E-Mortages Offer Speed, Safety, and Savings

Christos Bettios, Fannie Mae
March 18, 2008 | COMMENTS

In a mortgage market that is unpredictable at best, lenders can tap technology to lower processing costs and provide better pricing and service to borrowers. Going paperless – with all critical documentation created, executed, transferred and stored electronically – has another benefit: helping the mortgage industry go “green.” Paperless mortgage transactions, including the electronically signed mortgage documents known as e-mortgages, offer a fundamentally better way of doing business. We digitize data in countless other applications in our lives, even pay our bills online, so why not take advantage of similar efficiencies and savings in processing mortgages?

E-Mortgages Save Time and Expedite Closing
Paperless mortgage technology and processes can create powerful competitive advantages for credit unions. First and foremost, paperless mortgages provide better customer service with fewer errors, faster closings, and increased transparency to the borrower/member. Data is entered only once, reducing processing time and ensuring better control of the closing process. Paperless mortgages can be executed faster (traditional mortgages can take three days to process versus minutes for electronic transactions) and more cost efficiently. Borrowers receive e-mortgage documents immediately on their computers.

E-Mortgages Provide a Secure Alternative
The data integrity of e-mortgages is protected with the use of a tamper-proof digital seal. E-mortgage technology is based on widely accepted industry standards. Many technology providers have readily available solutions built to those standards.

E-Mortgages Can Reduce Costs
You can realize significant savings with your first e-mortgage closing with virtually no capital investment. Courier fees are eliminated and loans can be sold to Fannie Mae the same day they close, boosting liquidity for the lender. This savings will positively impact your borrowers' bottom line and continue to emphasize credit unions as the “low closing-cost” provider of mortgages.

BECU Becomes Early Adopter of E-Mortgages
Boeing Employees' Credit Union (BECU) recently completed its first end-to-end paperless mortgage in a refinancing transaction that incorporated electronic signatures and imaging on closing documents. According to BECU vice president Joe Brancucci, paperless transactions save as much as $1,800 on a $300,000 loan, which helps lower the cost of homeownership for borrowers. He estimates that within three to four months, half of BECU's mortgage refinancing loans will be done electronically.

With support from Fannie Mae, BECU relied on its technology providers to build its transaction-based eClosing solution at virtually no capital cost, ensuring that it is “Prime Alliance-ready” and usable by other members. Navy Fed FCU and American First FCU also have successful track records with paperless transactions.

E-Mortgages Becoming Standard Practice
Admittedly, the paperless mortgage transaction was slow to take hold in the early days. Fannie Mae bought the first two e-mortgage loans in 2000. Since then, the industry has moved from pilot efforts to full-scale production. Most mortgage lenders that we surveyed in 2006 told us they have either started or expect to start incorporating e-signing technologies in the near future.

Going paperless can have important environmental benefits by reducing the mortgage industry's significant paper usage. Based on the assumption that each of the 14.5 million mortgages produced in 2005 required 100 pages of paper (about one pound) and was copied three to five times, those mortgages consumed the equivalent of 22,000 to 36,000 tons of paper in a single year. That translates into as many as 620,000 trees as well as some 340,000 barrels of oil used in paper production. With paperless e-mortgage technology and processes, the industry takes an important step toward reducing its carbon footprint.

More information about e-mortgages is available online here.

Christos Bettios is Fannie Mae's senior product manager for paperless initiatives. This article appeared in Prime Alliance News, a newsletter published by Prime Alliance Solutions, a Tukwila, Washington-based CUSO that specializes in home lending. Visit www.primealliancesolutions.com for more information.