Five years ago, I was asked to write a little blurb on e-notes for Mortgage Technology. Back then, I would have bet you a hundred thousand dollars that e-notes would be prevalent in five years—and consequentially, I would have lost a hundred grand.
Here we are in 2012 and there is limited to no traction. If you can name three industries outside the mortgage business where their contracts require a wet signature, please email them to me—firstname.lastname@example.org—and I’ll buy you a cup of coffee.
Why does our industry lag behind? The ESIGN Act was passed more than eleven years ago, ensuring security and trust in electronic transactions. At the heart of this bill is electronic consent. The government paved the way for American businesses and consumers to take advantage of the digital revolution.
Let’s size our evolution up to the commercial and mass production of the automobile. In 1903, the same year that Ford Motor Company incorporated and started as a bona fide business, Henry Ford put the first Model A on the street. Less than 10 years later, Ford introduced the first moving assembly line, all of this only seventeen years after he completed his very first automobile, the Quadricycle. Compare this to the first real mortgage dating back to the 1600’s and note the 300-year head start we had on Henry Ford.
In 1992, auto manufacturer Lexus was able to build 300 luxury sedans per day, made by 66 human beings and 310 robotic machines, with the humans there mainly to ensure quality control. But 20 years later, in my lending organization—which I’d like to think is among the highly efficient operations in the business—it takes 300 humans to produce approximately 55 loans per day on average, and that’s a highly efficient organization.
Keep in mind that anywhere from 25% to 50% of these loan files are cited for some type of error. This is not a knock on our seasoned staff, but indicative of the industry as a whole. I doubt that 25% to 50% of Lexus owners have issues with their cars. I also think that it is much, much harder to build a car than a loan file.
So what’s the silver lining? There is the opportunity existing for someone to take charge and make the mortgage history books. Who is ready to take on the challenge and machine a new mortgage process? A process where fraud does not exist, one that encompasses a global supply chain, and where e-notes are to closing what credit scores are for credit? A world where we don’t pay Federal Express charges that exceed our rent and where we don’t have human error that leads to attrition? There is a Henry Ford in all of us. Let’s stand up.