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eMortgages gaining momentum despite compliance challenges


A growing majority of mortgage industry professionals are either in the process of implementing eMortgage strategies or are planning to do so by the year’s end, according to a 2014 industry survey.

Xerox’s 10th annual “Path To Paperless” report, which surveys executive-level mortgage professionals who perform loan origination, underwriting, closing, archiving and servicing functions, is designed to gauge the industry’s transition toward a completely electronic, or eMortgage, loan process.

Full implementation of a completely electronic mortgage origination process would include adoption of electronic notarizations.

“What we’re seeing is continued industry support for paperless processes despite compliance pressures,” said Jamie Williamson, sales vice president of Xerox Mortgage Services. “Companies are evaluating and implementing several paperless methods to extend electronic collaboration to all participants in the loan process.”

The move toward eMortgages

One of this year’s major findings is a significant increase in how industry professionals are embracing the idea of paperless loan processes.

The survey indicates that 84 percent of respondents believe the mortgage industry will be closing over half of all loans as an eMortgage transaction within the next seven years; up from 68 percent holding that belief in 2013. Furthermore, 77 percent of respondents said they considered technology that supports electronic acknowledgments and signatures to be a “very important” attribute.

The beginning of eMortgage solutions

Adoption of fully electronic mortgages may still be a couple of years away, but survey respondents said they are embracing electronic technologies for transactions that occur early within the mortgage process.

Currently, 23 percent of respondents said they have implemented complete eMortgage solutions through all points of the loan process. Another 33 percent said they are currently evaluating complete eMortgage applications or plan to implement them in the near future.

A far larger percentage have adopted eTechnology for various parts of their mortgage processes:

  • 70 percent use paperless origination and underwriting
  • 63 percent use eDelivery for disclosures and other documents
  • 56 percent use eSignatures for disclosures and other documents

Only 17 percent said they use eSignatures at the closing table. However, a fifth of mortgage professionals reported an increase in eClosings in the past year.

Compliance Challenges

Pressure to comply with industry regulations and standards continues to impact implementation of eMortgage and paperless solutions.

An overwhelming majority — 90 percent — of respondents said their eMortgage plans were restricted by compliance pressures, and more than half reported an increase in external audits.

One of the biggest challenges reported by the survey was getting more second party organizations — such as companies in the secondary mortgage market as well as county recorders and other government agencies — to accept eMortgage documents.

But recent federal initiatives, including a pilot eClosing program launched by the Consumer Financial Protection Bureau, are helping to push things along.


Add your comment

Howard Blum

10 Nov 2014

I believe the first time I ever heard of fully electronic closing of a transaction happened in Utah some 15 years ago with a commercial transaction. They began to talk about all electronic stuff way back then and you can see how little progress has been achieved in this arena. There are some very strong headwinds getting in the way of full implementation of this idea that is being pushed by the people that sell the software and hardware configurations required to do electronic closings. Let’s not forget that CA has 10% of the nation’s population and the Secretary of State for CA has been consistently clear on why this is not going to be implemented in CA. You also have to deal with county recorders that have shown great reluctance to accept electronic signatures. Heck, they are so darn picky with some of the printed docs to be recorded. So, while some industry insiders would like this to come to pass, I do not think I will see this implemented in my lifetime.

Bill Anderson (NNA)

11 Nov 2014

Howard, yes Utah was one of the first to be out of the gate in closing a mortgage transaction from end to end using a fully electronic process. In California, the issue isn't the Secretary of State; its our recording statute. It only allows three B2B documents to be electronically notarized and submitted to a recorder as a digital document (reconveyance deeds, assignments of deeds of trust and substitutions of trustee). The statute does not allow the consumer-facing real property documents (deeds of trust, mortgages, grant and quitclaim deeds, real property powers of attorney) to be electronically notarized and submitted for recording as digital documents. The legislature did this back in 2004 when it enacted the law because of a fear of fraud affecting consumers, but in the years since there have been no instances of fraud that I am aware of in any of the states where this can happen today. We need a legislative fix for this problem.

John Axt

11 Nov 2014

I am very much in favor of this process moving forward. The problem is that no one wants to discuss it. Digital Docs has a system that would allow for eNotarizations and a signing service is soliciting notaries in Florida and other states to hop on board. The problem I see is that Florida has a VERY specific protocol for the protection of the notary's eStamp. Digital Docs does not appear to have the three level security that Florida requires. I have made inquiries with the signing service, Digital Docs and the CFPB and no one is willing to discuss whether or not this system meets Florida requirements. I am not singling out Digital Docs, they are the only one that I have had the opportunity to review and comment back to the company about. John Axt


17 Nov 2014

How will e-mortgages affect my NSA business?

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