How electronic mortgage can simplify the lending process?

electronic mortgageAdvancements in technology have made life quite simple for all of us. The things that we had to physically go and buy or inquire about can now be done sitting in the comfort of our homes. Who would have thought that we could get something delivered to our doorstep from a company located overseas? Now that’s possible, all thanks to the electronic era. This advancement is not just limited to the retail sector but is gradually becoming evident in the mortgage sector, as well.

Based on a survey conducted by Carlisle & Gallagher Consulting Group in 2012, it was found out that most of the mortgage applicants either thought that the time-to-close was the most important factor in the mortgage process or the simplicity of the entire process. This proved that people are now looking for faster and a more streamlined process to apply for mortgages rather than the long traditional ways that seem to take forever.Keeping the fragile economic conditions in mind, lenders are looking to make the mortgage more customer-friendly by using technology to make the process simpler.

The time-to-close the mortgage application is usually quite lengthy and this can mainly be blamed on the traditional process of sending and receiving the required documents that need to be physically signed. Clearly, there is a dire need for an easier way for people who want to buy homes in much the same way that they buy other things in life. Sending documents and then waiting for them to be verified by different agencies seems so ancient to the people of today. They prefer signing and sending the documents electronically so that the same thing can be done faster and more efficiently.

Federal Housing Administration (FHA) loans do not accept documents or records that are not electronically signed. This has limited the number of lenders who can offer borrowers such capabilities during the mortgage process and interfered with the mainstream adoption of this process. Based on a report by the Mortgage Bankers Association (MBA), about 30% of the mortgage loan applications with lenders in 2012 were FHA backed and most of these applicants were first time home buyers in their early thirties. The way this younger generation prefers to buy homes is quite different from how the mortgage industry currently functions. Technological advancements have to be implemented by lenders to make the most of lending opportunities that come their way.

An example of how technology can simplify the mortgage process can be seen on how the 4506-T forms were processed by the IRS earlier. It usually took an institution 30 -60 days to process the forms once they were physically signed and sent by the applicant or the lender. However, with the introduction of electronic signature and sending documents electronically, the whole verification process has become fast and reliable. Technological advancements like this can also be valuable in light of the recent Consumer Financial Protection Bureau’s (CFPB) latest regulation that requires all closing documents to be delivered at least 72 hours before the actual closing.

This change from the traditional way to the modern one is inevitable. The sooner the lenders and the authorities accept it the better. With the new advancements coming up every year, lenders and borrowers both expect to gain out of the developments that can make lending easier and more cost effective.

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