E-Mortgages are the Future! Yeah, Right!

Online lending is booming and pretty soon all that paper jammed into the mortgage application packet is going to be a thing of the past. Yes, electronic mortgages are here to stay and consumers - as well as lenders - are taking to e-mortgages like fish to water. Yes, the future is now.

As Col. Potter of "M*A*S*H" used to say: Buffalo chips! The wife and I just finished refinancing our home and I'm here to tell you that the only thing we've done electronically is to e-mail messages to the loan officer. Did the loan officer encourage us to fill out an application online? No. Did we care? No.

In fact, while gas prices were spiraling out of control, our LO was kind enough to drive the loan application packet - about an inch thick and chock full of disclosures - to our house.

Who was my loan officer and which firm did he work for? No comment. Suffice to say he did a good job and I even referred one of my employees to him.

Now, let's talk about the loan process and why I didn't force the online issue with my lender. First off, we weren't exactly in a rush. It was a refinancing and the only thing I cared about was locking in a low rate. When I finally decided to pull the trigger on the lock-in I picked up that antiquated device known as a telephone (a land line no less) and I phoned my LO. No online nothing.

As for why my mortgage company didn't ask me to fill out an application online that's a different question, one that I didn't ask. But I thought about the process and the paper "app" and I came to the conclusion that the app itself wasn't the problem. Yes, I had to fill in a bunch of information (in ink) but it wasn't exactly "War and Peace." Quite a bit of the paper mountain was comprised of disclosures - Truth in Lending, HUD forms, take your pick.

I'm sure that within a day or two of my completing the application all the information had been re-punched by an office grunt, creating an electronic version in my lender's mainframe or server.

I'm 44 years and I'm all for the use of technology - as long as it makes logical (and business) sense. If online lending is really in the best interest of all involved (customer as well as lender) then why isn't it being promoted to the consumer? I'm not talking about online ads. I spend a lot of time on Yahoo! Finance and there's plenty of mortgage ads. Why aren't lenders requiring the customer to fill out an application online?

Of course, if my lender required me to fill out an online app I know exactly what I would've said: "Sorry, but given all the news stories over the past year about companies losing customer data or having it stolen I would rather not." And you know what my lender should've or would've said? Answer: "OK, Mr. Muolo. You're the customer and the customer is always right."

During my rate shopping spree online, I discovered that many of the "pre-apps" aren't really pre-apps at all. Instead they turned out to be an online marketing gimmick designed to capture the customer. One ad I clicked promised me four price quotes. (I had to disclose my income range and the mortgage amount) I actually got three price quotes - two of which came from different affiliates of the same parent company and one of which came from a loan broker. (My guess is that the loan broker worked for the funder.)

In the end I dismissed the broker because the gentleman was located 3,000 miles away and I decided to go with my previous lender/servicer who never once screwed up my mortgage and was even kind enough at one point to refund some escrow money to me without me even asking.

So, is online lending the wave of the future - complete with five-second approvals and legally binding, electronic signatures? No, no, it is not. Sorry all your MortgageTech geeks. The Internet is a great place to shop for a mortgage and e-mail is a great way to keep tabs with your loan officer, but the day is a long way off before e-mortgages will be the norm.

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