that is securitised. “Our file room in Santa Ana, together with the sister facility in Redlands, California, currently holds more than 21 million loan files in safekeeping,” says Macmillan.
The bank’s file
room in Redlands, California
Outlook for document custody business “The technology required to develop initiatives such as Deutsche Bank’s eVault file tracking allows us to process significantly more loans on a daily basis than we were able to before, and we are continually looking at how to expand the technology to make the process even more efficient,” says Vaughan. The technology focus is one of the three pillars of this business – the other two are its people and facilities – that have supported 25% year-on- year average growth from 2009 to 2021. Vaughan believes that being a successful document custodian requires fostering a client-centric culture, establishing a proven track record built on longstanding relationships and networks, and technological innovation, as digital and automation solutions emerge. It remains an institutional banking solution, given the need to safeguard and preserve the original note/contract, as well as other important documents. He adds: “It is not and will never be a storage solution. It requires the custodian to know and understand the documents and their provenance and adhere to warehouse lender criteria and agency guidelines. This is accomplished by following policies and procedures with proper audit trails and maintaining client chain-of-custody.”
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