Last year, we took a close look at the state of eSign technology in the mortgage industry. While there are a number of eSign solutions on the market, we still saw gaps in the capabilities our lenders demanded. As more lenders move toward electronic closings, we knew the industry needed a tool that any borrower could use without the need for extensive customer support or proprietary software. As a result, Solex is a top-to-bottom redesign and modernization of Docutech’s existing eSign platform – the foundation that allows us to take eSign performance to the next level.
Regulatory changes have sent many lenders back to the market in search of technology services that can help them remain compliant. Because of the nature of many of the government’s changes, document preparation has become a critical component of every lender’s operation.
Recently, our own Harry Gardner penned an article for the October issue of Mortgage Banking magazine entitled, “The E-Notarization Challenge: 50 States of Grey.” As Gardner pointed out there, getting all 50 states to fully support electronic notarization is a serious challenge facing the industry. We need to overcome it if we hope to have end-to-end electronic mortgages.
We caught up with Gardner recently and asked him for an update on the status of eNotarization and what has changed.
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.
First, you need the documents themselves, of course. Mortgage disclosure and closing documents are typically generated either by the Loan Origination System (LOS) software, or by a third-party doc provider like Docutech. LOS-generated documents typically don’t cost extra for the lender, but may involve tradeoffs in terms of compliance quality, custom doc management, and responsiveness – and the LOS vendor may not rep and warrant their legal compliance the way a doc provider would.
Based on today’s heavily regulated mortgage industry, financial institutions are re-evaluating their key goals and strategies to ensure they are not only meeting the latest compliance guidelines, but also doing so in the most cost effective way possible. While each institution is unique and shares different goals, the overarching theme for mortgage improvement across the industry points to increased efficiency and improving customer experience as the leading goals institutions are working toward.
For the mortgage industry, increasing efficiency points to a variety of areas within the institution, most importantly the overall loan process. In 2016, it is more expensive than ever before to manage the full lifecycle of a loan due in large part to changing regulations. In Mortgage Daily, the Stratmor Group reported the cost per loan was up 150% for retail lending, 166% on consumer-direct originations, 202% for broker lending and 82% on correspondent lending. The goal is simple: streamline the loan process to decrease the time and money needed to manage today’s mortgage procedures. But how?
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.
Resources to help
Almost every lender knows of or has at least heard about the many benefits of going paperless. They understand the time and cost savings, the improvements to process flow and the compliance benefits. But too often they just don’t know enough to make the decision to move forward and they stall.
The mortgage industry is a document-centric business; you can’t get around it. If they don’t have the right documents, financial institutions can’t sell loans into the secondary market. This is an exciting time, because that no longer means that documents have to be printed on paper. So in working toward that new electronic workflow, business should be no longer driven by the documents themselves, but rather the data contained in them.
Getting to data-driven documents
Initially, lenders created digital versions of the original paper documents lenders as they moved to adopt electronic documents. This was a great first step, but forced consumers to deal with static forms that are difficult to modify and caused time delays waiting on changes to be enacted. Data-driven documents, have dynamic data points that hold the required data for each individual loan.
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.
CIOs have a unique perspective on a financial institution’s technology investments. Operations and sales managers evaluate the impact a new tool might have on efficiency, cost savings or ease of use. The CIO and CTO, on the other hand, also need to ensure that the software works, is secure and can grow with the bank or lending institution.
When it comes to loan document preparation software, there are some specific areas every CIO is concerned with. Regardless of a specific institution’s needs, any loan document software should be able to answer four key questions:
1. Is it secure? Cybercrime is one of the biggest threats facing financial institutions today, and loan documents handle sensitive personal consumer data. One of the most important questions CIOs will ask is how the software ensures data security.
When it comes to paperless mortgages, lenders know what the advantages are – lower costs, more flexibility and a faster closing process. But despite the advantages ditching paper provides, widespread adoption of paperless mortgages has been extremely slow.