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Industry is moving to paperless mortgages
ATLANTA (10/1/12)--The mortgage lending industry is moving toward paperless mortgages at a robust rate, according to research from Xerox Mortgage Services.

Forty-three percent of lenders surveyed indicated that within the next four years, more than half of mortgage loans will be closed electronically, said the Atlanta-based documents management company in its seventh annual Path to Paperless survey. That compares with 28% who said so in 2011.

What's more, 90% of origination, underwriting, archiving, investing/funding and servicing professionals said an access to an audit trail is a key benefit to going paperless, while 88% indicated they would consider compliance a key factor in their shopping for a paperless mortgage solution.

Collaboration is also important, said the study. If paperless mortgages are to become the norm rather than the exception, everyone from underwriters to attorneys will need to be on board with the process, said Xerox in a press release last week. Credit unions, to stay competitive with the industry, will move to e-mortgages and automated closings.

"The emphasis on collaboration has more than doubled in the last year, with 96% of survey respondents (up from 45% in 2010) indicating that working together through an electronic loan folder is critical to achieving a paperless mortgage environment," said Xerox.

The survey also showed the number of respondents who implemented components of a paperless mortgage rose 15%, with:

  • Sixty-one percent using paperless origination and underwriting;
  • Sixty-one percent electronically delivering closed loan folders to investors; and
  • Thirty-nine percent leveraging electronic acknowledgement and e-signatures on disclosure documents.
Most respondents indicated that uncertainty centering on the Mortgage Electronic Registration Systems (MERS) and the government-sponsored enterprises Fannie Mae and Freddie Mac, which underwrite many mortgages, would not impact their initiatives to go paperless on mortgages, said Xerox.

MERS, a company set up by banks, was recently ruled in the Washington state Supreme Court as not having legal authority to foreclose on mortgages. It is lobbying to build a national recording database for mortgages (Reuters Sept. 14).

Fannie and Freddie both have plans to tighten lending standards for some groups of homebuyers and the Dodd-Frank Act includes more mandates for mortgage disclosure requirements, said the American Banker (Sept. 27).

To access the Xerox survey, use the link.
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