Even though the mortgage industry has, by and large, embraced the digital revolution, there are still some gaps in knowledge when it comes to understanding what technology is available, what that technology entails, and how originators can use it to their best advantage.
The phrase ‘digital mortgage’, for example, gets bandied around all the time, but sometimes mortgage professionals will use that as an umbrella term when they’re really talking about a specific component or the process.
Digital mortgage platform provider LenderHomePage recently cleared the air about digital mortgages: what they are and what they aren’t. For starters, an e-mortgage and a digital mortgage aren’t the same thing.
“While sometimes used interchangeably (even among mortgage professionals), e-mortgage and digital mortgage are not the same. A digital mortgage refers to every step and tool that is involved in processing a mortgage — from acquisition to funding — and all done digitally.*”
LenderHomePage CEO Rocky Foroutan said that part of the reason why it’s important to understand the differences in terms and components of a true digital mortgage is so that mortgage brokers can have a better idea of what they want and how to use it for their business.
“It gives them a clear understanding as to, if they want to add to their technology stack, where are they missing? Do they want to add an e-signature, what exactly is a point of sale, what types of things are done in a point of sale, what is the borrower portal?”
When mortgage brokers want to incorporate certain tools, not knowing what they’re asking can be a source of frustration.
“They hear things either at a cocktail party, or at a seminar, or a conference, or through a colleague or through an account executive . . . they hear bits and pieces and then they call us, for example, and say, ‘hey, I want this.’ And then because they really haven’t been educated per se, properly, then it causes frustration for them,” Foroutan said. They want something specific and are surprised to hear that not all digital mortgages offer that particular feature, and they have to go back to square one.
Foroutan said that it’s also important not to lose sight of the basics, particularly for those who faced a steep learning curve when it comes to technology adoption in the first place.
“A certain cross-section of the broker market is not as tech savvy as the rest of the guys, especially if some of them have old school methods,” Foroutan said. “We still have some guys that are still taking paper applications, believe it or not. We have some guys that are still using fax machines!”
Regardless of the tools an originator chooses, they’re only going to be effective when put to their best use. Without knowing those best uses, Foroutan said, digital tools aren’t going to have any tangible benefits.
“With dumbbells, as the muscles build in the mirror you go, ‘wow, this thing is working! Let me look at some educational videos to see what other moves I can do with the dumbbells to do my back muscles or whatever.’ It’s the same kind of idea; as you see the benefits, and digital tools have that ability to give you immediate ROI, as you see how effective those tools can be, then it becomes a question of, ‘how can I go back to the vendor, watch their how-to videos, attend their webinars, just to pick up on best practices,’ because each vendor has ways to make their thing hum.”
*Fannie Mae provides further instruction as to the meanings for specific terms:
- e-Closing – Refers to closing a mortgage where the required closing docs are accessed, presented, and signed digitally.
- e-Mortgage – Refers to the closing docs (such as the Promissory Note) that are created, accessed, presented, executed, stored, and transferred digitally.
- e-Notary -An authorized notary that can perform digital notarial acts in conformance with the law.
- e-Note – Often viewed as the most important as it’s validity is critical to the holders’ ability to legally enforce the eNote.
- e-Signature – Is a digital sound, symbol, or process attached to a record and adopted by a person with the intent to sign the document.
- e-Vault – An electronic storage used for digital notes. It provides secure certification, storage, and status reporting for signed mortgages.