NMP - February 2018 - 66

a special focus on THE PURSUIT OF PAPERLESS a special focus on THE PURSUIT OF PA

Would The Jetsons Get a Loan From You?
By Joe Langner

n 1962, Hanna-Barbera
delivered its animated vision
of utopia to Americans via
primetime television. In the
56 years since The Jetsons
came to TV, several of the
innovations George Jetson and his
family used in their daily lives-or
some version of them-have
become a reality. Today, drones,
smart watches, jetpacks, robots
and flying cars are no longer the
stuff of cartoon fantasies, but are
real and some are even present in
our everyday lives.
In a Jetsons' universe, a
paperless mortgage really doesn't
seem all that impressive. In fact, it
seems almost ludicrous that today
mortgages still require wet
signatures, when electronic
signatures have been in use for the
better part of two decades. In
truth, however, we are closer to
paperless mortgages than ever
before, and the reasons why have
as much to do with consumer
demands, as they do with
emerging technology.

requires a wet signature, while
the rest of the closing
documents can be signed
electronically.
Advances in notary
technology, such as virtual
notarizations, allow signatures
to be notarized remotely
through a shared streamed
environment, such as a WebEx
or GoTo Meeting-like
conference call. The technology
is here today, and the process
is gaining traction in several
states that have approved the
use of remote notaries. It's now
a matter of more investors,
lenders and governments
accepting it.

I

FEBRUARY 2018 n National Mortgage Professional Magazine n

NationalMortgageProfessional.com

66

Paperless and digital: The
difference matters
A paperless mortgage sounds like
a great idea, but a digital mortgage
is even better. Paperless doesn't
mean "no paper," it means "less
physical paper handling." Paper
loan documents still exist, but they
are sent, viewed and processed
electronically in a virtual
environment. Unfortunately, the
system or technology used to
manage the work dictates the
order in which documents are
reviewed by the user. As a result,
many lenders must use multiple
applications and screens to see
multiple documents, forms or other
data elements at one time-when
comparing actual verification data
and making on-screen notations,
for example.
Digital mortgages follow the
same idea, but with a couple of
major differences. First, digital
mortgages take advantage of
process automation, server-less
technology and other tools to
perform the same work as
paperless system, but without
human intervention. With these
tools, lenders can create a
consumer direct platform that lets
the borrower apply for a mortgage.
Then the platform automatically
performs, for example, the credit

"The way mortgage lenders engage consumers is
changing, big time. Borrowers want a lot more than
simply getting a lender to call them back.
They want answers, and they want them now.
They want control over the process."
check, calculates conditions, runs
compliance, and sends the data to
Fannie Mae or Freddie Mac, for
approval.
Second, with digital mortgages,
information is collected and
organized, well, digitally. In
paperless systems, a great deal of
information needed for each loan
file-particularly information about
the borrower-is based on forms
and paper documents; these are
often handwritten, scanned or
printed, and then sent to the lender
as PDFs. Depending on the type of
technology being used, it's not
always easy to "scrape"
information from a PDF, or any
other file type for that matter. With
a digital process, capturing
information is easy-information is
stored digitally as it is being
entered.
In other words, we're talking
about a process that creates and
transfers data digitally without the
need for paper at all. For the
borrower, this means a more
intuitive and responsive experience
with faster turnaround times and
immediate results.

What's holding things back?
The technology that enables
paperless and digital mortgages
already exists. Borrowers can fill
out a full mortgage application, esign it and submit it online. More
documents are being delivered
electronically to consumers,
including loan estimates and
closing documents, and many are
even automated. But there are a
few cases creating obstacles.
l Signature requirements:
Regulations demand a wet
signature for certain
documents. For example, the
Patriot Act form is the only
initial disclosure form that still
needs a wet signature. Because
it can't be e-signed, it still
needs to be hand signed, then
scanned and sent back to the
lender. The lender incurs costs
and added consumer workflow
complexities for a single
document that is no more
complex than any other
document the borrower signs.
There's a similar issue with the
closing package. The note still

l Stuck in the past: Another
obstacle is our industry's
decades-long reliance on
standardized forms. In the
earlier days of automation, tech
companies would upload forms
put store them in a computer,
so the forms would be easier to
replicate and reuse. Many
lenders are still scanning
documents and faxing or
emailing them back and forth
with no straightforward way to
"scrape" the data from the
document into a system's
fields. This process is inefficient
and prone to error.
Many lenders are also
burdened with old, legacy loan
origination systems that don't
have digital capabilities. Some
have managed to build
workarounds to leverage a bit
of automation. However, this is
often costly, adds complexity to
their technology environment,
and often introduces new
processing gaps or compliance
risks.
l It takes a village: The single
biggest roadblock, however, is
the number of people and
organizations it takes to
process a loan. Lenders, their
software vendors, credit
agencies, flood and title
companies, and the GSEs and
secondary market must all work
together to complete a single
loan.
Getting these different
systems and vendor partners to
really work together and
communicate in a mutual
environment is a huge


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Table of Contents for the Digital Edition of NMP - February 2018

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