Are E-Mortgages On The Horizon?

October 12, 2007

The dream of today’s mortgage lenders, brokers and borrowers: paperless e-mortgages. The Internet and the digital era have opened the door to almost everything else - why not replace those piles of mortgage paper documents with a fast and easy paperless digital system? It could save a lot of time, money and frustration, but there are obstacles to its development.

For the past eight years, the Mortgage Bankers Association has been trying to establish voluntary e-mortgage standards. However, originating and securing a mortgage is a complicated procedure. For beginners, you have to know that there’s a real property securing the mortgage, and the worth of that property, and whether or not it has a clear title. It’s vitally important to have everything properly checked and recorded. Also, a lot of people are involved in processing and closing a mortgage - loan officers, underwriters, appraisers, surveyors, termite companies, title firms and others. They all play a role in processing a mortgage application. It’s a real challenge bringing them all together in a practical, efficient e-mortgage system.

The only system that will really work is one that equally benefits both mortgage professionals and borrowers. If it’s a one-way benefit for mortgage lenders and brokers, it will never be accepted by consumers. Applying for a mortgage represents a huge commitment for most families. It’s only natural that applicants are extremely cautious about communicating their personal information via cyberspace. There’s some talk now about offering mortgage applicants a discount on their fees if they agree to use a paperless electronic system. It’s one way to push the public acceptance of the e-mortgage concept.

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