As published in Scotsman Guide's Residential Edition, July 2008.
Most of us have heard about electronic mortgages, closings and recordings. What many mortgage brokers don't know, however, is why these things should interest them.
Simply put, electronic mortgages can help brokers save money, acquire additional market share and beat the competition.
Let's start with the basics: According to the Mortgage Bankers Association, an e-mortgage is one in which "the critical loan documentation -- at a minimum the promissory note, and preferably also the security instrument and other closing docs -- are created electronically, executed electronically, transferred electronically and stored electronically."
These types of mortgages also can be called "paperless mortgages."
The electronic-closing process, meanwhile, involves reviewing documents in a secure online environment and signing them electronically.
Such legal paperwork is possible because of the Electronic Signatures in Global and National Commerce Act (ESIGN) and the Uniform Electronic Transactions Act (UETA). While ESIGN facilitates the use of electronic records and signatures, UETA provides a legal framework for electronic transactions. Combined, these laws give electronic signatures and records the same validity and enforceability as manual signatures and paper-based transactions.
What this means to brokers is simple: Not only are electronic mortgages time-savers, but they also are as legally binding as paper.
If you're still conducting a paper-based business, your current process probably entails mountains of printed documents along with high overnight-mail and copy costs.
How many times have you had a last-minute change on a loan file and had to reprint and resend the document package? When that happens, not only do you lose efficiency and time, but you also increase your operating expenses and essentially lose money.
By switching to e-mortgages, you'll avoid these problems and experience the benefits of increased efficiency and reduced costs. And when you have to make another last-minute change, you'll smile as you realize how much easier it is to make those changes and deliver them securely.
Further advantages come into play at the closing table. For starters, by going electronic, brokers can get closing documents into the hands -- or computers, as it were -- of their borrowers more quickly. This allows borrowers more time to review the documents, thus promoting a smoother transaction in the closing room.
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