Case Study

E-Signatures for Online Mortgages

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Bank: National Bank of Kansas City
Problem: Missing signatures on mortgage documents were increasing production costs and time.
Solution: By deploying electronic signature software; borrowers now sign documents by clicking on a screen.


National Bank of Kansas City used to depend on UPS to send and receive mortgage documents that required multiple wet-ink signatures and section sign-offs. Now the entire signature and disclosure process can be done electronically with an e-signature application from DocuSign. This has enabled the bank to avoid prolonged closing times, some of which used to stretch to more than 30 days, incurring hundreds of dollars in weekly fees levied by the larger banks to which National sells its loans.

Digitizing signatures with DocuSign since August has allowed the bank to reduce by an average of one to two days the time it takes the bank to receive back completed, fully signed mortgages, and thus better avoid the so-called lock-in fees, fines that can range from $300 to $1,000 or more per week, depending on the size of the loan.

"Basically, those extra days help us if we have a 28- or 30-day lock-in period for getting a loan closed," says Dan Stevens, National's sales operations manager. "That two- or one-day head start is valuable."

Mortgage interest rates are made available to borrowers from larger banks that are buying or investing in the loans, while the lender originating the mortgages agrees to close the loans with the borrower and sell them off to the bigger, investing banks within a certain timeframe - typically 30 days. Buyers of the originated mortgages will honor the interest rate at which a borrower agrees to receive credit for the 30-day "lock-in period" for free, but will only keep the interest rate "locked" thereafter if weekly fees are paid. NBKC's mortgage investors include Bank of America, CitiMortgage and Wells Fargo, Stevens says.

Previously, the Leawood, Kan.-based correspondent lender sent the 25- to 35-page documents to loan applicants via UPS with sections highlighted where borrowers' signatures were required, or transmitted them in a secure PDF via email, which necessitated customers printing the documents before signing them, and either faxing or scanning them back to the bank. The bank still offers these methods as disclosure options to mortgage borrowers, but they're more time-consuming and error-prone than DocuSign's e-signature process.

"A certain percentage of people will still miss something using UPS and email," says Stevens. "Plenty of times we get stuff back that's half-baked from a consumer. That stalls the process. But the DocuSign system will not allow borrowers to finish the process without completing all the required signatures and initialing. So it totally eliminates the chance of human error."

The bank expects to originate close to $1.6 billion in home mortgages this year. It began as a mortgage lender, Ameri-National Mortgage, and in 1997 partnered with home loan Web creator John Markert to expand its online lending business. In 1999 it chartered a national bank called First Horizon, of which Ameri-National became a division that was renamed National Bank of Kansas City in 2004.

Borrowers often reach NBKC after requesting mortgage info in Google searches or via sites like LendingTree. "About 98% of our mortgage customers are never going to set foot in our offices," Stevens says. The bank then responds either via phone or email to discuss available mortgage options. If the borrower meets approval criteria and the customer agrees to a loan at a particular rate, the bank will lock-in the interest rate. At this point, the borrower is offered options for receiving the initial disclosure and loan package from DocuSign, UPS or email.

The only interaction DocuSign has is with the PDF document, not the loan origination system. Users simply upload the mortgage document into DocuSign, which supports other file formats like Microsoft Word and Excel. Loan officers type the name and email address for each required borrower or signer, and drag and drop "Sign Here" tabs into the document. The package is then emailed to customers via a secure link that opens the document in a browser for electronic signing and review.

Borrowers are offered signatures DocuSign automatically produces from their typed names in various font styles; or the borrower can opt to create their own signature using their mouse. The app then guides the borrower to places where signatures or initials are required. Customers add their chosen e-signatures by clicking in the spaces. After a final "confirm signing" step is completed, the lender receives the package back electronically "almost immediately," Stevens says. Borrowers can print the document, have it emailed, or save it as a PDF to their computers. AssureSign, Doc on Time, EchoSign and RightSignature also offer e-signing.

Bank executives have discussed deploying DocuSign for retail account openings if the solution's performance in mortgages proves extensible, Stevens says.

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Comments (1)
How are they handling multiple signers for those documents?
Posted by jpsands | Friday, January 11 2013 at 12:24PM ET
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