Do True Digital Mortgages Actually Exist?

October 5, 2016

There’s been a lot of buzz recently about the idea of digital mortgages. The idea of being able to complete mortgage paperwork and other transactions entirely electronically is enticing, and there have been some sensational advertisements about the possibility.

But how close are we to truly digital mortgages? Do they actually exist?

While the technology certainly exists to complete such transactions digitally, the reality is that there are still hurdles to the widespread adoption of truly electronic mortgages. HousingWire recently reported on survey results from Fannie Mae and Freddie Mac that indicate there are still some difficulties to overcome before we see a process that is truly digital from end to end.

Warehouse Lenders Still Wary of eNotes

According to the reported results of the survey, warehouse lenders are still wary of eNotes as part of the closing process. It represents a change to revenue models they are used to.

On top of concerns about revenue changes, the reality is that mortgage transactions are very complex and implementation can be difficult. Not only that, but there aren’t any standard programs and procedures for completing digital mortgages, particularly those related to electronic notarization. In many cases, the final documents for any mortgage, including refinancing, still require a “wet” signature due to the notarization requirements.

So far, trying to standardize the process and implement everything that needs to be done to make the process seamless has been slow to happen. Services, document providers, title agents, and others who are part of the process all need to be on the same page and have access to the same systems to effectively make the process truly electronic from beginning to end.

Innovation and the Mortgage of the Future

Of course, even with some of the hiccups to a truly digital mortgage process, the reality is that there has been a lot of progress made in recent years regarding technology and the ability to originate loans and sign promissory notes online. More and more of the process is becoming electronic. Even when “wet” signatures are required, it’s often possible to complete almost the entire process using digital documents, only printing out the final needed items.

As consumers become more interested in online transactions, and as more loan officers and others close to consumers look for ways to add convenience to the process, the technology to streamline the process is likely to develop.

Plenty of companies are looking for ways to integrate the different parties needed to complete a mortgage transaction. Settlement agents, real estate agents, loan originators, warehouse lenders, and others all need to have access to systems that allow them to interact with each other digitally and share documents easily. Perhaps the biggest challenge, though, will be the need for updating the notarization process electronically. Notarization is still a very in-person and hard-copy process, especially with all of the identity verification that is required for a transaction as important and serious as a mortgage. However, as technology advances and as industry innovators continue to push forward, there is a very real possibility that a truly digital mortgage will exist within the next few years.

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