On the road to e-mortgages, image-based underwriting is a path to consider

Judson Phillips, director of product marketing, Advectis Inc.

As published in Scotsman Guide's Residential Edition, March 2006.

The phrase "electronic mortgage" is heard today as much as "online origination" was in the 1990s. And the acceptance curve has been about the same.

This time, however, the comfort level of mortgage companies, not of consumers, has made the road to the e-mortgage less-traveled. But having the essential elements to accept an e-mortgage will make the conversion process less daunting.

One area to consider on the path to the e-mortgage is image-based underwriting. This entails an application that allows originators or brokers to fax or scan paper documents securely and view them as digital images. Although technological acceptance often has to catch up to the technology itself in our industry, image-based underwriting is a natural addition to an industry that has ramped up its efforts to eliminate the use of paper.

The mortgage industry has refined its approach to automated underwriting since Fannie Mae and Freddie Mac introduced their respective technologies in that arena in the early 1990s. The goal of assessing risk quickly has evolved into processing loans more effectively and accurately.

Lenders and mortgage-insurance providers performing underwriting functions can use an image-based-underwriting tool for timelier risk assessments and loan approval or rejection. If they are using a collaborative document network that links participants in the mortgage process, underwriters will have increased access to loan documents. Further, brokers and underwriters could have the option to view the imaged documents for a particular loan folder simultaneously online.

For an image-based-underwriting system to perform at its fullest potential, several variables should be in place. A system with configurable indicators can help underwriters identify the status of documents they have reviewed. Seeing indicators of reviewed, incomplete or missing pages would allow underwriters to check documents' status. When originators access the electronic loan documents, they easily could see what additional information may be required.

Viewable comment fields and automatic notification of new work items also are key collaboration tools for image documents. Systems should enable independent security for internal notes. Notes could be flagged as "internal" when comments should not be disclosed to external brokers, correspondents or others who access the documents. This would allow for detailed internal communication without the need for a separate system. Notes between underwriters and originators could be logged, ensuring correspondence is recorded, and managers could track any loan issues.

An interactive system also supports notifications for specific loan events. Targeted notifications can be set up to include specific individuals or teams that support various loan functions. A number of events could trigger a notification, such as adding document images to the electronic folder; selecting user- or system-initiated action items; changing loan or document status; or marking the electronic loan folder as completed.

* * *

Companies should be selective with vendors when considering a customizable, image-based-underwriting solution.

The benefits gained from implementing an image-based-underwriting system can include increased productivity and streamlined management of a manual, paper-intensive process. This benefits all areas of a company, not just underwriters.

As technology advances, the industry is realizing that the path to e-mortgages is becoming a reality. Although the standards are being defined and crafted by the Mortgage Industry Standards Maintenance Organization, companies can implement systems now to create a seamless transition.

The best approach for moving to a true e-mortgage is to begin with evolutionary solutions that allow users to reap the benefits of electronic-mortgage processing while integrating and working with existing systems, processes and external parties. Image-based underwriting can be a solution that does just that.

Judson Phillips is director of product marketing for Advectis Inc., a leading provider of paperless origination, underwriting and archiving solutions for the mortgage industry. He can be reached at (678) 460-2483 or via e-mail at jphillips@advectis.com. Visit the company Web site at www.advectis.com.