Digitized signature: A handwritten signature that is converted upon execution into an electronic form. This is usually performed with a pen and a graphics drawing tablet used for sketching new images or tracing old ones. This technology alone will not encrypt a document once signed.

“In a high-growth, high-speed industry such as retail, real estate is all about maximizing revenue. Every decision—whether it’s to open a new store, renew a lease or remodel an existing location—is an opportunity for retailers to meet their growth targets. When entering markets and making site selection decisions, using the latest property information is critical, especially when it involves opening hundreds or thousands of new stores a year.” --Andrew Florance, president and CEO of CoStar, Bethesda, Md.

Industry Getting Arms Around eMortgage Cost Savings
Murray, Michael
NEW YORK—A loan through Fannie Mae’s desktop underwriting using electronic loan delivery (eLoan Delivery) into the secondary market could provide cost savings of up $350 per loan if the loan closed the same day, according to Christos Bettios, the company’s senior portfolio manager.

“[Electronic] mortgages for Fannie Mae are no longer a new thing or a pilot,” Bettios said here at the Mortgage Bankers Association’s National Secondary Market Conference & Expo. “For us, this is not a new thing.”
 
Bettios said faster funding through eLoan Delivery has been placed at $35 to $200 cost savings with same-day origination, closing and sale of the loan. Savings on operational costs could range from $80 to $150 per loan through automation.
 
Bettios also estimated six to nine months for implementation. With industry-wide data standards, an interface from lenders to investors could be a one-time fee. The costs to change processes in report closings are “good kind of costs” because they provide long-term savings in quality assurance. Not simple to buy piece of software, plug it in and make it rumble, Bettios said.
 
Harry Gardner, senior director of industry technology at MBA, said it is not always easy for lenders to quantify cost savings, but said he knows of at least one warehouse lender that keeps production through FedEx delivery in paper notes. In cases of bad weather, such as a snowstorm, the warehouse lender needs to spend the day speaking to correspondents on whether to take greater risks in waiting on the notes.
 
An electronic note (eNote), Gardner noted, would arrive electronically, without dependence on paper delivery. Additionally, an eNote process gives immediate cost savings in delivery to Fannie Mae and Freddie Mac.
 
“There is great savings potential,” Gardner said. “In some cases it is difficult to quantify. In some cases, there are obvious savings.”
 
Implementation costs—expensive a few years ago—are changing because service providers charge on a transaction basis, said Brian Blair, senior vice president of sales at Wayne, Pa.-based GHR Systems, a subsidiary of Metavante Inc.
 
After closing, the Mortgage Electronic Registry System (MERS) receives the electronic document—the eNote—by providing standard delivery of the eNote from one member to another. An existing MERS interface eliminates custom B2B interfaces. MERS, however, is not a vault storing the eDocument, according to Gardner.
 
“Everyone is integrating with everyone else through proprietary interfaces,” Gardner said. “MERS has central ‘spoke and hub architecture’ for eDocs to move back and forth among partners.”
 
The eNote is then registered on MERS eRegistry, a national eNote registry that is the central location to identify the current controller and location of the authoritative copy of an eNote. An eNote registered on MERS eRegistry keeps track of the owner of the eNote. The post-closing eRecording phase can happen in near real-time because documents are moving electronically, Gardner said.
 
Quality assurance can certify eNotes faster, eliminating rekeying with fewer mistakes. Rather than “stare and compare,” data would be populated on the back-end with greater transparency into the depth of the loan and data quality. With an eNote acquired and traded in minutes, investors are also able to buy a loan faster at best execution and lower risk, Gardner said.
 
“The data is immediately in our hand,” Bettios added.
 
Fannie Mae has acquired eNotes from 1,000 or more lenders by sharing its best practices and guidelines with lenders. In a recent survey by Fannie Mae, 72 percent of its lenders expect to implement some form of electronic signatures (eSignatures) and nearly 45 percent of respondents expect their companies to implement eMortgages. Fannie Mae forecasts a “critical mass’ of lenders moving to eMortgages in the next three years, Bettios said.
 
Gardner said hybrid loans are likely for some time with eNotes and paper closing documents. Custodians must manage paper or eDocuments for the same loan, and hybrid pools would include eNotes and paper notes.
 
“The revolutionary move is toward an electronic note on the outset. Typically, with the signing pad, it is the legal document that is being delivered,” Gardner said.
 
To gain the full eMortgage landscape and liquidity, more investors are integrating into loan origination systems and are becoming electronically enabled, according to Gardner. Electronic file transmission and shipping can be integrated into a loan origination system. Blair said Metavante has several clients that want a “lights-out processing” requirement, which includes minimum staff for processing a loan.
 
Bettios said Fannie Mae’s eCommitONE for lenders to commit to a price does not incur pair-off fees if a loan falls out of the pipeline and it provides a window for loan officers to lock in a rate by 10 p.m. If closed and received, the commitment price is given to the lender
 
With eDocuments, data and the view of information combine through SMART Docs, allowing the borrower to see and sign the documents, but it also provides data payload capability. It provides almost immediate quality assurance capabilities for investors and data in XML data payload links to signed eDocs.
 
Automated underwriting at point-of-sale is a cost savings of $1,025, and costs of direct servicing are 50 percent less than the 1980s, with 2 percent to 5 percent errors. Blair said GHR Systems works with more than one appraisal vendor, and GHR could implement other proprietary data interfaces, although it would save costs to the entire industry for one standard interface. A study by MISMO said XML data standards alone could save $240 per loan transaction. Blair said GHR supports MISMO XML standards and the automated appraisal process.
 
Bettios said the new servicer of electronic notes, if not already enabled electronically, will eventually need to become e-enabled. Fiserv, Encomia, Settleware, Digital Docs and Document Processing System are live on the eMERS Registry system.
 
The combination of an eClosing—using eSignatures and eDocuments—provides borrowers with secure access well in advance of the closing for borrowers to find any mistakes prior to closing, rather than taking the time at closing to initial errors. The electronic notarization (eNotarization) is the same as notarizing in the paper world, but the notary seal is in electronic format.
 
“For eSignatures, the intent to sign must be clear,” Gardner said. “The signer must agree in advance to use electronic documents and electronic signatures.”
 
A Public Key Infrastructure (PKI) seal—a digital thumbprint on the eDocument—provides security. The eMERS Registry stores a “hash value,” protected with the PKI thumbprint and MERS confirms the eDocument was received and is identical to the document received by the borrower at the closing table. The eNotes include fixed-rate and ARM products.
 
“When Fannie Mae talks about eMortgages, we mainly care about the eNote,” Bettios said. 
 
As sellers send loans to investors on a post-analysis basis, they provide variance-based expectations as data would populate an investor’s software to schedule and track cost expense guidelines. In an automated environment, investors could create any forms and retain that data, and investors would manipulate unrekeyed data to determine risks and costs. MISMO industry data standards would again prevent added costs to create new interfaces for each investor.
 
“Electronic reporting is the next advent to get to with this type of technology,” Blair said. “We are still struggling with clients who do not want to uphold the [data] standards but they are certainly there.”
 
Even with MISMO XML data industry standards, which would reduce costs to create separate interfaces for all investors, some investors do not necessarily want to comply with the standards. “I do see a need of custom forms and some institutions are feeling they need to be unique or different,” Blair said.
 
Quality assurance departments could verify borrowers with automated compliance alerts to ensure loans meet certain thresholds on the front end, and they can provide exception alerts to management in shorter time frames, according to Blair.
 
County recorders continue to adopt electronic recording (eRecording) capabilities and they are increasing through the Property Records Industry Association (PRIA). While there are 3,600 counties and municipal entities, the “80/20 rule” applies, as nearly 300 counties account for 80 to 90 percent of mortgages across the country. A statewide eRecording portal has been created to integrate eRecorders at the end of the origination process. New Jersey, for example, has taken to the statewide portal and it is offered for free to any other state government willing to use it.
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Technology Partnership Provides Retailers Property Information On-Demand
Palaparty, Vijay
A new partnership between commercial real estate information services provider CoStar Group Inc., Bethesda, Md., and Accruent Inc., Santa Monica, Calif., a provider of real estate performance management services, will offer retailers a range of current real estate market data to make more informed decisions about retail locations.

As retailers review sites for new store openings and while gauging the life cycle of their properties and lease, they will have access to data to make decisions more accurately while saving costs, said Andrew Florance, CoStar’s president and CEO.

“In a high-growth, high-speed industry such as retail, real estate is all about maximizing revenue,” Florance said. “Every decision—whether it’s to open a new store, renew a lease or remodel an existing location—is an opportunity for retailers to meet their growth targets. When entering markets and making site selection decisions, using the latest property information is critical, especially when it involves opening hundreds or thousands of new stores a year.”

The companies are working together to develop and market a technology-integrated service that would provide on-demand access to CoStar’s commercial real estate data from within Accruent’s software. Customers could access current retail property data and online images from Costar’s online database of more than 2.2 million commercial properties, which cover 121 areas throughout the U.S., with additional listings in the United Kingdom and France. CoStar’s data includes nearly 1.7 million tenant locations, including the U.S.’s leading 5,500 retailers and 655,000 shopping centers, general retail property and parcels of retail-zoned land.

Using the new system, retailers would have electronic information on space availability and property for sale—including land, sales comparables, store types, tenant rosters, frontage location, individual building photos and 360-degree aerials.

As a result, “retailers should have an enormous opportunity to increase their revenues, reduce site selection and lease management costs and have greater predictability of their business performance,” Florance said. “When an Accruent user performs a property search query using the new integrated system, CoStar’s requirements such as available sites, competitor sites and market comparables can be quickly and easily identified. They will also know the asking rents on similar retail space around the country.”

CoStar and Accruent are working on developing more capabilities to inform current tenants by sending automated alerts when an anchor tenant vacates, or informing tenants if the center’s vacancy rate falls beyond a certain occupancy threshold—which could violate lease co-tenancy provisions.

Data entry and site selection processes will also be automated once the system is launched. Retailers would be able to search for sites with specific availabilities, demographics and leasing or co-tenancy requirements and would get results quickly without going through each listing.

“By automating the assembly of key information, we can provide our mutual customers the appropriate context for each decision and allow them to execute it at a higher velocity, with greater confidence and ultimate success ,”said Mark Friedman, CEO of Accruent.

The product is expected to be released in September.
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Tech Case Study: Diversified Doubles Close Rates
MBA Staff
WHO:
* Diversified Mortgage Services, Bowling Green, Ky.
* SoftVu, Overland Park, Kan.
* Mortech, Guilford, Conn.

CHALLENGE:
Although technology-savvy customers are increasing the demand for online lending, they continue to complain about the loss of the personal touch offered by typical “brick and mortar” lending shops. The sales force at Diversified Mortgage Services desired an automated online marketing service that would help combat their lack of face-time with customers.

“We needed to answer key questions,” said Aaron Hill, Diversified’s CEO. “How do you make contact with thousands of online loan prospects quickly, easily and in a high-touch, personal manner? And, once you establish contact, how do you maintain interest with aging leads and those leads for loans with longer sales cycles?”

SOLUTION:
Diversified Mortgage Services relied upon a partnership with SoftVu and Mortech to increase contacts with online lending customers and close more loans. SoftVu and Mortech partnered to provide Diversified an integrated series of services. The services work together to capture and process leads immediately after borrowers complete a loan application online. Key ingredients were video communications from the actual loan consultant at Diversified that were emailed to prospects immediately after filling out a loan online.

Mortech secures Diversified leads from LendingTree and other lead sources. The company then processes and supplies the loan offer details, assigns a loan officer and sends the details to SoftVu’s proprietary communications software platform, Relay. Based on the details provided by Mortech, the Relay system automatically creates, manages, distributes and tracks the appropriate messages.

A humanizing touch occurs when Relay sends an initial, automatically-triggered email communication with a video of the actual loan consultant Mortech assigned to the borrower. While borrowers view these video messages, SoftVu sends view notifications to Diversified Loan consultants by email or cell phone text message. The consultants can catch borrowers at their office or home, and know exactly when they are ready to talk mortgage. This frequently puts Diversified first in line to help borrowers get started, complete an application, answer questions and start building a business relationship.

After the initial communications, Mortech’s system triggers Relay to send follow-up communications at strategic points in the process that automate and foster a lead incubation process to keep Diversified in front of potential borrowers.

RESULTS:
Within months of launching the Mortech-SoftVu service, Diversified’s close rates rose from 3.1 percent to 6.7 percent, more than double. Diversified signed on with SoftVu in October 2006 and went live with their automated campaigns this past February.

In March, Diversified moved into the Top 10 LendingTree rankings for Purchase lenders along with other SoftVu and Mortech clients, including four of the top 10 Purchase; three of the Top 10 Refinance; and four of the top 10 Home Equity lenders.

“Any time you can put a face to a name, you make a better impression,” said SoftVu president and founder Tim Donnelley. “Our clients use our automated rich media solutions to build one-to-one customer relationships. This helps them overcome some of the most common lending issues such as lack of response and follow-up. We also give them a more professional look and resolve communications etiquette issues by promoting our clients through consistent, high-quality online communications.”

 “We were able to secure qualified leads when we were top of mind with the borrowers,” Hill said. “It increased our contact rates and our loan consultants were able to build relationship instead of tracking down unqualified leads.”

(Has your company solved a work challenge through technology? MBA Tech NewsLink accepts case studies that document challenges, steps taken to address those challenges and documented results. Submit inquiries to Mike Sorohan, editor, at msorohan@mortgagebankers.org. Case studies published in MBA Tech NewsLink do not connote endorsement of any particular product, technology or process and are presented for information purposes as a benefit to MBA members.)
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MISMO Trimester Meeting Focuses on Version 3.0
Zimmer, Gloria
Nearly 200 attendees were onsite in Bethesda, Md., last week for the MISMO Trimester Workgroup Meeting, sponsored by Fannie Mae, Freddie Mac, Wells Fargo Home Mortgage and PRIA, the Property Records Industry Association.

At the opening General Session, Ron Duff, 2007 chair of the MISMO Governance Committee, welcomed participants and outlined MISMO’s 2007 priorities, which include a focus on organizational alignment, enhancing standards and promoting adoption. Special emphasis includes creating a streamlined project management methodology for the development of MISMO’s Version 3.0 standards.

Highlights of workgroup activities during the week included:

The Architecture Workgroup, tasked with the overall technical direction and support for MISMO’s data standards and interchange mechanisms that leverage the data standards, reviewed the MISMO Architectural framework and identified open issues to be resolved in the development of the Version 3.0.

The MISMO Governance Committee approved organizational changes within Architecture to support the Version 3.0 development team and appointed Greg Alvord of Optimal Blue as special vice chair of the Architecture Workgroup to serve as the chief architect for the Version 3.0 project.

The Government Housing Workgroup met face-to-face for the first time since it was chartered in January. Representatives from Ginnie Mae, FHA and USDA Rural Development were join