Electronic Signature Capabilities Add to Profits
Electronic signatures can help mortgage originators increase their sales, move things quicker through the process and as a result get better prices for their loans from investors, said an executive with Silanis, a Montreal-based company which provides solutions in this area.
Michael Laurie, vice president, strategic planning and Silanis’ co-founder, said among the products it offers originators who sell loans on the secondary market is an e-vaulting service for their documents.
The company has been in business for 20 years and its products are available on a licensed basis for some clients and on a Software as a Service basis for others.
Its e-signature service has been approved for signing 4506-T statements; those are then submitted through Internal Revenue Service-approved program participants.
While the 4506-T has been in the news a lot lately, Laurie said “our software is being used to do the whole mortgage application process up front. Every document that goes into the package that needs to be delivered to the borrower in the application process is being handled by our software.” Smaller lenders tend to use the SaaS offering while larger ones use the on-premises version, he continued.
The company has also been working on e-closings and e-vaulting, although those are a small piece of the pie right now, especially when compared to doing the upfront process electronically.
It is “quite beneficial” for originators to do the application process in this manner, he said. It reduces the overall time it takes to get to the closing table in first place and it does it in a more predictable manner.
Laurie noted that when originators are locking in rates with their investors, with the electronic signature process they are better able to meet the deadlines to fill those commitments. This, along with getting the file ready to close quicker, allows for better pricing.
Investors see the predictability and reliability of your delivery, and price accordingly, he explained.
But it is not just the lender having the capability to offer e-signatures that makes or breaks such a program; it is also a question of will the borrower do business in this manner? According to both Silanis and one of its lender clients, Signature Mortgage, the answer is a resounding “yes.”
“The adoption rate we see across the industry is 95% to 100%. Borrowers very much want to do this,” Laurie declared. Signature Mortgage, he continued, has an almost 100% adoption rate.
The president and CEO of Signature Mortgage, Bob Caitlin, started doing e-signatures as part of a pilot program for the SaaS service in spring 2010.
Competitive forces were one of the reasons, especially coming out of the bust years. Caitlin said he realized he had to rethink the way he was doing business. Quicken Mortgage, a recognized leader in customer service, was the model and he was looking for a way that a smaller player could replicate their processes. That is what led him to Silanis.
Signature is licensed in Ohio and Michigan and one thing about being able to offer electronic-signature service to consumers is that it lets the company grow without having to add brick and mortar, he said.
The company felt it had to offer this kind of service to compete for the consumer who is shopping with several lenders looking at price and service.
Initially, Signature felt it would see the most use for this technology for those clients who resided further away from the company’s headquarters and only office in Canton, Ohio. “As it turns out, nearly all of our business switched over to e-sign technology,” Caitlin said. Even those who work nearby want to use the e-signature capabilities.
Signature is able to offer its clients the ability to sign documents in just minutes after the application is made and can get them back within the hour.
“And that has been a huge game changer for us,” as packages had to be overnighted to clients, he explained. Now, ideally the process gets moved forward quickly. In the past it took days, if not weeks, to get the documents signed and returned to the company.
And once the customer executes the documents by using this technology, Caitlin said the shopping ends and they go with Signature.
As a result it is able to process, underwrite and get the clear to close in half of the time of the competition. This applies only to conventional loans as Federal Housing Administration loans cannot have their documents e-signed.
It has even impacted Signature’s secondary marketing capabilities. The company has gone from taking 45- to 60-day rate protection on its loans to switching over entirely to mandatory delivery. That has increased margins by between 50 to 100 basis points.
Laurie said “It is a great customer experience. Customers are pretty keen on doing this kind of stuff,” and at the end of the day they realize they are getting a better rate because the lender can make the process faster.
How the electronic-signature process works is as follows. When the consumer calls into the loan officer, the loan officer takes the application and generates the loan documents in which ever system the originator users for that purpose.
The documents would be generated in a PDF format. Laurie said the next step depends on how the lender is set up with Silanis. If the originator is using the SaaS, the company has a template for the creation of the document package.
This template knows which documents need to be in the package, where the customer signatures need to be made. Whether the lender uses the SaaS or has the software in house, the package then goes into the e-sign live signing room. An email notification is sent is sent to the consumer which has a link into the website.
Consumers access the documents through a web browser, so they don’t need to worry about downloading the files, etc. The browser guides them through the experience and any place the borrower needs to sign; all they do is click on the button.
The Silanis product is being used for both purchase loans and refinancings, Laurie said. Speed and accuracy are of the essence in both processes, especially for purchases.
Silanis is seeing a lot of growth in the mortgage industry in the past couple years, especially as the market starts to come back. “Lenders are under the gun to meet regulations and to ensure the processes are being carried out properly. We think this is the reason why we are starting to see so much demand” for this kind of product,” Laurie said. It is not only the large lenders, but the interest in providing this product is being seen by the smaller lenders as well.
And it is about providing a better experience for the consumer. Users are reporting going through the process in 15 minutes or less, he said.
Caitlin declared that with this type of technology, there is no reason for any shop to add brick and mortar.
Speaking of the 4506-T, Silanis has just been added to Equifax’ approved e-sign list.
In a press release, Jeff Knott, Equifax senior director of product management, said, “With the requirement of the 4506-T to authorize a bank or lender to verify a mortgage applicant’s income, it makes sense that Equifax partner with e-signature vendors like Silanis to complete this process electronically.”
Laurie added, “This partnership with Equifax will allow our customers, as well as any banks and mortgage lenders of any size, the ability to complete the entire application process in electronically and improve the customer experience.”