Our bank is in the early phase of implementing an electronic document scanning system with the goal of trying to cut down on the amount of paper documents we have to physically maintain for retention purposes. Are there any regulatory implications for providing a scanned document as evidence of compliance (i.e. signed disclosures related to Reg Z, X, etc.)? Do regulators find the electronic/scanned copy acceptable or do they need to see the hard-copy/signed original?

The regulators are fine with scanned copies. You need to check with your lawyer on the courtroom evidence aspect. Most courts now accept reproductions.

Just make sure that ALL your pages get scanned, once those originals are gone you cant get them back....have had a few instances where the person scanning wasnt counting the pages and things got stuck and we got hit by auditors for not having items!

I'm an old school guy, I guess, but the idea of shredding original documents makes me feel sick. I like to look at the documents to see if we have the original signed docs. I have seen original lien instruments that had not been recorded in the file months after the closing. If you image and shred, you lose the chance to review and correct a lot of stuff. In some cases you get exposure to fraud and in some cases you waste time and good will having to prepare new docs and having the customer come in and sign again.

It just makes me nervous.

For alot of lenders it's literally a fire hazard to keep documents on site, and having them sent off to and kept in storage for 7 years (I think it is)gets expensive and trying to get old docs out of storage for one reason or another is just a PITA. Not to mention that sometimes the people at the storage facilities can't locate the boxes. We do not ever shred original notes, deeds of trusts, poas, sub agreements, or final title policies as those go directly to the servicer. Usually we do not shred original credit docs and any "junk" docs until the loan has been purchased by the investor.

Tatt,

You are talking about sold loans? I'm talking about loans that we service ourselves.

I've worked for a bank that had literally thousands of loan files in fire resistant cabinets and we never had an issue with fires.

Retrieving from storage is a PITA, I agree. But, if you maintain a file room, all you have to do is pull the file. No big deal.

In my current place, we can't trust our imaging process to capture all items or index them correctly, yet they want to shred documents and reduce the paper files. Pretty soon, we'll end up with nothing reliable. I am very frustrated.

Yes, we sell all of our loans. But I do know of some lenders locally that are going to a truly paperless (or trying to anyway) system on all ends (from origination to closing and servicing), that should be interesting.
I dont think that we had fire resistant cabinets-but we had a lot of them and the fire marshall came in and to say he wasnt happy was an understatement!!
I think that if you have competent staff (which we dont!!) it should be ok. Pretty soon I think that everything is going to be paperless (whether its just scanned files or everything is on computer) at some point...hopefully it wont be fully automated, I kinda like my job!

I realize this thread is older and you probably already have your processes in place.

Anytime you begin imaging your customer documents, the question of “shred” or “not to shred” rears its head. It is important to reach out to your regulatory authorities, legal counsel, audit/compliance (internal and external), as well as your recording authorities before deciding what documents you need to retain and what documents you can shred.

As Mint Julep said, if you can’t “trust imaging processes to capture all items or index them correctly” the thought of shredding documents can be downright scary. However, if your investment in imaging technology allows quick and easy access to your customer records, along with providing an intuitive end user interface and a robust quality control process, you may discover that your reliance on paper documents will become a vague memory.

To take a tour of a system that takes the fear out of imaging (an ultimately shredding) your documents, visit www.accusystem.com.

What a lovely ad. Thanks for the information.

It is a bit of a confirmation of the tasks at hand by a paying advertiser, minimal. BOL is brought to you, free, in part courtesy of AccuSystems.