Magazine article Mortgage Banking

Long Path to Paperless

Magazine article Mortgage Banking

Long Path to Paperless

Article excerpt

FOR THE PAST 11 YEARS, The Path to Paperless survey has offered a snapshot of the industry's outlook on the adoption of electronic mortgages. Survey sponsor Xerox Mortgage Services, Sandy Springs, Georgia, has been producing the report each year since 2004.

Yet fully paperless loan files have proven to be such an elusive goal that at times it appears the final objective is moving farther away even as mortgage automation increases. Currently just 8 percent of survey respondents believe e-mortgages will be possible within two years, reports Jamie Williamson, vice president of sales at Xerox Mortgage Services.

But not too long ago, survey participants forecast we'd be entering the era of electronic home loans by now. Four out of five mortgage executives believed the industry was just three to seven years away from e-mortgages in 2010, Williamson observes.

Compliance concerns are taking up so much attention at mortgage companies that the prospect of rolling out game-changing technology is daunting now, says Williamson.

Ninety percent of 2014 survey respondents related that "continued compliance pressures" were causing them to pull back on e-mortgage initiatives.

Mortgage technologists are challenged by compliance for legitimate reasons. Williamson notes that loan files that totaled 300-350 pages in 2005 now are 200 pages thicker, due largely to new compliance requirements.

Yet automation also provides solutions to growing regulatory requirements. About three out of four surveyed executives stated they were implementing new technologies in order to deal with compliance issues.

Both the front and back ends of the mortgage process are benefiting from technology, according to the 2014 survey. Seven out of 10 firms utilize paperless originations and underwriting, and 63 percent electronically deliver closed loan documents to investors.

Time and money are saved by pursuing paperless loan alternatives, according to 91 percent of survey participants.

But there's room for improvement. More lenders should look into sending documents electronically to investors, Williamson contends. He also believes that mortgage companies targeting young borrowers will need to offer these prospects a "mobile solution" as they prepare to buy homes. Xerox Mortgage Services has just released a mobile tool to assist those firms.

Moving forward

Mortgage technology continuously evolves to assist a changing industry, says Williamson. A decade ago, wholesale lending was predominant, and electronic document submission allowed brokers and lenders to work together efficiently. Lenders were less likely at that time to select software primarily to maintain compliant procedures.

Issuing mortgage disclosures electronically "is a giant step" for the business, Williamson asserts. Besides speeding up the process, e-disclosures create audit trails that can confirm the process was compliant, while offering consumers the opportunity to electronically sign and return documents.

Almost two-thirds of all lenders employ electronic disclosure delivery, reports Williamson. He adds that it's a growing industry trend.

The advent of new Truth in Lending Act (TILA)-Real Estate Settlement Procedures Act (RESPA) integrated mortgage disclosures on Aug. 1, 2015, is encouraging lenders to offer e-disclosures. Williamson predicts that providing appraisals and lock letters via email also will help lenders meet expectations established by the Consumer Financial Protection Bureau (CFPB) to improve borrowers' loan experience.

A more complex challenge is to develop loan documents that can be analyzed by secondary market investors or altered by closing agents. …

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