The Numbers Support E-Signing Mods
According to numbers by Lender Processing Services, even though there are some signs off stabilization, the number of new problem loans remains at a five-year high. The only way to successfully modify so many present and future underwater loans is through adopting e-signing technology, according to Tim Anderson, president at SigniaDocs
"The No. 1 problem in turning trial mods into permanent mods is getting the documents collected and executed in a timely fashion. There are a number of reasons for this. For one, if you're a homeowner you may want to drag it out."
Anderson says that those servicers that have opted to use e-signing technology are not having problems getting documentation back from borrowers. "A top lender qualified 100,000 borrowers for a modification. All those borrowers had to do was sign and return the documents. In total, 20,000 responded. Half of those 20,000 were missing a document or a signature. They got a 10% return on processing paper."In an electronic world 50% of modifications signed the mod invitation the same day. They did a click-to-sign. Beyond that, 80% were signed by the next day. That's a real-life example. There are advantages to doing this electronically. Once you print the documents you lose control."
But has the technology gone mainstream? Are a lot of servicers doing e-modifications?
"Servicers are finally educated and interested," answered Anderson. "They understand it now. They're going live. The biggest obstacle is the investors that they service for. Some are not accepting e-signing."
Those that have opted to use this technology like specialty servicer Wingspan Portfolio Advisors are being rewarded for their vision.
"We like the technology. We have also found that our borrowers respond well to the technology. One of the most compelling features is the ability to deliver the modification agreement online while we're on the phone negotiating the mod. This is very powerful in convincing the borrower that this is a real solution to their situation," said Steve Horne, CEO at Wingspan."The vast majority of our borrowers execute with an e-signature immediately. The small percentage that don't, maybe 5%, follow through with a wet signature. We believe this is because they've already seen the document on their screen and we can generate a document and get it to them the next day if they don't want to do an e-signature."
Despite the clear advantages to doing e-mods, Horne still thinks the practice is rare in the industry. "It is very powerful in terms of its effects. It may take servicers a year or two to widely adopt, but this is the way the industry and the culture is going. When we first rolled this out some argued what would happen if a borrower didn't have a computer. I can say that all borrowers have computers and they're looking to explore online."