As Downturn Rages On, Lenders Consider eMortgages

Funny thing about the mortgage meltdown; despite it, the industry is finally embracing the promise of electronic mortgages, a technology movement that began during the boom but never really fully took off. Until now. In the worst origination market in memory, the technology that was pushed as the future of mortgages a few years back appears as if it’s finally being adopted by some of the industry’s meaningful players. Seattle-based DocuSign said Wednesday that it was selected as an approved electronic signature vendor for Wells Fargo, and will provide its service to major correspondent lenders working with the bank. DocuSign provides a on-demand platform for electronic signatures of key disclosure documents, including truth-in-lending notifications and 1003 applcations. “We have enabled our correspondent customers to double their close rates and eliminate 80 percent of the cost from their expensive paper signature process,” said DocuSign CEO Matthew Schlitz. Houston-based Encomia, which provides a complete suite of end-to-end e-mortgage solutions, was also among the vendors selected by Wells to manage electronic signatures, and characterized the move as the bank as a “first step” at Wells towards originating fully-electronic mortgages. CEO Andrew Dubinsky said that while the arrangement certainly benefits originators using the Encomia platform, it also reflects a move by Wells Fargo towards greater adoption of electronic mortgages — and, mind you, this is taking place in the worst origination market in decades. Electronic mortgages were initially touted as a game-changer in 2001, right before the housing boom. With the technology in its infancy at the time — and lenders making huge margins regardless of whether they managed the process electronically or not — the hype failed to match industry-wide adoption levels. Yet the implosion of the mortgage lending market has had a curious effect on those intent upon surviving it; tools that were once seen as an unneeded and complicated luxury are now increasingly being recast as a way to remain competitive in a quickly changing market. Which means, paradoxically, that some origination technology vendors are doing better now than they did two years ago, according to some sources that spoke with HW. “The technology is better, the cost structure is better, and right now it’s the sort of thing that makes sense for lenders,” said one source, who asked not to be named. “We’d never have considered electronic signatures back in 2005,” said another source, a manager at a large retail banking operation. “But with the market being the way it is, I think people are realizing that there are efficiencies to be gained, and those efficiencies may make the difference between making money and losing it.”