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Description
When Alpharetta, Georgia-based NetBank Inc., the Internet-only savings-and-loan, filed for bankruptcy in September, it reminded me that the business of lending is still very personal. We're often inundated with news about the ever-increasing number of consumers who are banking online but, in spite of all this, I still maintain that people looking to buy a home want to look their lenders in the eye and shake their hand. [??] The appropriate use of technology should enhance the vital personal connections between lenders and their customers. Information technology (IT) is enhancing personal relationships every day. The Internet's ability to provide instant access to data on demand has created a world where people date, network and maintain family connections online. The lenders that are able to balance customers' "old-world" need for personal contact with their 21st-century need for information on demand will be in the best position to survive the current market downturn.
Going paperless
In 2007, virtually every mortgage originator--brokers and lenders--works with an electronic loan origination system (LOS) to manage their loan origination process; verify a borrower's credit, savings and employment status; generate loan documents; and electronically request appraisals, title insurance and so forth. Where lenders differ greatly is in the way they leverage technology at different phases of the origination process.
Many lenders receive loan data electronically from consumers completing 1003 loan applications online or brokers uploading data files through a Web site. Lenders typically then generate a paper file immediately, and the loan documents are routed in paper format to the constituent parties--underwriters, mortgage insurance (MI) companies, credit agencies and others--via courier services or by fax.
These electronic documents often come back to the lender in portable document format (PDF) and are once again converted to paper. The process is often slow, inefficient and fraught with potential errors and security risks--all of which could be avoided by going paperless.
"Going paperless" is the popular vernacular in the technology industry for the process of using the Internet and private networks to send, receive and share data, including images of paper documents, and storing it digitally. A paperless system essentially eliminates paper records by hosting all necessary loan documents in a secure electronic file.
Under optimal conditions, that file can be accessed by every participant in the lending process. Workflow-driven paperless systems also generate and manage immediate electronic requests for appraisals, credit scores and other services. Essentially, paperless systems automate and streamline the loan origination process, eliminating manual steps that cost paper-based lenders countless hours.
In my experience at the PMI Mortgage Insurance Co., Walnut Creek, California, we have worked with lenders with just about every degree of technical acumen and at various stages of adopting a paperless model. All of the customers we work with acknowledge... |
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