The same benefits and legal foundation that guide mortgage lenders' paperless origination capabilities are now being applied by servicers performing loss mitigation, according to a panel at this week's Mortgage Bankers Association servicing conference.
The laws that govern e-mortgages—the federal Electronic Signatures in Global and National Commerce, or ESIGN, Act and the state-level Uniform Electronic Transactions Act—also apply to servicing documents, like modification agreements, said Jonathan Kearns, senior vice president of technology vendor eSign Systems.
“You cannot dispute an electronic signature or record simply because it's electronic,” Kearns said.
In the federally-sponsored Making Home Affordable Modification Program, servicers are allowed to use electronic signatures for workout documentation. However, program guidelines require servicers to have online portals for borrowers to access documents, rather than having servicers emailing the forms. Using e-docs and e-signatures reduces turn times on getting agreements signed and delivered, as well as reduces shipping and printing expenses. It also is easier for borrowers to complete, Kearns added.
“We always hear in financial services the question of whether consumers will e-sign, but it's been proven time and time again that consumers want this,” he said.
In addition to the borrower benefit of paperless loss mitigation, servicers are finding that their technology vendors are increasingly adopting the Mortgage Industry Standards Maintenance Organization's reference model of data specifications and definitions, said Harry Gardner, chair of the MISMO residential governance committee and the president of e-doc vendor SigniaDocs. A common data standard improves communication across disparate technology systems, Gardner explained, adding the benefit is exponential as new systems migrate to the standard.
“If you or your technology partner has implemented the MISMO reference model even once, then it's very little effort to implement it in other transactions,” he said.
Servicers facing challenges like lost paper documents, incomplete forms and changing regulations can improve their processes by going paperless. In addition, some specialty servicers and servicers taking on new portfolios of loans for their clients are finding many “hybrid pools,” of loans that include both paper promissory notes and e-notes, requiring the servicer or investor to have an e-vault to store the data.
Another benefit to “e-servicing” is that business rules and logic can be more easily amended and tracked to accommodate changes to procedures and regulation, said Janet Eakes, business owner financial services at Sapiens Decision, an automated decision management system provider.
Eakes explained that using technology with business rules-driven decisions provides consistency in both how decisions are made and tracking what and why those decisions were made, answering for servicers, “How do you know the right decision was made at the right time, with the right logic and data?”
“There is an awful lot of logic in a modification workflow,” she continued. “With an e-mod, all of that also has logic to it that must be transparent.”
