The residential real estate finance industry has struggled with ‘e’ for years. Efforts to move from paper introduced microfilm, microfiche, imaging, Optical Character Recognition (OCR), and scanning. All come with their own cost, infrastructure, deployment, storage, retrieval and indexing headaches. This was further complicated with the introduction of an ‘e’ or digital signature component. Everyone understood the benefits of ‘e’, but this type of process change was going to require resource and time investments allocated at a cost to more immediate wants and needs. For the interim, ‘e’ would wait.
When the E-Sign Act was signed by President Clinton in 2000, the real estate industry didn’t take much notice. There really wasn’t any reason to modify existing processes and frankly mainstream technology wasn’t available to institute ‘e’ save for the memorialization of a signature in an e-mail. The industry has danced with some ‘e’ success, e-disclosures (boiled down pdf documents sent through e-mail, i.e. ‘paperless’), evolving to attestation of those documents through a signing room where the recipient stumbles through an authentication process, to ‘sign’ the documents, which are then delivered back to a ‘eVault’ for storage, which can be retrieved as .pdf documents.
There has been success in delivering eNotes electronically, with little enthusiasm. To date 321,559 e-Notes have been registered and delivered electronically to the investor. The adoption of ‘e’ has been lethargic at best, but in reality pathetic. ‘e’ will shortly become the required standard and best practice, because drivers are in place to force the process change. They may look like the same old drivers the mortgage industry has been marching to over the years. But the reasons and structure are changed.
There are three drivers, which will force the industry to move to a fully enabled ‘e’ transactions, from the purchase of a home to the delivery of the collateral to the secondary market. Yes, I said Home Purchase to Delivery. What does purchasing a home have to do with collateral delivery? Financing. It is the contention of the author that ‘e’ starts at the beginning and the beginning is different for purchase and refinance transactions.
>> Fraud – Fraud breeds regulation. Each iteration of regulation begets more data to combat fraud. These two components ultimately force the industry to adapt rigor, which guarantees transactions, ‘are what they are’. The industry needs to provide sustainable, accurate and verifiable data elements, end to end, from the inception of the transaction; regardless where that is, purchase or refinance to delivery.
>> Audience – As we move from the Greatest Generation through the Baby Boomers. The X and Y Gens occupy the market place, they are tech centric and their culture is to obsolete ideas over and over.
>> Technology – Those partners who deliver the most user friendly, least obtrusive, e-solution will gain the most acceptance, faster.
See where I’m coming from? Going forward I’ll look at each of these items and discuss how they’ll contribute to a more ‘e’ mortgage world. Stay tuned …
About The Author
Alan Harris is the founder of IRIS Corporation and is a designated Certified Mortgage Banker, (CMB), with 25+ years’ experience in the real estate finance industry. He started in loan origination, servicing operations and system administration. Subsequently moving to Change Management, Process Re-engineering, System Integration and ‘e’ Implementation. Alan has ‘backend’ and/or User Interface ‘hands-on’ experience with the many Loan Origination and leading Servicing systems, managing integration or implementation of those platforms.