Thanks to Quicken Loan's relentless advertising, including a Super Bowl ad, everyone seems to have heard of the "emortgage" and demand is rising as a result.
Ironically, the emortgage has been around for 15 years but has been slow to be adopted in this paper-intensive industry. However, just as how Microsoft's promotion of "The Cloud" in TV ads dramatically increased usage of the term and demand for this type of software, after many years of being referred to as software as a service (SaaS), the repeated promotion of the emortgage appears to have increased demand.
Is your organization ready to offer emortgages as well as to handle both pre-fund and post-close quality control (QC) requirements?
Post-Close QC Implications
The increasing use of eforms and workflow automation software has created a digital audit trail, which helps to reduce the manual labor and processing errors associated with managing mortgage paperwork. As such, post-close QC findings for emortgages may actually be reduced since borrowers are playing a more active role in entering and uploading their information.
Here's the emortgage process for borrowers:
- Enter their own information online via eforms
- Upload their documents via cloud document management software
- Sign with electronic signatures like DocuSign
- Communicate directly with loan officers with an archive of discussion threads
Some emortgage systems use database look-ups to display things like credit scores and customized interest rates. Workflow automation then alerts the loan officer for what needs to be processed, if any document is missing and a means of working directly with borrowers.
All of the above is expected to replace paper, fax and email, though this could take many years to be adopted on a widespread basis. Adopting the emortgage sooner than later could give mortgage lenders a competitive advantage and be more in line with what Millennial homeowners expect. If you're not set up with eforms, workflow automation software and an electronic signature solution, contact us to get started – it's not as difficult, costly or painful as you might think (it's a lot easier now than in the past).
Pre-Close QC Implications
While technology can make post-close QC easier, it likely will place more importance on pre-fund QC but not necessarily more complicated. Reason being: because borrowers enter all of their information, there needs to be additional scrutiny to prevent mistakes, abuse and outright fraud. emortgage systems cannot possibly catch everything, so human intervention, review and QC is essential. As a result, many are concerned that issuing emortgages too quickly (as with Rocket Mortgages 8-minute claim), based on information that might not be accurate, could contribute to some of the problems that contributed to the real estate bubble and Great Recession.
Thus, you may want to audit more than just the 10% of mortgages on a pre-fund basis that is required by FHA, Fannie Mae and Freddie Mac – at least until you get a handle on how many pre-fund issues arise in the emortgage process.
Like it or not, it appears that emortgages are here to stay. If you offer emortgages today, we recommend you consider our pre-fund QC audit services – at least to audit your auditors if you do this internally. If you don't offer emortgages today, ask about how eforms and workflow automation can get you there or at least a whole lot closer.