*Get A New Start*
***It seems like every day brings more bad news for the mortgage industry. What bad news? Originations are on the decline. Foreclosures are on the rise. More regulation is lurking around every corner. Investor confidence has not returned. Housing prices haven’t bottomed. Unemployment remains above 8.5%. Should I go on?
****When will we start seeing some good news? There are no immediate fixes for any of these problems and the host of other problems the industry faces that were not listed. However, in the midst of all this gloom and doom, Kelly Purcell of eSignSystems has always been an innovator who sees opportunity, not adversity. Sometimes you just have to hit bottom before you can see the best way forward. Kelly is very positive about the future of mortgage lending.
****Why does she feel this way? Coming back from the brink and becoming successful takes a lot of hard work to accomplish. Personally, Kelly started an e-signing and e-vaulting company back in the 1990s when there was no market for this technology at all. So, she had to be a constant evangelizer. The bottom line is that she’s a hard worker and she thinks most mortgage professionals are as well. She talks candidly about her own experience and where she sees the mortgage market going from here.
****Q: When is the mortgage space going to see a new beginning?
****KELLY PURCELL: I believe that we are on the forefront. The shakeout from the crisis is pretty much stabilized as far as who the players are going to be in the new mortgage arena. Those that have weathered the storm the past few years are obviously committed to the mortgage industry. The storm cloud hovering still is what will happen to Fannie Mae and Freddie Mac. Speculation varies—but in the interim lenders are dealing with the limitations of the secondary market and adjusting their business accordingly. I see everyday lenders wanting to think differently and making changes. So, I am optimistic that the mortgage industry is already in its new beginning. The cleanup is underway and it will take some more time, but the housing industry is too critical to our economy to not give it the attention and resources to make it better.
****Q: But with origination volume predicted to decline by as much as 40% this year, how does the mortgage industry reinvent itself in such a challenging market?
****KELLY PURCELL: The good news about origination volume being down is that it allows mortgage participants to play catch up. With a lot of the regulatory changes coming into effect in 2011, most companies have been scrambling to buy or build solutions to help meet those requirements. Historically speaking, most technology changes occur in a down market. When companies are at peak volumes it is hard to implement change. The challenge now is that even though volumes are down, resources have been cut quite drastically in the past few years so finding the “talent” to reinvent will be difficult. I think that is part of what is driving the utilization of the SaaS model in all areas of the mortgage process, namely the lack of resources within a company. That is why our SaaS partners are so important as they offer e-signatures and e-vaulting embedded within their products and services creating many options for lenders today. Companies will be very focused on the ROI of technology investments and how it can improve their competitive advantage.
****Q: Also on the down side, foreclosures hit a record high last year and that number is expected to increase more this year. As someone who is fortunate enough to serve both lenders and servicers, what do servicers do to reinvent themselves this year to deal with all these foreclosures?
****KELLY PURCELL: Yes, we participate in all market segments. Servicers have been challenged over the last 24 months in particular and continue to be challenged. Having said that, the technology providers that service this segment have been working very diligently to improve their products and services not only on the foreclosure process, but also the modification process, as well. An example of that is DRI, who won an award for their contribution to improving this market segment. What we’ve seen as a result of these market conditions is that servicers are reaching out. They want technology solutions. Most servicers are a part of a larger company or entity and those larger companies realize that technology dollars need to be allocated to servicing. To fully address future issues, everyone now understands the impact of efficient servicing or the lack thereof. Who knows where the housing recovery would be today if response times and programs had been different. I believe there has been a real window of opportunity for technology providers and many of them have stepped up to the plate. E-signatures have made a significant positive impact.
****Q: One issue that we continue to hear from lenders and servicers is that regulatory uncertainty is stalling innovation. Are people more or less willing to innovate given this uncertainty?
****KELLY PURCELL: I actually have seen the opposite. I see the technology providers working day in and out to make the engineering changes necessary to provide products and services to help lenders meet those regulatory changes. They want more information as to how technology is going to solve a particular regulatory issue. We have resources to stay on top of all the regulation out there and we are actually providing guidance around regulatory compliance to our customers. We feel comfortable in this area and are glad to be viewed as an additional resource to our customers/partners.
****Q: One positive development is that recent research shows that technology spending will be up by 15% this year as compared to last year. Is that good news or was technology spending just abysmal last year?
****KELLY PURCELL: Many sources have indicated that tech spending will be up this year. I understand that companies will spend $600 billion dollars by 2012 on mobile payment applications alone. Now that is a number to notice. There continues to be focus on technology. Organizations continue to spend, just more carefully. Many technologies are very mature and proven. I don’t see a lot of new technology surfacing, more just improvements of existing technology. I see mobile applications as an area of growth. I also see more interest in secure authentication of both the data and the individual and of course e-signatures.
****Q: So, how would you define the state of innovation? Is it alive and well or are mortgage companies just getting up to speed?
****KELLY PURCELL: Most companies are still playing catch up with the fallout and new regulations that have taken place over the last couple of years. Technology is approached from the point of view that I as a mortgage professional want to automate to make this one process better. I think technology usage today is more about process improvement. Do you call that innovation? I’m not really sure, but there is a more defined approach to solving process problems with technology. This approach by market participants is encouraging to me, but it isn’t necessarily the earth-shattering innovation that comes to mind when thinking of huge technology advancements.
****Q: You have been an innovator in the area of e-signing, having brought to market a solution in the 1990s, long before there was a market for this technology. How has the industry’s perception of e-signing changed over the years?
****KELLY PURCELL: The numbers speak for themselves. Adoption continues to grow. If you look at the increased number of companies producing e-disclosures from three years ago to today it is pretty impressive. Not only is that area growing, but now companies are realizing they can spill the e-signature process over into other parts of their business, to include contracts, HR documents and virtually any document that needs a signature. Most e-signatures are being done at the point-of-sale today. On the closing side you can see the MERS numbers continuing to increase as well, though. When the investors have an easier process for the seller/servicer to get “approved” to sell e-notes—then we will really see traction on the closing side. In addition there are a couple of pioneers in the warehouse lending community that will help with liquidity in the sale of e-notes. It is all finally coming together. Our company continues to support technology platforms and lenders in preparing their company with a complete product roadmap of products to get them from e-disclosures to a full e-mortgage and everything else in between. It is very exciting.
****Q: You’re not just an e-signing vendor, you also offer e-vaulting. How has the industry’s perception of e-vaulting changed over the years?
****KELLY PURCELL: E-vaulting is a specific offering. I believe that there will be a handful of organizations that will commit and be successful as a long-term e-vault. However, even if you touch an e-note for 30 seconds, 30 minutes or 30 years, a lender does need access to an e-vault in the closing process. This is where there is some controversy in the industry as to what that means. The term is thrown out there with a lot of different definitions. An e-vault should provide to a lend,r at a minimum, the ability to e-sign a SMART Doc, audits around all processes and of course the whole integration with the MERS eRegistry as the loan moves through its lifecycle. Then there is the e-delivery piece and then the final resting place of the e-note – in an e-vault. The good news is that you can perform all of these functions with existing platforms that are out there today. I am hoping to see more direction from non GSE investors as it pertains to the purchase of e-mortgages this year.
****Q: So, what’s ahead in 2011 for eSignSystems?
****KELLY PURCELL: In 2011 we have enhanced several of our modules. We are emphasizing smart reporting and putting business intelligence around our e-signature solutions. That’s unique because I don’t think our competitors offer that type of intelligence around e-signature and e-vault usage. We continue to be committed to the financial services marketplace and the specifics as it relates to the mortgage industry. As we talk about things like business intelligence, we think it’s critical that companies can take the data and document information and track trends, etc. How do you provide a more transparent process if you can’t track every part of your workflow? The answer is that you can’t. Lenders want and need that control in every aspect of their business, including their usage of e-signatures.
****Q: What would your closing thoughts be about how the mortgage industry can recover from this meltdown and be better for it in the end?
****KELLY PURCELL: To recover is to rehabilitate and that is what the industry has been doing the past 24 months. The mortgage industry is looked upon as a major barometer of the U.S. economy. Everyone takes that very seriously. The mortgage industry has been vilified of late, but I believe that the industry can and will play an important role in bringing our country back from the brink of disaster. However, this will take continued commitment from everyone in the mortgage space to continue to innovate and improve the quality and delivery of a sound asset to the investment community. We can and will rise to the challenge.
****Kelly Purcell Thinks:
****1. Online authentication and single sign on will be a top priority for companies this year.
****2. Regulatory compliance concern will continue to drive technology adoption.
****3. In particular, e-signature adoption will grow conservatively by 20% this year.
****4. Mobile applications will drive the banking industry and will spill over to the mortgage industry.
****ABOUT KELLY PURCELL: Kelly is Executive Vice President, Global Sales and Marketing for eSignSystems, a division of Wave Systems Corp. eSignSystems is a provider of e-signature and e-vaulting solutions. She was co-founder of eSignSystems and has over 25 years of mortgage and technology experience. Kelly is recognized as an evangelist and advocate of e-signature and e-vaulting technology driving e-mortgage adoption. She held prior positions at GE Capital and Transamerica Financial Services. In 2009, eSignSystems was the recipient of Mortgage Technology Magazine’s Lasting Impact Award.***