LAS VEGAS--More than a decade beyond bold predictions that the mortgage transactions would become completely paperless, Paper is still king. But change is on the horizon. Really, it is.
Even as Imaging and eMortgages—the “i” and the “e” in the “Pie”--increase in volume, lenders have notoriously been reluctant to embrace the technologies that make the process simpler and more efficient, said Tim Anderson, president of SigniaDocs, Jacksonville, Fla.
“If you look at PIE today, it's still mostly paper, but the volumes of paper are diminishing,” Anderson said here at the Mortgage Bankers Association's National Technology in Mortgage Banking Conference & Expo. "Imaging and eMortgage transactions are increasing. Paper still represents about half of volume; that should diminish to about one-fourth of all documents in the next few years, with the eMortgage volume growing substantially, to nearly 40 percent of volume in the near future."
“Paper is still the lowest common denominator with the mortgage process,” said Greg Smith, vice president and general manager of Xerox Mortgage Services, Alpharetta, Ga. “The challenge is to change the lender mindset.”
Smith said that once lenders adopt imaging and digital processes, enthusiasm increases. “Lenders really need to think about the pieces of the pie and how they integrate together,” he said. “They're all still needed and used, but technology must be leveraged.”
Imaging, for example, is on the increase, but most often at the closing part of the loan process. “It needs to move up to the front end,” Smith said. “Paper is simply not efficient. There are systems and solutions that can encompass all the pieces of the process and help you on that evolutionary path.”
Brad Eaton, vice president of mortgage products with a la mode inc., Oklahoma City, Okla., said digital documents can help lenders overcome a number of compliance hurdles, reduce costs,
From a cost standpoint, paper costs have become increasingly prohibitive, Eaton said. Digital documents, for example, can eliminate overnight shipping costs, printer supply costs and other labor components.
The federal ESIGN and UETA Acts, passed at the beginning of the decade, are both really “broad, general acts that cover commercial and consumer transactions,” Eaton said. “We have the law on our side” in making electronic mortgages digital, he said.
Statistics from a la mode suggest that since 2006, the company has applied more than 2 million electronic signatures. More encouraging, Eaton said, the pattern of usage of eSignatures suggests a sharp rise. “And this is even in the face of the mortgage crisis,” he said. “Even in bad times, lenders are seeking technology solutions.
Consumers prefer the electronic process as well, Eaton said. “When presented with the option of electronic signatures, fewer than one-third of 1 percent choose not to use the process,” he said. “This is a statistic for which lenders should take heed. It's never too late to get involved in the paperless process.”
Kelly Purcell, senior vice president with Wave eSign Systems, Lee, Mass., said back-end processes, such as closing, is driving the digital move more toward the front end.
“Technology can really help all parties in the transaction,” Purcell said. “What we're seeing is how we can use technology to help stabilize a market that's really suffering.”
Purcell says the hybrid close—also known as the “10-minute close”--is becoming a more popular option. The technology means that most documents have been reviewed and signed ahead of time, reducing the need to sign many other closing documents.
“It's called the 10-minute close because the only thing that needs to be signed are the documents that require a notary,” Purcell said. “It's an exciting development. It's giving the whole process of closing transparency and authenticity.”
So how long will it take to see massive adoption of electronic mortgages? “The numbers continue to increase—the numbers are pretty astronomical,” Purcell said. “It just takes your company to take one segment of your business—one process—to see how it will benefit your overall business. It's not going to happen overnight, but I hope 10 years from now the process will have wide adoption.
“The sins of paper are obvious,” Anderson said.