It's taken a while, but e-mortgages have started to gain mainstream acceptance

Monte Larsen, chief marketing officer, DocuTech

As published in Scotsman Guide's Residential Edition, March 2008.

At times, the road to complete digitalization of mortgage origination seems to be a quixotic quest.

Numerous technology vendors and industry experts proclaim the new era of paperless e-mortgages. Investors and consumers, on the other hand, continue to type, print, sign and ship their paper forms.

But unlike Don Quixote's imaginary giants,
e-mortgages are a reality and are being originated today -- and they're not necessarily anyone's enemy.

More investors are funding and supporting
e-mortgages, encouraged by early-adopter lenders. For brokers, e-mortgages offer the opportunity to produce more loans in less time, while saving money on time-consuming data-entry tasks and data-storage. More important, borrowers get a faster, more enjoyable experience during origination and at closing.

In the past few years, developments such as e-disclosure support and Web-based loan-origination systems (LOS) have brought the industry one step closer to true e-mortgage acceptance. But what exactly is an e-mortgage, and how will its adoption affect brokers in the near future?

In the most basic sense, an e-mortgage is one where the initial disclosures and primary loan documents are created, processed, transferred, signed and stored electronically. In a "full"
e-mortgage, the original documents are electronic, as are the management and servicing of those documents.

The concept of e-mortgages has been around for years. The idea of the loan process -- from a borrower's search to closing -- existing completely online came about in the late 1990s. This vision often included laptop support for originations, online access to mortgage pools, development of automated approval and underwriting engines, and simplified processing requirements.

In 1999, the Mortgage Industry Standards Maintenance Organization (MISMO) began working to define key e-mortgage technical standards and processes that could legally support electronic transfer and signatures in mortgage documents.

Once the first technical standards were established, lenders and technology vendors began developing systems that could support all the pieces needed for an e-mortgage.

In 2000, Congress established a legal framework with the Electronic Signatures in Global and National Commerce Act (ESIGN), backing up the Uniform Electronic Transaction Act (UETA), which 46 states and the District of Columbia have adopted to date. The legislation supports the validity of electronic signatures.

Today, technology exists to conduct compliance, origination, disclosure, closing, delivery, signing, recording and servicing electronically.

Benefits for brokers

For most brokers, the key to implementing e-mortgages is understanding electronic documents -- or e-docs -- and the benefits they provide for borrowers.

Many brokers think of e-docs as images or scanned, ink-signed papers. A true e-mortgage, however, is created, transferred and signed electronically. It never exists in paper form.

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