Pre-execution: Represents activities to ready the environment and parties for the execution or actually closing and electronic signing of documents.

"Lenders are not in the fulfillment business, nor should they be. Adopting a total electronic fulfillment solution-one that addresses the continuing demand for paper documents-brings lenders not only great cost benefits, but also positions them strategically for the quick adoption of the truly electronic mortgage." --Robert Nilsson, vice president of business development with eLynx Ltd., Cincinnati.

Investment Banks Focus on 'Deal Management' Technology
Murray, Michael
Investment banks have stepped up their focus on leveraging "deal management" technology and automation, spending IT dollars on improving their ability to win deals, according to research from TowerGroup, Needham, Mass.
 
Stephen Bruel, analyst in TowerGroup's securities and capital markets research practice, said research showed that investment banks could maximize their effectiveness while minimizing the cost of their suite of IT tools through a "tactical redesign of their infrastructure." Bruel said that at this stage in the development of new issue technology, there is little need for investment banks to undertake a wholesale strategic redesign of their solution set.
 
Bruel added that investment banks have significantly lagged in the trading side of business activity based on the culture and regulatory landscape governing the industry-not on the available technology.
 
"The technology landscape in investment banking is changing, though at a significantly slower pace than on the trading side," Bruel said. "Technology will help embed best practices and structure around the investment banking process, particularly relative to new issues. The goal is not to fully overhaul or automate the complete deal process, but rather provide solutions that complement the banker and save valuable time and resources."
 
TowerGroup estimated that investment banks will spend $1.53 billion in the U.S. on investment banking suites of IT applications, with another $1.48 billion spent outside the U.S. It noted that in the next few years, the role played by syndicate desks, issuers, and underwriters will quickly evolve. Technology is already making inroads relative to "plain vanilla" new issue assets, such as corporate fixed income instruments.
 
According to the research, investment bankers need "an integrated single window access point that aggregates and correlates disparate information sources in order to help win deals [and generate revenues]." TowerGroup estimated that 82 percent of all investment banking IT spending is currently targeted to help win deals-and the drive towards a single window portal will keep that proportion steady.
 
"Investment banking remains a relationship business. Technology is not going to change that fact," Bruel said. "However, as younger bankers who grew up with technology move up the hierarchy in their banks, they will push for new and more efficient uses of IT. We see technology as a complement to the intellectual capital the bankers themselves bring to the table, and as a tool to facilitate the business process - as opposed to an embedded driver of the overall process itself."

The research titles are "Investment Banking: Why Automating "Deal Management" Has Become a Big Deal," and "Investment Banking Technology: Analyzing Trends, Opportunities and the Vendor Ecosystem."
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CIOs Plan For More Staff, Survey Says
McAfee, Jamie
Chief information officers plan to add IT staff in the fourth quarter, according to the Robert Half Technology IT Hiring Index and Skills Report. Thirteen percent of respondents plan to increase staff while 3 percent said they might have to reduce staff.

Among the CIOs who expect to hire, business growth was cited by 40 percent as the primary reason for adding IT staff. According to the survey, 23 percent of respondents said a need for increased customer service and/or end-user support professionals. Installation or development of new enterprise-wide applications followed with 19 percent respondents, a gain of 6 percentage points from the previous quarters.

The survey found that when asked which overall job category was experiencing the most growth within their IT departments, the top reply by CIOs was help desk/end-user support at 19 percent. Networking followed at 18 percent, and applications development was third at 12 percent.

"Ongoing competition for IT professionals, particularly those with hard-to-find skill sets and specialized expertise, is prompting many companies to devote greater resources to recruitment and retention efforts," said Katherine Spencer Lee, executive director of Robert Half Technology.

Of the technical skill sets most sough after, Microsoft Windows (Server 2000/2003) administration was named by 80 percent of the CIOs surveyed. Network administration (Cisco, Nortel, Novell) was a close second, with 79 percent of respondents, followed by database management (Oracle, SQL Server, DB2), at 71 percent.

In addition, the Robert Half Technology 2006 Salary Guide that to further recruitment and retention, many business are reassessing their compensation packages. According to the findings, starting salaries are projected to increase an average of 3 percent over last year. High-demand positions such as business systems analyst and IT auditor could see base compensation increases of up to 11 percent.

Regionally, CIOs in the East South Central states anticipate the most active hiring for the remainder of 2006. Twenty-three percent of executives in this region plan to expand their IT departments and just 1 percent forecast staff cutbacks. The net 22 percent increase is 12 points above the national average.

"Many companies have been moving into the East South Central region to take advantage of the lower cost of doing business and are actively recruiting employees," Lee said. "Firms that have recently invested in hardware and software upgrades now require long-term support for their systems, which is creating demand for help desk professionals, network engineers and network security staff."

Executives surveyed from the Mountain states are among the most optimistic in the country, outpacing the national average in projected technology hiring for the fourth consecutive quarter, the findings of the IT Hiring Index said. Twenty-one percent of CIOs in the region expect to add IT staff in the fourth quarter and none forecast personnel reductions.

Technology executives in the construction industry were unanimous in their desire to hire IT staff in the fourth quarter, survey results found. Thirty-four percent of CIOs surveyed plan to add IT staff and none anticipate cutbacks in personnel.

The poll includes responses from more than 1,400 CIOs from U.S. companies with 100 or more employees. It was conducted by an independent research firm.
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White Paper Identifies Fraud Challenges
McAfee, Jamie
Despite the increase in use of electronic payments, the total amount of attempted check fraud is more than $5.5 billion annually, according to the American Bankers Association. New fraud trends continue to emerge. A white paper by New York-based Fortent identifies fraud challenges and how banks are protecting themselves and their customers.

"Winning the War Against Financial Fraud" found that new opportunities for employee fraud are emerging. The threat of information theft is causing as much concern as the theft of funds. In today's automated bank environment, customer account information is readily accessible in branches, offices and call centers throughout the world, according to the white paper.

"Fraud is not static. It continues to evolve with criminals, typically following the path of least resistance, said Steve Solberg, fraud product manager at Fortent. "Once new anti-fraud measures are implemented, criminals move to another scheme until they figure out how to beat those measures."

"The financial cost of fraud to a company may be three or more times the value of the fraud loss amount," Solberg added.

One challenge for banks is criminals who thwart rules-based systems. However, intelligence systems can learn criminals' behavior and guard against risk in real time, Solberg said. Banks are required to use these advanced systems to stay ahead of fraudsters, who are keenly aware of reporting requirements that raise alerts.

Another trend in bank fraud is the "silo" mentality, which weakens fraud detection. According to Solberg, many banks' check fraud detection and credit card detection departments often do not share systems; the same criminals can prey on customers in different divisions without raising a bank-wide red flag.

"Fraud is fixable-if you use the right tools," Solberg said. "The solutions to what may be considered an unacceptable fraud environment are not mysterious, but simply require commitment, investment and talent."

Fraud can create a backlash for banks. It carries significant reputational risk, reduces customer confidence and can damage an institution's market capitalization and profitability. As a solution, C-suites are moving toward an enterprise focus on anti-fraud systems. A more powerful fraud detection infrastructure "can contribute to cost reductions and total operations efficiency... [including] reduced investigative staff and premises expenses, as well as lower systems costs in the long run," Solberg said.

Regulatory expectations are also increasing. Bank regulatory agencies may soon mandate that financial institutions implement stronger programs for identity-theft prevention, according to the white paper.
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Industry Briefs
Sorohan, Mike
Ten of 14 HP Witnesses Plead 5th at House Hearing
Ten of the 14 employees and contractors of Hewlett-Packard subpoenaed by a House subcommittee invoked their Fifth Amendment right against self-incrimination at a contentious hearing last week investigating the pretexting scandal that has engulfed the company in recent weeks.

Former HP Chairman Patricia Dunn, who was forced out late last month, and current chairman and CEO Mark Hurd bore the brunt of criticism at the Sept. 28 House Energy and Oversight Subcommittee hearing. Despite evidence suggesting that Dunn was actively involved in monitoring an internal HP investigation into alleged leaks among the HP Board of Directors, she insisted that she was "unaware that the fraudulent misrepresentation of identity was a part of the standard arsenal of HP tactics."

Dunn defended her decision to investigate the leaks, asserting that it was "necessary to protect trade secrets" and confidential discussion. "I believe that these methods may be quite common, not just at Hewlett-Packard," Dunn said.

Rep. Diana DeGette, D-Colo., issued a blistering critique, saying Dunn "knew that a lot of these techniques were going on. You just didn't think it was your job to do anything about it.

Former HP general counsel Ann Baskins resigned the day before the hearing, the sixth major HP executive to step down since news of the scandal broke. She refused to testify before the House subcommittee, pleading the 5th Amendment, as did former members of HP's global security team and five private investigators hired by HP to conduct the alleged pretexting.

Dunn reportedly authorized HP investigators to use pretexting to access phone records of board members suspected of leaking information about board deliberations to news outlets. The investigators also allegedly accessed phone records of at least nine journalists.

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Gone Phishing at Google?
Google said it had discovered a "phishing hole" on its Public Service Search application, but said it had taken steps to rectify the situation.

A blogger brought the issue to Google's attention, noting that the application, which is used by nonprofit institutions to install ad-free Google functions, could enable phishers to create fake Google pages to deceive users into disclosing personal information.

"We recently learned of a security issue with our Public Service Search service and disabled login functionality temporarily to protect our Public Service Search users while we were working to fix the problem," Google said in a statement. "We are not aware of any malicious exploits of this problem and this service represents an extremely small portion of searches. We have a temporary fix in place currently that prevents exploitation of this problem and will have a permanent solution in place shortly."

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Homeland Security Has Cybersecurity Specialist (Finally)
The Department of Homeland Security's assistant secretary for cybersecurity position, which has been vacant for more than a year, is finally filled. Gregory Garcia, who had previously served as a vice president at the Information Technology Association of America, accepted the post last month.

The announcement by Homeland Security Secretary Michael Chertoff came as members of Congress repeatedly criticized him for not taking cybersecurity seriously. The position had been vacant for 14 months before Garcia accepted the position.

Garcia will be responsible for advising federal agencies and the private sector on cybersecurity issues.
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Report from MISMO's Technology Workgroup Meetings
Zimmer, Gloria Gordon
The MISMO Workgroups and Governance Committee meet face-to-face three times a year to develop, revise and approve electronic data exchange standards in Extensible Markup Language (XML) for the real estate finance community. These meetings provide an opportunity for industry professionals to engage in an active exchange of ideas and to define a path forward for the future of electronic data interchange in the industry. The most recent meeting took place Sept. 11-14 in Fort Collins, Colo.

Introduction to MISMO
David Barkley, chair of the MISMO Governance Committee, gave an overview of the MISMO organization to new attendees. His presentation included the history and purpose of the MISMO organization, tracing the development of electronic data exchange formats in the mortgage industry, through the X12 EDI standards to the present data standards in Extensible Markup Language (XML). Current areas of focus include work in business process areas of mortgage industry data processing and relationships with related standards organizations.

MISMO workgroup meetings provide an open, consensus-based setting that encourages participation by all interested parties.

MISMO ARCHITECTURE:
Architecture Workgroup (Gabe Minton, chair; Pritish Jacob, vice chair)
Architecture workgroup activities since the last trimester meeting include the approval of five new releases in the Version 2.4 suite of standards that include: Mortgage Insurance (MI) Policy Cancel, Flood Insurance Request and Response, Document Classification and Document Information, a revised Envelope that identifies parties in a transaction submitted through an intermediary or portal system and the Real Estate Property Information Valuation Response.

The MI Policy Cancel transaction provides a means to terminate a mortgage insurance policy when a loan is paid off. Document Classification furnishes a standardized methodology for identifying document types and conveying related information about documents embedded in electronic transactions. The Real Estate Property Information Valuation Response integrates the previously released Property data set in a new XML structure in response to a request for an appraisal or valuation of a property. An updated MISMO Envelope provides additional information to identify parties in a transaction submitted through an intermediary or portal system.

Additionally, four Errata releases have been approved and posted for MISMO transactions; Title Insurance v2.3.2, Flood Insurance v2.3.2, Secondary Loan Delivery v2.4 and SMART® Doc v1.02.

The Architecture Workgroup approved release of a new version v2.4.1 of the PRIA eNotary and eDocument standards and held extensive discussions on the topics of Backward Compatibility, Namespaces and the MISMO Reference Model.

Backward Compatibility
Gloria Zimmer, MISMO program director, presented a proposal for Backward Compatibility to be used as guidance for acceptable changes once MISMO moves to the Version 3.x standards. To date, MISMO has attempted to maintain backward compatibility within the Version2.x releases although no formal definition of backward compatibility exists. Often the constraint of backward compatibility has resulted in retention of a misspelled tag name or other errors in subsequent publications of the standards.

Further discussion resulted in a consensus that backward compatibility is less of a concern to implementers than managing changes that occur in successive versions of the standards. This led to a recommendation for MISMO to create a versioning strategy that takes into consideration the impact of changes that relate to backward compatibility for revisions of the standards and a mandate to provide adequate documentation between version releases.

Namespaces
Greg Alvord, Core Structures chair, presented a proposal for the use of namespaces in the MISMO Version 3.0 schemas, noting that namespaces provide a way to identify when the business semantics in the standards change. Since the data dictionary (LDD) changes with each approved transaction, creating one namespace per release would result in many namespaces. A corollary proposal would limit releases of MISMO data standards to three times per year with all MISMO standards republished under the same namespace inheriting the latest version of the LDD.

The Architecture Committee did not reach a consensus on how to assign namespaces but noted that a combination of Version, namespace and other method(s), including use of a SOAP header could provide the necessary distinctions. The recommendation to publish on a three times per year schedule was previously approved by Architecture and has been referred to the MISMO Governance Committee for further consideration and decision.

Reference Model
Alvord led the review of the Version 2.x reference model and discussed migration to Version 3.0. Alvord introduced the Contivo Builder Pro tool and MISMO Reference Model of the v2.x data standards, and demonstrated ways to resolve conflicts between components of the same name developed independently by different workgroups. This tool can be used to automatically generate schema for the data standards, all of which would be based upon the same LDD vocabulary.

The Architecture Workgroup is coordinating the development of a set of Common Integration Scenarios among four MISMO workgroups; Enveloping, Information Security, eMortgage Closing Interface Transactions (eMCIT) and Multi-Services, to address the exchange of transactions between trading partners and to define requirements for the next version of the MISMO Envelope.

Subgroups of the MISMO Architecture workgroup include Enveloping, Information Security, Commercial Architecture and Core Structures, each supporting their scope of responsibilities.

Core Structures (Greg Alvord, chair; and Dave Erkes, vice chair)
The Core Structures workgroup provides guidance to Core Data and maintains the MISMO Engineering Guidelines for Version 2.x standards. The Engineering Guidelines, previously released on several occasions as draft specifications, have been separated into numbered sections, making them available for individual updates and approval. With the use of a collaborative tool, this change will enable the Guidelines to be updated and published with greater frequency. Core Structures reviewed recent sections addressing the topics of Class Words, Non-Public Personal Information Metadata, Files Names and Namespaces.

MISMO has recently purchased and intends to migrate the development and maintenance of the MISMO LDD and schema files to software tools from Contivo Inc. These tools will serve as a canonical source for the MISMO Reference Model, which is nearly completed for Version 2.x, and will serve as a basis for the Version 3.x standards. The framework for the reference model is being modified to support use cases submitted by the Multi-Service and eMortgage Closing Interface Transactions (eMCIT) workgroups. Core Structures plans to release the MISMO Engineering Guidelines (MEG files) and Reference Model for Version 3.x in January, 2007.

Enveloping (Pritish Jacob, chair)
The Envelope workgroup conducted an Architecture Survey seeking information about methods of communication for exchanging MISMO transactions in external system integrations between trading partners. The survey closed Sept. 22. Results will be published in the near future.

The Envelope workgroup completed a v2.4 Request and Response, which was released in August for other MISMO workgroups to use for the transport and routing of v2.4 payloads.

The Envelope workgroup is authoring a whitepaper with recommendations for using SOAP as a means of transport in conjunction with the MISMO standards, and working on requirements for a Version 2.5 release, which will include support for tracking multi-service requests.

Information Security Workgroup (John Simon, chair; and Dick Taylor, vice chair; with R.J. Schlecht, SISAC representative)
The Information Security Workgroup (ISWG) updated the Security content within the general MISMO I-Guide that addresses security best practices. The recommendations were broad guidelines for methods of exchanging messages with mortgage industry trading partners using industry best practices and SISAC certifications.

The Secure Identity Services Accreditation Corp. (SISAC) is a wholly-owned, non-profit subsidiary of the MBA that was formed to standardize the policies of issuing security credentials in the mortgage industry and to accredit security certificate providers.

Recent items in the news about data breaches created lively discussions among participants.

The ISWG has completed identification of data items in the MISMO Logical Data Dictionary (LDD) that may need to be flagged as personal or private information as defined by state laws, but will continue to monitor state legislation for new requirements. The workgroup ratified MISMO Engineering Guidelines that define the process by which the identified data points will be maintained by each individual workgroup to flag private data within their own specifications.

The ISWG revised the Identifying and Safeguarding Personal Information White Paper released in February to include recent guidelines published by NIST and current state legislation.

ISWG Collaboration:
The Security workgroup will be working with the Multi-Services workgroup to develop use cases for security practices to mitigate risks associated with the exchange of service requests,

ISWG will be working with the Envelope workgroup to develop security profiles associated with web services.

ISWG will be working with the Real Estate Property Information (REPI) workgroup to develop security recommendations for identifying fraudulent appraisals.

Legislation:
ISWG heard a presentation on the proposed FFIEC identity theft red flag amendment to the FACT Act. The regulations effect account opening and ongoing relationships, requiring written processes and procedures for potential identity fraud threats for both customers and institutions.
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Technology Briefs
McAfee, Jamie
DataVerify, Chesterfield, Mo., released Third Party Verify, a database product that automates the process of mortgage broker and correspondent-lender license verifications. The Third Party Verify database updates information from all regulatory sources that license mortgage originators in the nation to deliver customers an accurate and easy to use platform for mortgage license verifications.

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New York-based PricewaterhouseCoopers launched a U.S. valuation practice that offers a full range of valuation services. PwC organized its valuation services into two teams. The Transaction Services Accounting and Valuation Advisory practice offering services that help companies meet financial reporting and tax valuation requirements, especially those related to M&A transactions. 

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Dallas-based Global 360 was listed as one of the top five BPM vendors of 2005 based on total software revenue in a recent report by Gartner Inc., Stamford, Conn. As the No. 2 named vendor worldwide, Global 360 achieved its position by exhibiting nearly 25 percent growth, keeping pace with expansion of the pure-play BPM market in terms of total software revenue, according to the company.

According to Gartner, the steady growth of organizations in the BPM market could contribute to the evolution of business-process management technology, providing customers with the end-to-end solution of a business process management suite (BPMS).

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Trinity Real Estate Solutions, Dallas, launched a new services bundle of its specialty risk management products. Each product allows lenders to manage the risks and costs of residential new construction loans. The new services bundle includes residential new construction inspections and process management tools such as construction training, inactivity reporting, troubled asset evaluations, and more.

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DocuLex, Winter Haven, FLa., released Goby Capture Professional 3.1, enhancing optical character recognition (OCR) accuracy with 24-bit color and 256-grayscale JPEG and uncompressed TIF support, and the addition of 500 Windows fonts to the master library of the automated and network paper to electronic document conversion software.
 
The program provides paper document conversion and electronic capture of Microsoft Office files (Word and Excel) by automating image-processing functions at the document server. Distribution occurs via the programs' Profiler document identification freeware, in tandem with the server-based Monitor image-processing program. Goby Capture is a component of DocuLex's Archive Studio, featuring the Instant Document Access retrieval program, WebSearch.

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Users of Vector can access FraudMark, a mortgage application fraud detection product from BasePoint Analytics, Carlsbad, Calif. FraudMark targets fraudulent loans through Vector, and when used with Vector's LoanIQ, lenders can access an end-to-end fraud detection suite for both collateral and mortgage application fraud. 

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Interthinx, Weldon Spring, Mo., announced its next-generation loan-level fraud detection product for lenders and investors: FraudGUARD, which is powered by FraudNet, a network of data, pattern matching analytics and industry experience.  The product uses data pulled from the Interthinx National Fraud Protection Database (NFPD), aggregated 1003 (application) data spanning over 10 years, third-party data, and internal shared data. The data is analyzed using a pattern-matching system designed to emulate the most current fraud tactics. The system employs models and search algorithms to spot patterns and commonalities between the loan information and previous instances of loan fraud.
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Research DataNotes Offer Industry Analysis
MBA Staff
Research DataNotes, produced by the Mortgage Bankers Association's research and economics staff, provide insight and analysis into some of the most important topics affecting the real estate finance industry. Research DataNotes are produced, at a minimum, on a quarterly basis, and cover residential, commercial/multifamily and benchmarking issues and will be available on MBA's Web site, www.mortgagebankers.org.

The current DataNote, Residential Mortgage Origination Channels, provides some clarification of terminology surrounding different residential mortgage origination channels, while providing some estimates regarding shares of business across these various channels. 

To view the DataNote, go to http://mortgagebankers.org/files/Bulletin/InternalResource/44664_September2006-ResidentialMortgageOriginationChannels.pdf.
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MBA Membership Directory Available Online
Murray, Venita
The Mortgage Bankers Association's Membership Directory is now available to members directly from the MBA Web site at www.mortgagebankers.org.

Touted as one of MBA's most coveted resources, the Membership Directory has been enhanced to give you and your company access to the most up-to-date information on MBA member companies.

Available exclusively to the staff of MBA's more than 3,000 member companies, the Membership Directory allows members to find each other and communicate via a recognizable and credible source. Using your individual username and password, you can search by market focus, business or product type, location and other detailed categories, all to help you find other MBA members faster and easier than ever before.

MBA's Membership Directory is available to MBA members only. The information listed is provided by MBA member companies for publication in MBA's Membership Directory.

For more information, visit the Directory Web site at www.mortgagebankers.org/Tools/MemberDirectory.aspx.
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MBA Tech NewsLink Reprints Available
MBA Staff
Articles appearing in MBA Tech NewsLink are available as reprints for a nominal fee. Reprints are done on quality paper or can be sent electronically as a .PDF file. Reprints can be distributed to your employees, to illustrate presentations or for other communication purposes.

For reprint information on stories in MBA Tech NewsLink, contact Bob Thornton at (800) 394-5157, ext. 28.
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People in the News
MBA Staff
Archive Systems Names Verna VP of Sales
Archive Systems, Fairfield, N.J., appointed Elaine Verna as vice president of sales. With more than 20 years of experience in executive leadership and sales roles, Verna will lead Archive Systems' sales force.

Verna's background encompasses a number of executive management positions including COO of Knowtions, vice president of business development for Edison Venture Fund and president of isSound Corp. Earlier, Verna co-founded Princeton Softech, a software company, and served as vice president of sales.

Lenders First Choice Adds Bailey as SVP
Lenders First Choice, Simi Valley, Calif., added Dan Bailey as senior vice president of national operations, responsible for supervising the company's overall closing operations. He is based at LFC's Frisco, Texas operations center.

Prior to joining LFC, Bailey had several positions at LandAmerica OneStop, including vice president of Texas operations, vice president of strategic initiatives and compliance officer.
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Total Fulfillment Solutions: Flexibility Provides Benefits for Lenders and their Customers
Nilsson, Robert
(Robert Nilsson is vice president of business development at eLynx Ltd., Cincinnati. His responsibilities include expanding the company's service offerings and client roster. He also manages corporate-wide strategies as they relate to marketing, business and market development, strategic partnerships, business acquisitions, public relations and advertising. Nilsson is currently developing new services for existing clients as well as new markets, with a current focus on the insurance industry.)

The mortgage industry has clearly documented the efficiency and monetary gains of moving from paper to electronic document delivery. Lenders have maximized ROI on technology investments that save 40-60 percent over managing processes on paper. While progressive lenders may be willing to embrace e-delivery, they must still support consumers who insist on traditional paper, which creates an expensive new logistical offshoot in the process.

Forward-looking business leaders should be moving to a total fulfillment solution, incorporating electronic delivery and eSignatures wherever possible, while continuing to support paper based delivery as needed. Total fulfillment provides an umbrella covering all three options (eDelivery, eSignatures and paper delivery). This aligns a lender's goals for the electronic process with its paper-based counterpart. For example, lenders who pursue signing of disclosures can benefit by initiating the process with nearly instant electronic signatures, while lenders who are less concerned with signing can initiate the process with electronic delivery.

Total fulfillment also allows for the incremental adoption of eMortgage technology now, while positioning the lender to reap maximum benefits when the truly paperless mortgage is an industry-wide reality. Lenders can adopt as much or as little as they prefer; perhaps starting with electronic and paper-based delivery of disclosures before adding eSignatures later on.

The Option is Here
Making the shift to total fulfillment is as much about changing a company's core operating assumptions as about choosing one technology solution over another. Many lenders are still hesitant to go electronic. But such a transition isn't necessarily an "all or nothing" affair. Significant pieces of the mortgage process-notably applications and disclosures-can already be handled, legally and compliant, with existing paperless technology.

Total fulfillment marks a fundamental shift in the way business is done, but is at its core a very basic concept. Vast amounts of paper move around the country, from lenders' print centers, to couriers, to consumers and then back again. Time-and often some documents-are lost in the process. The cost of moving all this paper is tremendous.

Lenders are not in the fulfillment business, nor should they be. Adopting a total electronic fulfillment solution-one that addresses the continuing demand for paper documents-brings lenders not only great cost benefits, but also positions them strategically for the quick adoption of the truly electronic mortgage.

Paper Complications
According to the Mortgage Bankers Association's Council to Shape Change, real estate finance will change drastically over the next several years. Industry consolidations and convergence combined with changing consumer demographics will intensify competition among banks and technology providers alike. To survive in this volatile environment, lenders should seek out options that incorporate old processes with the new. Total fulfillment is just such an option.

The lender who implements an eDelivery solution understands their core competencies lay not in the preparation and coordination of the delivery of documents, but in mortgage origination itself. Unfortunately, they're often left still managing a great deal of the production and delivery of paper documents even after the fact.

Consumer-side adoption rates are promising; lenders find anywhere from 70-90 percent of customers opting for electronic delivery. Applications and disclosures for as many as 30 percent of these originations are kicked back to the lender's internal print center, creating a new subset of tasks within the process and incurring operational costs just to meet the gap.

The same lender may have implemented an eSignature component as well; borrowers electing to eSign stay in one system, while those who consent to electronic disclosures but still want the psychological security of a "wet ink" signature must be routed back to the print center as well, creating yet another management issue for the lender.

The Umbrella Effect
Total fulfillment consolidates those tasks, creating an umbrella over all three forms the process may take, making for the most effective management of the entire fulfillment piece. It goes a step further by working to change the instinctive behavior of many companies, which is to simply default to the production and shipment of a paper document set.
 
A total fulfillment solution automatically defaults to electronic delivery whenever possible sending the customer a link to secure electronic application and disclosure documents. The borrower then has between 24 and 36 hours to retrieve their documents. If that time passes, the total fulfillment solution automatically prints and ships a set of paper documents to the customer, with a waybill for return to the lender.

The borrower who opts for secure online documents is given the option to sign electronically. Should they decline, the borrower has two options. They can either download and print their own documents to sign and return the documents to the lender postage paid, or have a printed set shipped out for their signature. (If the lender were to start the process with electronic delivery instead of electronic signing, the borrower can still choose paper without impacting the lender's internal print center.)

The important point is that in either scenario, delivery to the borrower takes place without ever being routed back to the lender's internal print center, and without sacrificing the efficiency or control of automation. This holds true whether the lender uses eDelivery, eSignatures, or some combination of both. Even before considering added benefits-the total fulfillment provider's secure repository and built-in compliance features-the lender stands to see a positive return on their investment almost immediately.

Position Wisely for the Future
One of the most positive effects of total fulfillment is the way in which it allows the lender to take immediate advantage of paperless processes today, while positioning them strategically to increase adoption as more and more pieces of mortgage lending go electronic. Though current consensus it that a totally electronic note is still three to five more years away, lenders can dip their feet in now and reap immediate benefits.

eLynx clients who have adopted total fulfillment have seen positive ROI with as little as 20-30 percent consumer adoption. As more customers opt for the electronic route, savings rise, and as more electronic documents become legally viable, it's a relatively simple matter to incorporate those into the existing infrastructure.

The point is, too many in the industry are waiting for all the stars to align before going electronic. There are benefits to be reaped today, and every day spent waiting for industry consensus, an ideal and clearly not yet reachable 100 percent adoption rate, or for that matter, the complete set of standards necessary to make such possible, is another day incurring far too much cost.

There's no need for lenders to continue serving all the various customer-driven offshoots of the fulfillment process. They should be aggressively searching for fulfillment solutions which cover them all. In so doing, they'll not only reap immediate cost benefits, but also make incremental eMortgage adoption possible and profitable, right now.

(The views expressed in Tech Forum do not necessarily reflect the views or policies of the Mortgage Bankers Association. MBA Tech NewsLink welcomes your contributions. Articles and inquiries should be submitted to Mike Sorohan, editor, at msorohan@mortgagebankers.org.)
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About MBA Tech Newslink
 
Publisher: Cheryl Crispen, Senior Vice President - Communications and Marketing
Director of Online Publications: Mike Sorohan MSorohan@mortgagebankers.org
Deputy Editor: Michael Murray MMurray@mortgagebankers.org
Senior Staff Writer: Vijay Palaparty 202/557/2904 VPalaparty@mortgagebankers.org
Advertising Opportunities: Bill Farmakis 203/834-8832 bill@jlfarmakis.com

Any reprints or other use of these articles in whole or in substantial part, in any medium, requires advance written permission from the Mortgage Bankers Association. For reprint information on stories in MBA Tech Newslink, please contact Joanna Vulakh at 1-800-394-5157 x25.

MBA Tech Newslink, a weekly electronic publication, is a member benefit free to employees of MBA member companies, and available by paid subscription to non-members. For membership information, visit MBA's website at