How M&T Bank achieved 64% automation in loan boarding tax lines
The Challenge: optimizing accuracy during loan boarding
For mortgage servicers, the period immediately following loan boarding is critical. M&T Bank sought to further streamline their onboarding process by ensuring tax lines were verified and optimized before being established in the servicing system.
The objective was to reduce manual intervention and enhance the precision of tax data at the earliest possible stage, ensuring a seamless transition for the borrower and operational efficiency for the tax team.
The Solution: a platform with custom tax rules
M&T Bank recently joined Cotality as a beta partner to test the DigitalTax Onboarding Decisions platform. Extensive meetings and testing led to the creation of a solution within DigitalTax that enables lenders to view and adjust tax lines before they are built on the servicing platform.
The "PCH Rule" breakthrough
The core innovation was the implementation of the PCH rule. This logic interfaces directly with the lender’s PCH collection (aka monthly tax collections) to ensure tax lines match the exact amount disclosed to the borrower at closing. This creates a "perfect match" scenario, bypassing the need for manual review on qualifying loans and reducing escrow analysis exceptions.
The results
Since going live, the platform has delivered immediate efficiency gains:
- 64% Success Rate: The PCH rule successfully applied to nearly two-thirds of eligible loans immediately upon implementation.
- Reduced Risk: Significantly lowered the instance of payment shock and escrow overages for new borrowers.
- Continuous Improvement: Cotality and M&T are currently expanding functionality to handle complex scenarios, including multi-agency parcels, flow loans, and bene change loans.
Client perspective
"M&T Bank partnered with Cotality as beta testers for the new Loan Boarding Decisions platform. Extensive meetings and testing led to the creation of a solution within DigitalTax that enables lenders to view and adjust tax lines before they are built on MSP. The platform incorporates numerous rules and exceptions designed to improve accuracy and efficiency.
One of the most impactful features is the PCH rule, which interfaces with the lender’s PCH collection to ensure tax lines match the exact amount collected at closing. This significantly reduces manual work and helps prevent large payment decreases or escrow overages during the first escrow analysis.
Since implementation, the PCH rule has successfully applied to 64% of eligible loans, a highly favorable outcome. While constraints remain for loans involving multiple taxing agencies or parcels, Cotality is actively working to increase this percentage and expand functionality to include flow loans, bene change loans, and originated loans.
Our partnership with Cotality has been exceptional. We especially commend Melissa Van Meter, Cotality’s product lead, for her unmatched dedication and expertise throughout this process.
M&T Bank strongly endorses the Loan Boarding Decisions platform and looks forward to its continued evolution to deliver even greater benefits to our customers."
