Mortgage Companies Must Embrace a ‘Paperless’ Future


Reduce, reuse and recycle.

These key objectives for going green and making more environmentally friendly decisions are particularly apropos for the mortgage industry, which produces reams of paper for every loan.

According to the U.S. Environmental Protection Agency, the average office worker uses approximately 10,000 pieces of paper per year – the equivalent of a small tree. Given that the mortgage process is notorious for generating a great deal of paper, today’s mortgage professionals probably far exceed the national average.

The time for mortgage professionals to “go green” is now.

With document imaging and electronic delivery now widely available, the need for hard copies is significantly reduced. Furthermore, electronic documentation is essential to meet consumer demands for immediate access to loan information.

Adopting a paperless – or digital – loan process is one important step mortgage professionals can take to reduce their environmental impact while saving money and improving the borrower experience.

Saving Time and Money

Paperless processing uses a system that automatically generates electronic reports and documents, providing quick and easy access to them as needed. Paperless documentation saves money, increases operational efficiency for mortgage lenders and servicers, and provides an ideal solution for adhering to today’s record retention requirements.

Paperless processing saves money. The average mortgage application is a whopping 500 pages long. If a lender uses paper documentation throughout the loan application and closing processes, the environmental and financial costs are staggering.

Furthermore, the actual cost of the paper only represents about 10% of the total lifecycle cost of using paper. These costs include not only the price of paper and printing supplies, but also the cost of distributing physical documents to the intended parties whether via interoffice carriers or external carriers, such as UPS, FedEx or the U.S. Postal Service.

According to PricewaterhouseCoopers, it costs $20 in labor alone to file a document, $120 to locate a misfiled document, and $220 to recreate the document if it can’t be located. Electronic documentation eliminates these expenses.

The mortgage application process generating high volumes of documents in a short cycle to closing is just the first segment in a mortgage cycle. Depending on the mortgage loan term, up to 30 more years of document generation follows with the servicer.

Providing borrowers with electronic access to statements is far more cost effective than generating paper statements year after year. An online borrower portal or mobile app provides the servicer with significant hard cost savings as well as eliminating direct contact with a call center representative because customers can access their loan information at their convenience.

According to J.D. Power’s 2016 and 2017 U.S. Primary Mortgage Servicer Satisfaction Studies, mortgage servicers that invested in improving the customer experience reported four primary ROI benefits. One of these benefits was cost containment and reduction related to increasing the use of self-service channels to reduce customers’ reliance on the live phone channel.

The study found that when mortgage servicers provided an easy-to-navigate website with useful information, borrowers made significantly fewer calls to live agents. Many customers want to use self-service options and prefer attempting to find their answers online before having to make that call.

The study also found that those who did not use the servicer’s website were less satisfied than those who did.

Surprisingly, the study also showed that mobile usage declined from 2016 to 2017.

Electronic documentation also provides a method for extracting specific data for use in other internal and external systems, such as automatic under-writing, title searches and disclosure documents.

Furthermore, digital documents offer a more convenient, quicker method for delivering reports and documents to all parties involved in the process, from borrowers and processors to closing agents and investors.

Electronic documentation is a more reliable method for record retention – essential in today’s highly regulated mortgage environment. Computer space is inexpensive, provides more flexibility in maintaining documents, and eliminates the need to spend time and money shredding confidential paper reports and documents.

Meeting Borrower Demands

Paperless processing can also significantly improve the overall borrower experience. Today’s borrowers may view lengthy paper documents as wasteful and even annoying, especially as their preference for and reliance on technology continues to increase.

In 2017, consumers age 36 and younger (millennials and Gen Y’ers) represented the largest share of home buyers at 34%. The vast majority of this home buying segment expect immediate access to information anytime, anywhere and also recognize and appreciate the positive impact that electronic communication has on the environment.

According to the J.D. Power 2017 U.S. Retail Banking Satisfaction Study, many Americans of all ages now use digital banking. Digital banking is most common among millennials (49%), followed by Gen Xers (31%) and Baby Boomers (16%). Furthermore, regardless of age, many borrowers complete their mortgage application online. According to the 2017 J.D. Power U.S. Primary Mortgage Origination Satisfaction Study, 43% of mortgage customers reported applying online in 2017, up from 28% in 2016.

Electronic mortgage application processes provide immediate access to loan information, increasing overall borrower satisfaction. Furthermore, borrowers as well as mortgage professionals appreciate having a more convenient method of filing and accessing important documents and records.

By switching to paperless processing, mortgage companies can reduce their environmental impact, save time and money, and better satisfy their tech-savvy borrowers – especially millennials.

Even small reductions in paper consumption can have a positive impact on the environment, borrower satisfaction, and the mortgage company’s bottom line.

Susan Graham is president and chief operating officer for Financial Industry Computer Systems Inc. (FICS), a provider of mortgage origination and mortgage servicing software.

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