PHILLIP E. HUFF
‘Evolution’ under way
As the refinancing market continues to decline, mortgage industry professionals, in an effort to stay afloat in the changing marketplace, continue to invest in new products and services aimed at making the mortgage process more efficient and appealing to the consumer.
According to the president of one electronic data and document delivery solution company for the mortgage banking industry, the transition from paper to electronic delivery of mortgage closing documents is fast approaching.
“This industry is in the middle of an evolution toward a paperless process, otherwise known as e-mortgage,” said Phillip E. Huff, president of eLynx, a Cincinnati-based company that provides electronic data solutions to mortgage brokers and lenders nationwide. “It’s a transition that has been going on since 1997. The first step is to get all the documents in electronic format.”
Huff said the transition from a paper industry to an electronic industry is three-fold. The first step is to integrate all documents electronically. According to Huff, 65 percent to 70 percent of mortgage closing documents done this year will be done electronically.
Phase two is the actual implementation of electronic signature technology, and the last phase is having a full electronic mortgage industry, according to Huff.
“What the industry is currently embracing is an electronic signing of disclosure documents, and we’re working toward the electronic signature of closing documents,” said Huff. “Electronic signature technology allows the lender to cement the customer relationship much faster than by using traditional [paper documentation].”
‘More Instantaneous’
Before the electronic age, customers called a lender on the phone and applied for a mortgage – a process that continues to this day. The lender then sends disclosure documents via mail to the customer to sign and turn around in three days to secure the rate. According to Huff, that method gives the customer snail-mail time to look for another product or service.
“Now, the customer can sign those documents in a matter of minutes,” said Huff.
Huff said the additional flexibility of electronic delivery could help mortgage professionals secure a customer in a matter of minutes, from anywhere in the world, without having to add extra employees to the budget.
“The homebuyer can be in a different part of the United States, or a soldier at war, and the loan can still be originated and the documents still be signed in a matter of minutes,” said Huff. “If you look at the last three years, lenders have been able to handle more volume with the same number of employees. With the [mortgage] industry experiencing ever-shrinking margins, we’re allowing lenders to continue to work with the same amount of people.”
Huff said electronic mortgage documents help all parties in the closing agreement, because changes can be made immediately and on the spot.
“The title agent, for example, is responsible for the customer’s satisfaction level, but at the same time they are at the mercy of the mail courier for receiving the mortgage documents,” said Huff. “If they are just waiting for the FedEx trucks and making finger puppets on the wall, they are made to look bad. With new technology, the title agent is able to call up and fix the interest rate or make changes to the documents, and have a new document delivered within minutes.”
Theresa Solomon, assistant vice president of Stoneham Bank, has been using eLynx electronic solutions for three years, and said the cut in cost and the speed of delivery has changed the mortgage closing process.
“The cost and speed has changed the way of mortgage delivery. Electronic documentation is more instantaneous and we don’t have to worry about paper or toner,” said Solomon.
Huff said lenders save anywhere from 50 percent to 75 percent by converting to an electronic delivery system. According to Huff, the lender currently pays $7 to $15 to deliver a closing package with FedEx, UPS, Airborne or standard mail shipping, but using “e-solutions” can cut the costs in half.
While the process depends heavily on electronic delivery methods such as the Internet and e-mail, Solomon said Stoneham Bank has “been very lucky” in that it has not experienced the common drawbacks of a slow, or malfunctioning, Internet connection.
At Loansnap.com, an online mortgage company with clients throughout New England, President Stephen Tomaselli said the mortgage industry is just starting to embrace the idea of electronic mortgage documents, even though the e-delivery solutions have been around for a few years.
“We’ve been using e-documents since 2000 … now, more people are coming to the party. It’s just more efficient,” said Tomaselli. “E-documents save on toner, paper, wear and tear on printers and overnight mail. Everyone is looking at cost-saving measures – instead of buying more file cabinets, invest in technology that will be around for a while. It’s a way to help reduce costs. Five years from now, we’ll look back on the e-delivery of closing documents and wonder how we ever got along without it.”
Huff said electronic mortgage documents have been very well received in Massachusetts, and mortgage professionals in the Bay State are slowly embracing the technology era.
“We are on our way to e-mortgage delivery of all mortgage documents in the future. We need to continue to adopt new technology that takes time and money out of our processes and not sit and wait for the technology to come to us,” said Huff.
As for the customers signing the documents, Solomon said the bank has had a good approval rating, although everyone “gets a little scared about new technology.”
Huff predicted that electronic mortgage documents will become mainstream in the next five years, saying, “These things are happening slowly, and it takes time, but the end goal is total electronic mortgage delivery and closing documents.”
