Digital mortgage efficiencies span from origination to the secondary market and beyond, but something as small as a low-quality image in the loan file can cause headaches with investors.
Electronic document authentication in particular is critical, said Resitrader CEO John Ardy during a digital mortgage panel discussion at the Mortgage Bankers Association's National Secondary Market Conference in New York.
"That's extremely important to the investors," he said, noting that when there is a subpar image in the file, the lender isn't going to get paid on the entire trade until the seller provides the buyer with a better-quality image.
Because digital image technology is continually improving, this is something that won't be as much of a concern going forward, he noted.
In the meantime, using a hybrid process that automates as much as possible and handles other items on an exception basis generally offers time savings attractive to investors, lenders, consumers and Realtors, according to Jeff Bode, CEO of Mid America Mortgage.
While there are some legitimate challenges facing digital mortgages, a lot of times the concerns that stop companies from pursuing them are more about resistance to what is likely to be an uncomfortable change than actual roadblocks, he said.
"We got pushback all the way through," said Bode of his company's own digital mortgage initiatives. "You've got to make sure you're removing false barriers."
Real barriers to standardized digital mortgages that the industry continues to work on addressing include different jurisdictions' requirements for notarization, he noted, something the MBA and the American Land Title Association have been advocating for a model law to address.
Eventually, digital mortgage strategies could advance to the point where there won't be exception items and they can be standardized, said Shane Hartzler, director of e-mortgage strategy and operations at Fannie Mae.
At that point, "you [will] know you have this quality loan product even before you sell it," he said.