More being done to normalize electronic mortgages
As companies in a growing number of industries look to a paperless future, one sector where some feel this may be a little more difficult is mortgage lending. The reason for this trepidation is simple enough: Consumers often need scads of documentary evidence related to their finances before they will be approved for a home loan, and the agreements themselves are often lengthy, complicated documents.
But now more is being done to make electronic mortgages more common in the market, helps improve the workflow for banks and ensuring greater accuracy in the closing process, according to the home loan backing giant Fannie Mae. That government-sponsored entity will now back electronically closed mortgages in much the same way it does traditional home loans, and in general has found that they can be a big benefit for lenders that choose to undertake them.
Fannie Mae has received many comments from participating lenders saying that after starting to accept eMortgages, they see increased efficiency and lower costs, quicker turnaround times, and improved data quality, among other benefits. In fact, eMortgage software often quickly spots common problems – such as unsigned documents – before allowing the process to move forward. In general, as long as the eMortgages conform to the same guidelines as traditional loans, the GSE will purchase them with little difficulty. It first began doing so in 2003, though the practice was far less common then.
Recent data suggests that the majority of lenders are now using paperless processes of some kind in lieu of having customers put ink to paper, according to National Mortgage Professional. However, only about 1 in 20 lenders use eSignatures and similar technology when it comes to closing loans. This is an interesting disparity, because experts say companies generally see far fewer mistakes when it comes to signing documents once this process has been implemented.
When lenders are looking for more efficient operations, going with an automated workflow can go a long way toward making the process move more smoothly and quickly. Streamlining the approval and closing processes can not only be a major benefit to those financial institutions, but to would-be homebuyers as well.
