Dave Williamson believes 2005 will bring about significant pilot projects dealing with electronic mortgages, or those that can be processed and closed without paper. And he predicts that those innovations will become even more widespread over the following two years.
Investor acceptance may come about more slowly, Williamson said, but he hopes the group he chairs – the eMortgage Alliance – can help push the entire industry toward e-mortgages. The non-profit alliance, formed about two years ago, consists of 10 companies involved in the e-mortgage sphere of the industry. Four or five more companies may join by the end of this year, with even more expected next year.
“If the adoption rate picks up, everyone stands to win,” said Williamson, who also is SVP of The Performance Group, a consulting firm that joined the alliance in 2003.
Current members of the eMortgage Alliance include DocuTech, Encomia, LendWare, The Performance Group, Rekon Technologies, SwiftView, U.S. Recordings, VMP Mortgage Solutions, Wave and WellFound Decade Corp.
Although not affiliated with the Mortgage Bankers Association, the alliance considers one of its main goals to support MBA and its subsidiary, the Mortgage Industry Standards Maintenance Organization (MISMO for short). MISMO works to create and maintain industry data standards, and fosters widespread adoption of the standards. The alliance requires its members to be active in both the MBA and MISMO as one of the few steps to being a member.
The alliance also aims to be the go-to information place for lenders or other potential buyers of e-mortgage technology. Williamson envisions companies interested in learning more about e-mortgages and the potential return-on-investment turning to the group for advice and specifics. The alliance, he said, knows which companies are truly involved with e-mortgages and which ones aren’t.
The group also wants to demonstrate that the different e-mortgage technologies can interact with each other as well as older, legacy systems the industry already has in place. That “interoperability” is important in encouraging companies to move toward e-mortgages because it means they don’t have to get rid of all their current systems to adopt new technology, Williamson said.
“None of these mortgage companies or Realtors that are looking to use e-mortgages is going to throw out the baby with the bathwater, so to speak,” he said.
Those goals differ from the group’s original aim. The alliance began with just a handful of companies looking to come together to brand their e-mortgage products. Earlier this year, the group opened itself up to more companies and realized everyone would benefit from a strong, yet inclusive, alliance, Williamson said.
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Now, the alliance places few restrictions on membership. In addition to being MBA and MISMO members, alliance companies also must intend to use MISMO standards, Williams said. They also must demonstrate that their product can interoperate with the product of at least one other company in the group.
The alliance puts no restrictions on the types of companies that can join, and also allows competing businesses to join, Williamson said.
The one-time initiation fee is $750 or $1,500 depending on whether the member is a participating or principal member, according to the group’s bylaws. Annual membership dues vary each year after the group decides how much it wants to spend on such things as Web seminars, marketing efforts and trade shows. That total amount is then divided among the members, Williamson said.
Those expenses could be small when compared with the potential savings e-mortgages could bring. Williamson believes e-mortgages can cut down the cost of processing loans by anywhere from $400 to $1,200 per mortgage. Some of that savings would eventually trickle down to consumers, who also would be able to have their loans closed in days rather than weeks.
Until then, the future of e-mortgages comes down to educating both consumers and the housing industry as a whole about the benefits of adoption.
“It’d be huge for everyone involved in the chain,” Williamson said.
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