This summer I took my family on our dream road trip across Alaska, sometimes affectionately known as The Last Frontier. As we went from place to place, I was reminded of the ubiquity of the Internet, especially since having Wi-Fi was a critical component in my children’s rating of whether a camping site was good or not (luckily, watching salmon, bald eagles and moose were also key vote-getters).
It got me thinking about how we are now navigating The Last Frontier in mortgage lending. Once we’ve finally settled this space, all parties involved in the complete lifecycle—from applying for a loan through final payoff to the investor that owns the loan—will be able to exchange information easily.
And, that’s not just my usual optimism talking. Yes, the legal laws of ESIGN and UETA are over 10 years old, and there are still only a small percentage of closing documents being signed electronically, but closing is only one piece of the lending lifecycle.
Think about how far we have come with data and the standards for how data and documents are sent from system to system. Think about the infrastructures to exchange information, including systems like the MERS eRegistry (and the original MERS system), that act as seamless hubs and central repositories. Think about how many disclosure documents are being sent and signed electronically. The rousing success of the IRS allowing e-signatures on Form 4506-T is testimony to that. Think about the many states that now offer a central online property records repository where you can look up both tax and property records, including liens. Think about how a key lending document—the appraisal—has actually been standardized.
These changes, along with general technology advances such as digital signatures that can indicate whether a document has been changed since it was created or signed, lead to a model that reduces costs and improves the potential for real-time “trust but verify” practices among all parties. And it’s a model where we borrowers are both the mortgage payers and the investors (since most of us own mortgage-backed securities, whether directly or within a mutual fund or a pension fund).
Sure, all of these leaps (or crawls, in some cases) haven’t been without unanticipated detours along the way. But I’m excited about what is on the horizon next. The GSEs have been a critical lever in moving the industry forward towards an electronic model and forcing the adoption of data standards for various pieces of the process. Having standardized closing data and servicing data sets will incrementally bridge those many pieces through the lifecycle of a loan. And, just as important, they will establish the framework for extending the components into a truly connected workflow that benefits everyone involved. See, this truly is the last frontier of mortgage lending. I’m glad I’m part of it. Aren’t you?
Kim Weaver works in lending solutions at Fiserv, where she is the product manager for the Secure Lending platform which provides paper-free lending capabilities. She can be reached at firstname.lastname@example.org or 703-298-2169.