WASHINGTON – June 3, 2014 – An electronic mortgage process could cut 30 days off the average 52 days it takes to close a loan, according to a team developed by Fannie Mae to study e-mortgages.
What’s more, going paperless could save the mortgage industry an average of about $1,100 per mortgage – about $1 billion a year.
The industry has been slow adopting e-mortgage, however, and faces several hurdles in a transition to an all-electronic system. But the Consumer Financial Protection Bureau’s new mortgage disclosure forms process could boost the change since they’ll be disseminated electronically.
“This (change) will allow stakeholders much earlier in the origination chain to derive value from going electronic,” says Nancy Alley, vice president of strategic planning at Simplifile, a company that helps record mortgages electronically. “That should help adoption. Plus, an electronic process should drive a better consumer experience.”
The industry has been gradually progressing toward digital mortgages. About 25,000 mortgages had electronic promissory notes in 2013 – but that only represents about 1 percent of all U.S. mortgages originated last year, according to Michael Cafferky, product development manager at Fannie Mae.
Fannie Mae created a team called “Advancing eMortgage” charged with improving the electronic mortgage process. The team has focused on three key elements:
- Borrower financial passports: online employment and financial profiles that borrowers can share with lenders.
- Loan file service: electronic storage vaults for documents and data from loan files.
- National mortgage registry and clearinghouse: enhancements to a decade-old system that keeps digital records on electronic promissory notes for real property.
Source: “Advanced eMortgage: Why Are We Still Using Paper?” Fannie Mae’s Housing Industry Forum (May 6, 2014)