By Kelle Clarke
A completely electronic mortgage origination process could save the lending industry $1,100 per loan and shave a month off the time it takes to close, according to a special industry work group set up by secondary mortgage giant Fannie Mae.
Despite these benefits, the mortgage industry lags well behind other industries, such as the securities market, in conducting paperless transactions. In an electronic mortgage process, every step would be done electronically, including the notarizations.
The work group focused on creating electronic workflows throughout the life of a mortgage — from the time the application was taken until it was satisfied. It offered several recommendations:
- Creating a digital “passport” for borrowers that would contain all their relevant financial information and could be used in lieu of the reams of paper documents they currently are required to submit.
- Creating electronic storage vaults to store documents and data for each loan.
- Upgrading the decade-old National Mortgage Registry and Clearinghouse, which keeps digital records on electronic promissory notes.
The work group’s report follows other eMortgage initiatives announced in recent months.The FHA announced in February that it was expanding the number of electronically signed documents it would allow lenders to accept. In April, the Consumer Financial Protection Bureau launched a new pilot eClosing program for the mortgage industry, designed to use technology as a means to address and correct weaknesses in the closing process.
The Fannie Mae work group noted that there is a great deal of work to be done. Of all the mortgages originated in 2013, only about 1 percent or 25,000 had electronic promissory notes. Despite the hurdles, the work group believes that eMortgages could become commonplace in just a few years.
For more information about how eClosings and eSignature technology developments are affecting Notaries, see the June 2014 issue of The National Notary magazine.
Kelle Clarke is a Contributing Editor with the National Notary Association.