Preparing for Electronic Mortgage Lending

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.

Now that keeping the lending transactions electronic as long as possible is so important for ensuring compliance, many lenders are discussing the topic today. However, they still don’t know all the questions they should ask to reach an informed decision. It can be difficult to know where to start. That’s a very uncomfortable place to find oneself. Fortunately, an industry leader has provided some support.

Fannie Mae is completing work on a new decision-support matrix resource for lenders that will give them a set of questions they can use to evaluate vendors. For some time now, Fannie Mae has provided tools, education, and resources to facilitate industry adoption of both eClosings and eMortgages. The industry leader, as part of its mission, supports electronic initiatives to foster and promote a superior consumer experience while improving operational efficiencies for lenders.

This past July, Fannie Mae and Freddie Mac worked together to create a survey designed to “obtain perspectives on obstacles/barriers facing the eMortgage market.” The resulting report is now available on their respective websites, along with many other resources.

But secondary market investors aren’t the only place to turn for information about eMortgages and how to get started. MISMO has placed a significant amount of information online as has the Consumer Financial Protection Bureau.

Assigning an executive to the task of becoming educated on eMortgage is a great place to start. The material is freely available, and the resources will make it easier to make the decision to move into electronic lending.

Taking action

In our experience, we have also seen firms that have made the decision to move into eMortgage and even implemented an e-closing system, but still have not pulled the switch to make the move away from paper. There are a number of reasons this happens, but the only solution is to commit and move forward.

There will be hurdles that the lender must overcome after making the decision, both internally and externally. For instance, our industry is still dealing with state laws regarding electronic notarization that differ between the states and create an uneven handling of the e-notarization process. That’s a big hurdle right now and it is holding our industry back from the full benefits of the eMortgage - for our lenders and for consumers.

But those problems will be solved. The government has already said it likes the eClosing process and feels it’s better for consumers, so expect to see actions taken by federal regulators to make it easier for us to get there. But the lender still bears the burden of being ready and that means following through on their commitment to go electronic.

Lenders that work with us find it easy to take the paper out of their process in many states and counties across the country. And it’s getting easier every day.