In the early days of mortgage lending, the only way to ensure that the transaction would meet all of the state, federal and investor requirements was to use the right forms. Each type of loan came with a pre-defined stack of documents that would have to be completed in order to correctly process the transaction. As government regulators worked to make the process safer and more understandable to consumers, additional disclosure forms were added to the stack. Today, a typical loan file, containing all of the required forms, could be many inches thick.
As the industry has worked to get the paper out of our systems and adopted more electronic documents, lenders initially just created digital versions of the original paper documents and created electronic stacks that mirror in all respects the original loan documents from which they sprang. This was a good first step, offering both the industry and consumers many advantages, including lower costs to originate and store the loan documents and the convenience of electronic signatures for consumers. But in the end, we’re still dealing with static forms and that’s a problem.