In the wake of increased regulatory oversight, economic pressures and shifting customer expectations, mortgage lenders are adopting electronic signatures — a development that agents, brokers and their clients may view with relief.
The change is an effort to reduce paper-based loan processing errors, demonstrate compliance with consumer protection regulations and streamline lenders’ workflow and record-keeping, according to Silanis, an automated business technology provider.
Silanis, which recently hosted a webinar on e-signature solutions for consumer finance providers, has been IBM’s preferred e-signature and e-vaulting provider since 2006. Its e-sign solutions are integrated into IBM’s frameworks and run on IBM middleware and hardware.
According to Silanis, a recent survey from technology research firm Gartner showed that e-signature adoption among banks has grown 48 percent in the last 18 months, while another 43 percent of banks that are not currently using e-signatures say they are “extremely interested” in using it for loan origination in the next few years.
“Economic pressures, regulatory oversight and shifting customer expectations have changed the financial services industry,” Silanis said.
“Banks, credit unions, mortgage lenders and retail finance companies are challenged with balancing cost reduction against new investments in innovation to better capture, service and support the modern customer.
“In the midst of this transformation, financial service providers are more concerned than ever with meeting compliance requirements dictated by Gramm-Leach-Bliley, Dodd-Frank and other laws.”
By using e-signatures, banks can reduce the time to process mortgage closings from 1.5 hours to 15 minutes, save millions in paper, storage and personnel costs, and enable borrowers to access their financial records online.
In 2011, one Silanis client, U.S. Bank, incorporated e-signatures into its consumer and business loan processing across more than 3,000 retail branches, and eliminated all loan exceptions, cut the majority of document handling costs, exceeded compliance requirements, redeployed bankers’ time to sell more loans and improved customer experience in the branch, Silanis said.
There are many different ways to automate the mortgage process with e-signatures, according to Silanis. Common uses include:
- In-branch e-signing with a paper-based review of documents, combined with signature capture on a tablet.
- Click-to-sign (C2S) in a browser from a home or office computer.
- Point-of-sale transactions that use C2S with an iPad to process e-contracts.
- Electronic signing and vaulting of transferable records.
- Providing customers with a secure link via email to go online and receive delivery of regulated disclosures.
Mortgage lenders and other real estate industry professionals have been somewhat slow to adopt e-signature technology because real estate closings are handled differently across various local areas and the technology requires complete buy-in from everyone involved in the closing process.
In 2000, Congress passed the E-Sign Act to establish the legitimacy of electronic signatures, but some settlement agents, notaries and county recorders of deeds have yet to accept digitally signed signatures.
In recent years, the Consumer Financial Protection Bureau (CFPB) began to study the issue and is conducting a program to test e-closings from a consumer’s point of view.