eMortgage Interest Accelerates During Pandemic

The coronavirus pandemic has increased market interest in eMortgages, reported Fitch Ratings, New York.

“Shutdowns and social distancing measures have led to a greater reliance on digitalization of certain aspects of the mortgage origination process, and this has facilitated the implementation of eMortgage processes,” Fitch said, noting a “noticeable” uptick in eMortgage volume since the beginning of the year.

Monthly “eNote” electronic promissory note registrations averaged between 5,000 and 16,000 a month last year, but eNote registrations grew to more than 40,000 in June, the Mortgage Electronic Registration Systems said. The MERS eRegistry tracks which party controls eNotes stored by custodians in a secure electronic vault.

“While eNotes usage is still low in the U.S. and is uncommon in other markets, process and policy changes made in response to the pandemic facilitated increased electronic emphasis in many other aspects of the mortgage origination process,” Fitch said. “Enhancements such as remote notarizations and digital appraisals increased operational efficiency during the past six months.”

Since the pandemic started, sellers and servicers have registered in greater numbers with the MERS eRegistry. But overall eMortgage adoption remains low with only about 4 percent of agency production fully utilizing eMortgage technology. In a separate report, Fitch noted a gap in adoption between government-sponsored enterprises and private label securitizations, resulting in fewer non-agency eMortgages. “The GSEs have built the technological infrastructure over the past several years,” Fitch said. “For other market participants who do not already have the systems in place, the pandemic has prompted interest, but the recession has potentially hindered adoption of eMortgage origination and servicing technology.”