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   ARTICLE   |   From Scotsman Guide Residential Edition   |   April 2018

Going Green in the Mortgage Industry

Paperless processes and energy-efficiency save money and resources

Reduce, reuse and recycle. These are the key objectives for going green and making more environmentally friendly decisions. Reducing the use of paper may be the first thing most people think of in a business setting. This is never more accurate than in the mortgage industry, which produces reams of paper for every loan.

Moving toward a paperless — or digital — loan process is, therefore, an important step when mortgage companies decide to go green. Reducing the environmental impact of technology is another crucial step for mortgage professionals, because computers and servers use a lot of energy. Let’s take a look at both of these methods for making mortgages greener.

Paperless processing

By switching to paperless processing, mortgage professionals can reduce their environmental impact. According to the U.S. Environmental Protection Agency, the average office worker uses 10,000 sheets of paper per year — the equivalent of a small tree. The mortgage process is well-known for generating a lot of paper, so a mortgage professional’s paper usage probably far exceeds this national average.

With document imaging and electronic delivery now widely available, hard copies of important documents and reports are needed less often for lenders, servicers or borrowers. With consumers expecting instant access to information, electronic documentation is a necessity for success in the mortgage business. According to a 2015 survey, approximately 78 percent of mortgage professionals have technology in place for electronic delivery of disclosures or other documents to borrowers.

For those continuing to rely on paper processing in 2018, the time to go green is now, because electronic documents provide numerous benefits not only for originators and mortgage companies, but also for today’s tech-savvy borrowers. Paperless processing relies on a system that automatically generates electronic reports and documents, providing easy access to them as needed. Using electronic documents saves money, increases operational efficiency for lenders and servicers, and provides the ideal solution for record-retention requirements.

In addition, paperless documentation saves money. The average mortgage application is 500 pages long. If a company’s procedures involve paper documentation throughout the entire loan process and closing, the cost per year and environmental impact add up quickly.

The cost of the actual paper only accounts for about 10 percent of the total lifecycle cost of using paper. These costs include not only the price of paper and printing supplies, but also the cost of distributing physical documents. According to Pricewaterhouse-Coopers, it costs $20 in labor alone to file a document, $120 to locate a misfiled document, and $220 to recreate the document if it can’t be located. Electronic documentation eliminates those expenses.

Adopting electronic documentation also provides a mechanism for extracting specific information for use in other internal and external systems, such as automatic underwriting, title searches and disclosure documents. Furthermore, digital documents provide a more convenient and expedited method for delivering reports and documents to everyone involved in the process, from borrowers and processors to closing agents and investors. Eliminating the need to send paper documentation also saves the cost associated with delivery — whether via inter-office carriers or external carriers such as UPS, FedEx or the U.S. Postal Service. 

Beyond the time and cost savings electronic documentation can provide, eliminating paper files also provides a more reliable method for record retention, which can be of great use in today’s highly regulated mortgage environment. Computer space is inexpensive, allowing more flexibility in retaining documentation, and eliminating the time and money spent on shredding confidential paper reports and documents.

Changing borrower expectations

Beyond the operational benefits for mortgage companies and originators, eliminating paper-based processes also can significantly improve the borrower experience. Today’s borrowers may perceive lengthy paper documents as wasteful and even annoying.

In 2017, buyers who were 36-years-old and younger (millennials and Gen Yers) were the largest share of homebuyers, at 34 percent. Most millennials expect immediate access to information anytime, anywhere. They also recognize and appreciate the positive impact that electronic communication has on the environment. Millennials want the option to opt out of paper statements and documents in favor of electronic versions. 

Upgrading old, out-of-date computers and monitors can reduce your energy consumption. 

In fact, many borrowers are interested in completing their mortgage applications online. Two-thirds of homeowners say they would be willing to complete a loan application online. A 2016 Zillow report found that more than half of all homebuyers applied for their final mortgage using an online loan application. Millennials were the most likely generation to use an online mortgage application, at 56 percent.

Electronic mortgage application processes provide immediate access to loan information, increasing borrower satisfaction. Furthermore, electronic documents provide borrowers, originators, lenders and servicers with a much more convenient method of filing and accessing important documents and records.

Green IT

Beyond reducing paper, mortgage companies should look at their energy use when deciding to go green. Climate change, or global warming, is caused, in part, by burning fossil fuels and producing carbon dioxide, a greenhouse gas that stores heat. Electricity production is the largest source of greenhouse gas emissions in the United States. Mortgage companies can reduce their electricity use through green IT.

According to a Microsoft TechNet article, green IT, or information technology, means “building an IT infrastructure that uses fewer resources — most notably energy.” That means reducing not only the electricity used by individual computers, but also the energy required to keep them cool and to power servers. Desktop computers and servers require a lot of electricity.

Employees can take several steps to save energy. Turning off computers overnight is a simple, yet sometimes overlooked, energy-saving strategy. The average desktop computer uses from 60 to 250 watts per hour and the average LCD monitor uses around 35 watts per hour. Laptops use significantly less energy (20 to 30 watts per hour) than desktop computers, so switching to laptops can save a lot of energy and money in the long run.

In addition, employees should not use screensavers because they can use the same amount of energy as a computer in use. Instead, employees should set their computer’s power management options to power down into hibernate or standby mode when not in use. Both power-saving modes use only one to three watts per hour. Turning off monitors when they won’t be in use for long periods of time — such as overnight or on weekends — is another energy-saving strategy that can add up to significant cost savings as well, especially in a large company.

Switching to a virtual server environment also can help save energy. Virtualization enables a company to use fewer servers, thus decreasing electricity consumption and waste heat. According to EnergyStar, saving one watt-hour of energy in server usage can save almost two watt-hours of energy overall by reducing energy waste and reducing energy needed to cool waste heat produced by the server.

On a broader scale, IT staff can identify underutilized servers that are good candidates for virtualization and consolidate them into a virtualized environment. If your company has servers that cannot be virtualized, identify which ones produce more workload for less energy.

By identifying the most efficient machines, and those with extra capacity, your company can better utilize existing high-efficiency servers without needing to add servers. When purchasing new servers, focus on their energy-to-workload ratios, choosing machines that provide the most computing power for the lowest energy consumption.

Technology has improved over the years, resulting in less wattage being used with new hardware compared to equipment manufactured just a few years ago. So, upgrading old, out-of-date computers and monitors can reduce your energy consumption.

•  •  •

By switching to paperless processing and adopting green IT practices, a mortgage company will be more eco-friendly, save time and money, and better satisfy their borrowers — especially millennials. Evaluating areas where your company can adopt these practices is a great start. Even small changes can make a large impact on the environment, borrowers and your bottom line.


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