If you’ve ever bought a new home, you know how easy it is to be inundated by paperwork.
Fortunately, an approach called digital transaction management is changing some of that by allowing homebuyers to upload to a secure server whatever supporting documentation has been requested by a mortgage company as well as to digitally sign some of the documents prepared by a title company that become the legal basis for a home purchase.
“The mortgage industry is expanding the use of technology to improve collaboration across the industry and directly with consumers,” said Richard Hill, vice president of industry technology for the Washington, D.C.-based Mortgage Bankers Association. Features common to a digital transaction management system include electronic signatures, integrated workflow, use of mortgage industry data standards and online user portals, he said.
Expediting document distribution
Browser-based electronic systems expedite and secure document management, said Debbie Olsen, escrow administrator at Pioneer Title Agency in Phoenix. “These are an effective way for title companies to manage the closing process,” she said, adding that online systems don’t require proprietary software, “thereby limiting the risk of harmful viruses.” What are known as multiple-user systems may allow access by the real estate agent, the transaction coordinator, lender, title company, buyer and seller, she said.
“With the exception of a few documents, most of the paperwork to complete a transaction may be signed and returned via digital format, email or fax,” Olsen said. “There are a few documents, however, that are required to be provided in original format. I believe a truly digital closing (on a home) will happen in the very near future.”
These systems also can benefit real estate agents and brokers, said Nick Catanesi, vice president of business services and technology for the Arizona Association of REALTORS®. Quite often, he said, they will have features that save agents and brokers valuable time, such as when a buyer in another geographic region wants to submit an offer to a home seller in the Phoenix area.
“The prospective buyer can sign the purchase contract electronically and then the Realtor can send the signed contract to the seller. Often, no paper is generated in this process,” Catanesi said.
In addition, digital transaction management systems help Realtors remain compliant with state regulations, he said. For example, the Arizona Department of Real Estate requires that within 10 business days of a purchase contract being signed by all parties, a real estate broker must review the contract. Sometimes, especially for real estate agents located in rural areas of the state, it can be challenging to get a purchase contract into the hands of a broker, he said. With digital transaction management systems, the contract can be uploaded to a server where a broker can access it easily.
“An audit trail makes it apparent to regulators exactly when the broker accessed that contract,” said Catanesi, who complimented the Arizona Department of Real Estate on how receptive its leadership has been to the new technologies.
Monitoring the process
Digital transaction management systems can also help homebuyers track the mortgage approval process, Hill said.
“Depending on the system, a consumer can monitor the activities during the loan origination process,” Hill noted. “If they have access to a portal, they can determine what has already happened, determine if there are any delays in the process and take action as necessary. This action might be as simple as reviewing a disclosure and signing it electronically.”
Hill also said that the homebuyer benefits from this integrated process because a process that relies on the transfer of data — rather than pieces of paper — is a more controlled process that improves the quality and consistency of data.
“This lowers the cost of doing business and should reduce the unfortunate discrepancies between documents that occurs in the paper world,” he added.