As we enter 2009 the familiar debate begins. Will this be the year that e-mortgages gain significant traction? Is 2009 going to be the year of the e-mortgage? The majority of discussions around e-mortgages have traditionally focused on paperless mortgages, SMART Docs vs. PDF’s, e-signing, electronic closing rooms, e-vaults, e-recordings, e-registry, e-notarization and legal enforceability. But isn’t all of this really a mute point if the process does not start out electronically?
E-mortgages have started to gain some momentum in the marketplace, but most of the innovation regarding e-mortgages has focused on legally defining what an e-mortgage is, and establishing the backend processes for handling e-mortgages. The efforts of MISMO, e-mortgage evangelists and a select group of vendors and lenders have made significant inroads in these important areas.
At a time when the mortgage industry desperately needs to redefine itself, e-mortgages have the potential to gain significant traction while transforming mortgage market economics. These include improved turnaround time, cost optimization, greater accuracy, quality of data, increased speed and throughput, reduction of eyeball based QC process, greater efficiency, reduction of paper, responsible thing to do-Green Initiatives, and an improved customer experience.
Vendors and lenders will continue to put forth resources and jockey for a competitive advantage and differentiation in the world of e-mortgages but are they missing a key link to driving market demand?
Many of these promises are significantly diminished and have far less impact, if the process does not begin electronically.
People fail to realize that to drive demand for e-mortgages in the market while taking advantage of all of the benefits that e-mortgages offer, the process needs to begin electronically. If the process does not begin electronically then a number of the proclaimed benefits are minimized. If the origination process does not start electronically then there is no opportunity for e-signing of upfront disclosures. So if there is paper to begin with are we already missing out on some the cost savings that e-mortgages or hybrid e-mortgages promise?
What about the ability to streamline the mortgage process while allowing lenders to do more with less? When the process starts out with paper then there are additional steps, processes and resources needed to get the borrower information in an electronic format. Or allowing borrowers to paper-out at any step in the process, again adding additional costs and resources to the equation.
If the process does not begin electronically, is there really a strong argument for an e-vault or tamper evident seal to ensure legal enforceability?
To truly transform the market economics and deliver upon these promises, the industry is in need of innovative ideas that will drive the process to begin electronically at point-of-sale.
Whether it’s innovative ideas needed by today’s over 100 million people of Gen-X and Gen-Y or the ability to present information at the point-of-sale to the ever growing Hispanic market in their own language, the influence of their customer experience and beginning the mortgage process electronically will have a direct impact on e-mortgage adoption.
With a commitment to improving the real estate transaction by specifically addressing this missing link — starting the paperless process at point of sale — we will see much greater adoption of e-mortgages in 2009.
