The main problem with using paper documents when closing a complex loan is that it takes a lot of time for all parties to synthesize the deal's vitally important details.
Key provisos and stipulations are simply more susceptible to getting lost in the paper shuffle: Mistakes are made and terms are less easily comprehended among multiple counterparties. Disagreements and errors take longer to uncover and resolve.
To avert calamity and streamline operations, banks are turning to products that enable secure Web-based posting of closing documents for complex loans such as mortgages. The advantages of switching to a more digitized closing process based on Internet delivery are manifold, experts say.
Electronic loan documents are searchable by "key word," for instance. Thus, parties involved can digitally scour written terms more swiftly to better and more quickly understand them, as well as to correct mistakes and resolve disagreements on fees and other details faster than in paper-heavy closings.
Banks making the switch say they're saving both time and money: Republic Bancorp, for instance, based in Ann Arbor, MI, cites realized annual savings of roughly $50,000 from reductions in overnight shipping and "rush" closing costs as a direct result of installing eLynx's Web Posting Service.
By going digital with Cincinnati-based eLynx, the $6.1 billion institution has dramatically decreased the time it takes to send closing records to various title companies. A process that used to take two days, now flies at Internet, or email, speed. "The [eLynx] process really helps customer service when there is an error or change in a closing package," says Greg Bixby, Republic's CIO.
About 85 percent of Republic's loans were being electronically delivered to title companies three months after Republic went live with WPS in October 2004, Bixby says.
Speed is key to booking home-equity deals, to which these products can also be applied. "A borrower might put in an application at four different institutions. Whoever can close that deal the quickest is going to get it," says Bobbie Britting, an analyst at TowerGroup.
Demand has led several of the major loan-origination system (LOS) vendors to add Web-based viewing and posting of closing documents to their core offerings in the last few years. The aim is to attract customers seeking end-to-end products and to capture market share from eLynx and its rivals in the e-posting niche, which include Portland, OR-based Swiftview and Data-Vision, based in Mishawaka, IN. Both of the latter providers have alliances with Fiserv and other LOS vendors.
Fiserv Lending Solutions, a subsidiary of Brookfield, WI-based Fiserv, has integrated electronic document posting and e-signatures into its UniFi PRO Mortgage eX loan origination system. Mortgage buyers have an option to electronically sign loan documents online as well.
Fiserv acquired the technology in May via the $13.75 million purchase of the U.S. e-lending operations (based in McLean, VA) of Montreal's Emergis. The vendor has yet to disclose a financial institution that's using the platform, which was originally built by Freddie Mac and sold to Emergis in 2002.
Republic, for example, is using Fiserv's core mortgage platform in conjunction with eLynx's WPS. Yet Fiserv is speaking to customers like the Navy Federal Credit Union about adding the new capability, says Jack Pence, Fiserv Lending's vp of strategic alliances.
Jacksonville, FL-based Fidelity Information Services also offers e-doc delivery for closings. The Fidelity National Financial subsidiary offers the Internet-enabled "Empower Middle-Tier," which provides direct connectivity between lenders' Web sites and loan-origination databases for electronic document viewing and printing, including for closing and delivery.
The solution uses SOAP-based protocols to send XML data over the Internet, giving consumers, loan officers and lending correspondents the ability to log onto a database to enter lead information and edit and review loan data. The platform also includes capabilities to send submissions to underwriting systems like Fannie Mae's "Desktop Underwriter" and Freddie Mac's "Loan Prospector."
