Mobile Capture Comes to Mortgages

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The imaging technology that lets consumers deposit checks by taking photos of them with their smartphone cameras has proven to be extremely popular. That is paving the way for the same principle and technology to infiltrate mortgage lending, where image capture of mortgage documents could facilitate information transfer and speed processing.

"Leveraging the camera to deliver information reduces latency …and you are engaging customers on a device that they are comfortable with," says Bruce Orcutt, a senior director at Kofax.

Kofax (KFX), a company that sells image capture software to enable business process management (BPM) demoed its Mobile Capture for Mortgage app at the Mortgage Bankers Association's convention last week in Chicago. The software allows lenders, brokers and borrowers to use the cameras in smartphones and tablets to capture and extract information from supporting documents and deliver that information directly to the appropriate loan processes.

Orcutt contends there are several ways a mobile phone can be used to facilitate mortgage loan processing. In the case of exceptions, or where extra information or confirmations of borrower information are necessary, a lender may call or text a potential borrower asking for a paper document — a W2 tax form, a pay stub, an explanation of a bonus, etc. "They borrower can then use the camera to get that information to the lender right away," Orcutt says.

The firm's internally built technology analyzes the document to locate and optimize the data on each page. It's also using its VRS (virtual rescan) software to improve character and image recognition for documents that are being captured by mobile cameras to ensure the translation from image to text is accurate. VRS is embedded in the mobile app that users download to capture images. Orcutt says each page file is about 25 kilobytes in size, which he says is intended to reduce strain of the borrower's mobile data plan. "We want to make sure these documents are process-ready and a small file size. If you take a high res photo of a piece of paper and email it, it can be up to two megabytes," Orcutt says.

Orcutt says there are no financial institutions in production yet, though four are evaluating the technology. Mortgage Cadence, a firm that sells enterprise lending, default servicing and document preparation, has licensed Kofax's mobile imaging tech. "One of the use cases that is common is in the case of reverse mortgages, where you have senior citizens who may not be able to get to offices easily. You can get a document scan from a loan officer that's sitting at the table with them," says Mark Swift, vice president of product management at Mortgage Cadence.

Other firms are also targeting the mortgage document imaging market. "Finally there is technology available to allow borrowers and mortgage professionals to be truly mobile. The latest smartphones and tablets come loaded with hardware that allows borrowers to take photos of documents in very high resolution, and complete and sign forms remotely, check loan status, etc." says Iordan Gavazov, co-founder and CEO of LenderMobile, a firm that sells mobile technology to the mortgage industry.

LenderMobile's apps allow borrows to take photos of documents and forward them to the loan agent directly from their mobile devices, such as a request for a W2 form. The borrower will get a notification on his or her smartphone, and by tapping a button on the smartphone take a photo and submit it back, which reduces steps involved in scanning and email documents.

Jim DeBello, CEO of Mitek (MITK), which drives the tech behind a number of mobile RDC applications, says its firm's tech can be used to extract and process data and verify identification. "Mobile enrollment is a horizontal use case that applies across financial services market segments …we are talking to leading financial institutions about all of these applications as the next logical step in their mobile strategies," he says.

Mobile image capture has its limits — a mortgage loan can include as many as 300 documents, and not all lend themselves to a mobile photo. Karen Massey, a senior research analyst for IDC Financial Insights, says there are some good opportunities to use image capture for mortgage documents, such as driver's licenses and other shorter personal documents. But she says "I would be curious to see how they are handling larger documents, such as tax returns."

Orcutt admits that the tech can't be used for all documents. "We have to understand, based on user needs, the best way to use this technology. If it's a document that has 20 pages, the tech support that, but the customer may not like that," he says, adding that in these cases, Kofax offers more traditional email, fax, or a scanner application to make images or transfer documents.

Since image capture is already being used for check deposits, a lot of the security will be the same, and the idea of using mobile cameras to take photos of bank documents is not a foreign concept. "There has been public use of [image capture], so leveraging this type of tech is a good idea," Massey says.

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Consumer banking