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   ARTICLE   |   From Scotsman Guide Residential Edition   |   April 2008

Less Paper = More Efficiency

Paperless mortgages may be central to industry conservation efforts

There’s never been a better time for businesses to “go green” as they address their operational efficiencies. Modern consumers are acutely aware of environmental issues, and the movement among corporations to save resources of all kinds has never been more pronounced.

The same holds true in the mortgage industry. Forward-thinking lenders and brokers are identifying new ways to improve efficiency as they conserve time, money and labor costs.

And after decades of preparing, copying, distributing, mailing and filing reams of documents during the mortgage process, lenders and brokers are now taking a new avenue toward improved efficiency and environmental sensitivity -- reduced paper usage.

Web-based tools

The widespread use of the Internet in daily business applications provides countless opportunities for the mortgage industry to decrease its paper consumption.

Lenders are cutting through the paperwork by using Internet resources that keep broker information current and readily accessible. Many now offer rate memos, product updates, applications, loan guidelines and other tools through their Web sites or through dedicated, lender-administered broker sites. These Web sites give brokers a direct pipeline to the lender, ultimately allowing them to better service borrowers.

Internet tools let brokers forgo standard paper applications and enter preliminary loan information directly into an electronic file. Information is transmitted to and from the lender in minutes rather than days. Postage, envelopes, and fuel and labor costs for mail delivery are thus eliminated.

Not only do Internet tools improve brokers’ efficiency, but they also offer the residual benefit of a mortgage process that is faster, cleaner and easier for borrowers to understand. This gives borrowers increased confidence and improves their overall experience with their broker.

Expanded e-files

Traditional mortgage files are filled with supplemental documents that support borrower applications. Now, instead of making hard copies of this information, new imaging technologies let brokers scan the documents, upload the data and link them to the loan file. Information is transmitted electronically in a fraction of the time that traditional mailing takes, and lenders can immediately see what additional documentation may be needed.

Because the cost of equipment and systems continues to be a barrier for many brokers in adopting new technology, many lenders continue to accept supporting documents in a variety of forms, including hard copies, faxes, portable-document-format files and e-mail attachments. After they receive the supporting information, lenders often use their own systems to scan or link the documents on their brokers’ behalf. Depending on the document format, some lenders also accept third-party information such as credit files that they can merge into their electronic loan files.

Lower storage costs

Beyond the benefits of speed and efficiency in paperless processing, electronic files also eliminate the need for excessive storage. Brokers can reduce or potentially eliminate the cost of leasing space for a storage area, as well as the associated costs of filing equipment and materials, electricity, security and insurance.

Staffing expenses can be impacted, as well. It takes far less time to access an electronic file with a click of a button, to update the material as needed and to save it to the broker’s hard drive than it does to pull a file, address its contents and refile it manually.

Today’s programs even let brokers create an index of the scanned documents within an electronic mortgage file. This lets loan representatives easily call up items such as credit reports or underwriting forms from among all the documents in the e-file -- making review as simple as thumbing through documents in a paper file.

More enhancements

New technologies are introduced all the time, and some find their way into the mainstream of paperless processing. For example, some lenders now use e-notes to benchmark the document at certain stages of the process and at closing as a way to verify the application’s authenticity. Others use programs that monitor the number of “touches” an electronic file gets and that also track who enters the file.

Another new component in the paperless process is the digital -- or electronic -- signature. This eliminates the need to print a paper copy of the file for a signature. Instead, borrowers sign a touchpad at the broker’s desk, which affixes a legally binding signature to the electronic document.

Some programs allow borrowers to review their mortgage documents at any stage in the process from their computer. Depending on the program, borrowers also may be able to record their approval of or revisions to a particular section of the mortgage online, as opposed to initialing a printed copy.

As new technologies are introduced, it’s tempting to adopt the enhancements quickly. But in an industry devoted to helping customers with such an important, costly and personal investment, prudence remains the watchword.

New technologies, new questions

Before offering a new enhancement for widespread introduction, many lenders choose to examine its benefits and its possible ramifications. New technologies must be tested for ease of use, interface capability and efficiency.

As with any corporation weighing its environmental options, lenders and brokers must evaluate myriad paperless options against the expense and risk of their adoption. This evaluation typically generates a raft of questions such as:

  • Will the technology be accessible by and beneficial to most brokers?
  • Will this enhancement be in line with the Mortgage Industry Standards Maintenance Organization’s data standards? and
  • Will this electronic image take the place of a legal document of record?

Answering these and other questions helps sort through the promises offered by the new paperless technologies and serves to protect brokers, lenders and most important, borrowers.

•  •  •

The bottom line for any electronic enhancement is to determine whether it helps brokers serve their customers more efficiently. If it does, then the cost savings that result from conserving paper, time and labor resources can be applied to a different cause -- helping even more people achieve homeownership. For brokers, lenders and borrowers alike, that’s a welcome movement in the mortgage environment.


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