Encomia Sees E-Mortgages Easing Document Burden

One of the benefits of adopting e-mortgage technology, according to advocates of the trend at Encomia, is that the cost and time devoted to document custody services can be greatly reduced.

Electronic documents are also easier to access once they are archived. An investor, for instance, can go into an online system and see the mortgage note, rather than having to order the physical document or a copy from a warehouse someplace.

And an additional benefit, according to Encomia president Andrew Dubinsky, is that electronic and digital documents reduce the amount of time and resources devoted to checking one document's information against another.

"You are really eliminating the stare and compare," he said. "At the end of the day basically, the borrowers pay for that extra effort," Mr. Dubinsky said.

In a traditional lending environment, he said lenders and their business partners typically compare information from one document or computer screen to another document on at least four or five different occasions. Instead, e-mortgage systems provide robust data tools that allow lenders to perform checks and audit functions more easily.

Electronically generated documents also ease reconciliation when loans are being boarded onto a servicing platform.

The faster pace of tasks such as secondary market transfers and boarding loans onto a servicing system reduces cycle times, saving money, according to Encomia. For instance, a correspondent lender may benefit from faster turnaround on a warehouse line of credit, Mr. Dubinsky told Mortgage Servicing News. Reducing cycle times is a key benefit, especially in the correspondent lending world.

Mr. Dubinsky believes that e-mortgage transactions, along with electronic notices and disclosures that can be viewed and certified by a customer in advance of the closing, make the whole closing process simpler and easier for borrowers to understand. In addition, borrowers signing disclosures at their leisure before the closing are likely to have more time to examine and read what they are signing. It also creates more transparency about the loan closing process, so borrowers can go into the closing with less stress. Closing documents can be burned immediately onto a CD at the time the loan closes.

"The concept that a document can be electronically certified is a big one," Mr. Dubinsky said.

Today, electronic mortgage documents have gained considerable traction in the conforming loan space with backing from the government-sponsored enterprises. Companies like GMAC Mortgage, Countrywide, Wells Fargo and investors like Ginnie Mae also have embraced the e-mortgage concept.

Moving the electronic momentum beyond the conventional, conforming world will require more private-label MBS investors and custodians to adopt e-lending standards as well.

Mr. Dubinsky said e-mortgages will change the way document custodians operate, but it will not eliminate the document custodian role. They will still be needed to ensure the care and protection of legally binding electronic mortgage assets. But document services can be provided with greater "velocity" in an electronic environment, Mr. Dubinsky said. And it allows lenders to focus on improving the customer experience rather than being tied up with post-closing paperwork.

And chief operating officer Drew Krieger says that e-mortgage systems have security advantages for lenders, too, creating failsafe mechanisms for making sure documents get to the right place and stay there.

"Press a button and it gets electronically delivered and it's in the vault," Mr. Krieger said.

Encomia sells e-vault software to banks and companies that provide trust services. The company says its e-mortgage solution gives financial institutions a comprehensive tool kit that includes the creation of SMART Docs, electronic signature capability and secure document archival services. The company's technology is compatible with a number of third-party technologies. (c) 2006 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com http://www.sourcemedia.com