The first blow to you being the king of kings in your child’s eyes comes when your five-year-old says he’d prefer to get hot lunch over the lunch you as the parent prepare for him each morning. I shrugged off the embarrassment and did what any parent would do: find out how to get their child on the hot lunch list. I was excited to find the process was automated, but not that I would have to pay extra to go the automated route. What gives?
Each month the school sends home a menu for the following month. You can either fill out the paper menu and return it with a paper check, or go online, make your selections there and e-pay. On the paper menu it is stated that e-payment is the preferred method. So, I went online to place the order only to find that there was a $2 fee for online orders.
Why do I have to pay an extra fee to transact online, especially when the company says it’s the preferred method? If the company is saving on processing my paper shouldn’t that savings be passed on to me, the consumer? We see a similar situation in the mortgage space with e-mortgages. Everyone says e-mortgages save money but most lenders refuse to pass that savings along.
Sure, there are some lenders that give brokers a discount if they transact with them electronically, but what about investors? If an “e” process is more reliable and transparent shouldn’t investors provide incentives for lenders to transact this way? It just makes sense. The graphic below provided by Mortgage Cadence is a nice visual showing the benefits of being data-driven.As the mortgage industry goes through the current correction everyone is calling for more transparency. The rating agencies failed to properly value the paper and investors have a lot of loans gone bad that now have to be re-valuated to ascertain the true market value. If there’s a true “e” process the investor can see into every loan, know what happened at what point and why every decision was made during processing. If investors can e-QC everything who needs the rating agencies? And more importantly, the value of the loan is never in question.
Another result of the current downturn is that servicers are very busy. They have to revisit all these bad loans and try to work them out with the borrower to avoid foreclosure. Well, in the current paper world the servicer has to physically find each document associated with the loan. What happens if something got misplaced or lost? In an “e” world nothing gets lost.
It seems to me there are so many benefits to going electronic that it’s almost criminal not to share the wealth. And once more parties provide those incentives more will see the clear value and go electronic as a way to cut costs in a down market. For right now consumers like me will pay that extra $2 to do business online and get my son his hot lunch, but we shouldn’t have to.
