The mortgage industry continues to progress slowly toward the Holy Grail of a completely paperless process. As different technology providers enter the eMortgage space, a variety of partnership arrangements have evolved in order to piece together the various components needed for a fully electronic mortgage solution. Let’s explore those components, the different ways they can be assembled, and the possible advantages and downsides.
Having been in the business of helping lenders on the path to paperless for a good portion of our 25 years of service, we have seen many management teams approach eMortgage. Because this territory is so new for many, some companies stumble or hold back when they are on the very cusp of updating their institutions for the future. Fortunately, today there are many great resources available for the lender who wants to prepare for and then enter the world of electronic mortgage lending.
For most industries in which signing on the dotted line concludes the transaction, putting a solid eSignature experience in place is pretty straightforward. Many companies simply push a signature pad across the desk instead of a paper document. Things aren’t quite that simple in the mortgage business. Here, we ask borrowers to sign many documents throughout the entire mortgage process. Some of the docs must be executed early in the process, others at least three days prior to close and then even more at the closing table. Establishing a consistent, easy-to-use, seamless eSigning experience for the borrower across the entire mortgage origination timeline has been problematic in the past. Not anymore.
With most conferences we attend, there are multiple speakers and comprehensive sessions spread out across several days; however, in the case of this year’s Electronic Signature & Records Association (ESRA) Summer Member Meeting, immersive sessions and speakers were jam packed into one in-depth day.
Experienced mortgage origination executives will tell you that lenders tend to change their loan origination systems (LOSs) about every five years. There are many reasons for this, but the most common is that the firm’s top lending executives switch companies and want to manage their operations in ways that made them successful in the past. They tend to bring their LOSs with them into their new institutions. Increasingly, when a lender changes its LOS, we also see them taking steps to change out their mortgage document technology as well.
Do you remember Beta videotapes? How about 5.25-inch floppy disks? Eight-track tapes? Each of these technologies fell victim to a rival format – VHS, 3.5-inch floppies and cassette tapes – which in turn have all faded away as better technologies like DVD, CD-ROM and MP3 have become available.
In our recent white paper, “A New Home, A New Life - Improving the Borrower Experience” we talk about ways lenders can be a part of the homebuyer’s home purchasing bliss instead of an annoying part of a difficult process that the consumer would rather do without.
Consumers and regulators are pushing for mortgage transactions with less paper, more electronic signatures and the higher customer satisfaction that comes along with them. One challenge has been the need to keep the Loan Origination System (LOS), the lender’s database of record, in sync with the document vendors that supply modern electronic disclosure and closing documents. That’s changing now that innovative doc prep software is making it easier to accomplish a two-way LOS data exchange.
How many completely paperless mortgages did you close and deliver this year? For most lenders, the answer is still zero.
