Tim Anderson of Evolve Mortgage Services: Second Time’s a Charm for eModifications
Tim Anderson is President of the eMortgage Division for Evolve Mortgage Services, where he is responsible for overseeing deployment of the company’s digital closing platform and developing strategic partner relationships. A digital mortgage pioneer, Tim has more than 35 years of industry experience and has held executive management positions with Pavaso, DocMagic, Docutech, Black Knight Financial Services, Stewart Title, FreddieMac and HomeSide Lending. Tim can be reached at email@example.com.
MBA NEWSLINK: When were eModifications originally introduced?
TIM ANDERSON, Evolve Mortgage Solutions: eModifications date back to the mortgage meltdown in 2008, when there were millions of loans headed for default and many borrowers were desperate to modify their loans. In order to handle such massive volume, servicers would have to severely ramp up their staff. However, we saw that a great deal of the heavy lifting in the loan modification process could be digitized. This led to the creation of an eModification process, though which all the documents involved in a loan modification and the borrower’s signature could be electronic.
NEWSLINK: How did the original attempt at eModifications more than a decade ago work out?
ANDERSON: Not that great. Many mortgage servicers believed that the meltdown was only temporary, so they chose to throw more people at the problem rather than adopt new technologies. As a result, widespread adoption of eModifications evaded the industry. Ironically, many foreclosures were electronically signed en masse using robo-signing, although no one was reviewing the documents and there was no technology being used to verify the information on them. As a result, servicers were hit with a barrage of lawsuits and regulatory actions.
NEWSLINK: Why do you think that adoption will be any better this time around?
ANDERSON: There are two reasons. First, this time around, the Dodd-Frank Act and Consumer Financial Protection Bureau are in place to hold servicers accountable, and the CFPB is focusing a lot of its attention on mortgage servicers. Given the added compliance requirements, servicers need eModifications to ensure they are compliant every step of the way. Second, many mortgage servicers remember the mistakes they made the last time and are likely to take steps to avoid repeating them.
NEWSLINK: Are there any other factors that make adoption more likely today?
ANDERSON: Sure. People were not as tech savvy during 2008 as they are today. Many consumers didn’t have high-speed internet access or web cams. In addition, most people are now used to working from home and are much more comfortable ordering goods and financial services online today, so using remote technology is not foreign to them. Lenders and borrowers also have access to remote online notarization technology, which lets borrowers sign disclosures and closing documents electronically over the Internet. Consumers want to do business this way, and they have the equipment and technology to pull it off.
NEWSLINK: Doesn’t paper do a better job of proving that the borrower was provided with timely and accurate disclosures and documents?
ANDERSON: Not really. In a paper world, if a borrower says they read all their loan documents, the lender has to take their word for it. But the borrower could have signed the document without reading it. With eModifications, the process can be designed to require the borrower to initial key terms such as the interest rate as they go through each document. You can also require them to click on each document before they can advance to the next page creating a date and time stamp audit trail (evidence of compliance) to ensure that they at least had to view the document before proceeding. All of this information—what the borrower read, how long it took them to read it, and what they signed and when—is stored within a SMART Doc® and can be verified at any point in time. If the borrower suggests that he or she did not see their rate, you have the SMART Doc that shows they initialed it.
NEWSLINK: How well do eModifications scale up as volume surges?
ANDERSON: Keep in mind that in a paper world, if you were hit with a large number of loan modification applications, you would have no choice but to hire additional staff to work through them and review documents by hand, one by one. Plus, paper documents are often misplaced or fraught with errors. With eModifications combined with SMART Docs, which do not have to be read visually but contain data that can be read by machine, you don’t have that problem, because technology can do most of the heavy lifting. You can save staff time and resources for working with borrowers one-on-one. With eModifications, documents can be immediately shared, corrected and executed online eliminating the back and forth that might occur with paper documents —there’s no waiting around for them to arrive through the mail.
NEWSLINK: Are there examples of home lenders that have done it right?
ANDERSON: A great example of a lender that has done it right is Rocket Mortgage. They’ve used technology to make it easier for borrowers to do business with them, including eModifications, and borrowers remember that. The customer reviews Rocket Mortgage receives speak for themselves.
No lender has a monopoly on eModifications, SMART Docs, or technology in general. While they are not all the same, eMortgage technologies are wildly available today. With the right platform, a lender or servicer can adopt eModifications quickly and easily. And considering the challenges today’s servicers face, there’s no reason why they shouldn’t.
(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions. Inquiries can be sent to Mike Sorohan, editor, at firstname.lastname@example.org; or Michael Tucker, editorial manager, at email@example.com.)