Rachael Sokolowski, Author at Scotsman Guide

The Promise of AI

Rachael Sokolowski — Sat, 01 Jul 2023 08:00:00 +0000

Artificial intelligence (AI) is a promising and much discussed technology that may change how we work in ways we can’t even imagine. Will this new technology transform commercial mortgages and eliminate jobs, as some are predicting? Or is this just another fictional wizard?

We don’t know the answers to these questions just yet, but evolution appears to be occurring quickly. There has already been a frenzy of media attention surrounding AI that has helped students write academic papers, has created photos and songs that mimic the styles of famous artists, and has the ability to answer your questions in a conversational format.

“AI systems will raise concerns about privacy, along with the potential for the data to be misused or shared without consent.”

To better understand the real-world capabilities of this next-generation technology, ChatGPT was consulted with the following question: Is AI the real thing or a wizard behind a curtain? The system took some time to generate a response, but that may have been because the free version was used.

Here is ChatGPT’s answer: “The idea of AI being a wizard behind a curtain is a metaphorical reference to the Wizard of Oz, a powerful being hiding behind a curtain and manipulating events from behind the scenes. While AI can certainly be a powerful tool that can impact many aspects of our lives, it is not inherently mysterious or manipulative. AI is a field of computer science that focuses on developing algorithms and systems that can perform tasks that typically require human-like intelligence, such as recognizing speech, images, or patterns in data.

“AI systems are designed and developed by teams of engineers, researchers and data scientists who work to create systems that can learn, adapt and make decisions based on data and experience. While AI has the potential to transform many industries and aspects of our lives, it is ultimately a tool that is created and controlled by humans. It is not an all-powerful being that can control events from behind the scenes.”

A powerful tool

With the potential for AI to be a powerful new tool, how will the commercial mortgage and real estate industries use it? History may provide some answers.

More than 60 years ago, a crude form of a new technology was pioneered that allowed users to organize information, perform calculations and analyze data in a computerized table format. It might be hard to remember that far back, but when spreadsheet applications were introduced, many wondered if their jobs would become obsolete.

Rather than eliminating jobs, spreadsheets automated repetitive tasks, performed complex financial analyses and empowered data-driven decisions. Spreadsheets are commonly used in the commercial mortgage process and across many other business tasks. The technology may have eliminated some low-level jobs, but it also freed workers from the drudgery of data-intensive and time-consuming tasks.

In recent years, the potential of big data captivated the technology industry with its ability to create large and complex data sets from various sources, including social media, scientific research and business transactions. One of the main promises of big data is that it can be analyzed to reveal insights, trends and patterns that were not previously apparent.

By using AI technology, these analyses are now possible through machine learning algorithms, which can recognize patterns across various media such as text, images and videos. Once patterns are recognized, AI systems can make rule-based decisions based on the data. Combined with natural language processing technology, AI can interpret, understand and generate human language.

For the commercial mortgage industry, this has profound implications. AI has the potential to automate the analysis of narrative text in loan documents, thereby saving valuable time that people can allocate to more complex and strategic tasks. This technological advancement can make the industry more efficient and facilitate higher-level decisionmaking.

On the market

There are companies using AI technologies in commercial real estate today. To enable collaboration during the construction process, OpenSpace uses 360-degree cameras and computer vision to create digital replicas of construction sites. These videos capture a record of the construction project, allowing teams to remotely monitor and document progress. This saves time and money for travel and prevents budget overruns due to change orders.

CompStak uses AI technology to collect and analyze large amounts of data from a variety of sources (leasing brokers, property owners, public land records, etc.) and subsequently provide analyses of commercial properties, leases and sales. By identifying patterns and trends in the data, users can have deeper insights about potential risks and opportunities.

Similarly, Skyline AI (which was acquired nearly two years ago by JLL) is a platform that analyzes commercial property data to predict investment opportunities. The system collects and analyzes data from financial statements, tenant information, property values and other sources. The platform then utilizes machine learning algorithms to identify properties that are likely to generate strong returns, thereby enabling investors to make well-informed decisions.

Future transformation

How might AI transform the industry in the future? Digitizing loans is a challenge today as a commercial mortgage deal can include hundreds of pages of documents. Sorting, organizing and maintaining different versions of these documents are manual tasks.

AI could be used to automatically classify and sort loan documents by type, such as tax returns, rent rolls, financial statements and correspondence. Natural language processing may help accelerate the digital transformation of the data and documents by analyzing and identifying common patterns, structures and relationships in existing loan documents.

Key data, such as loan amounts, interest rates, repayment terms and collateral information, could be extracted in a standardized manner. Once extracted, the data could be checked for inconsistencies across the various documents. Additionally, by analyzing the language in the loan agreements referenced in the promissory note, AI could identify potential inconsistencies with representations and warranties, default provisions, lease expirations and payment schedules.

The right data

For AI to be accurate, it needs a large and diverse set of data that is representative of the types of necessary documents. In commercial real estate, this would include loan applications, financial statements, appraisal reports, sales agreements and more. These documents also have a varied narrative language.

For instance, a promissory note might contain the language, “For value received, the undersigned (whether one or more, “borrower”) promises to pay to XYZ Bank (“bank”) the sum of three million and no/100 dollars ($3,000,000.00).” Another promissory note might read, “In return for a loan that I have received, I promise to pay U.S. $3,000,000.00 (this amount called “principal”) plus interest, to the lender, XYZ Bank.” After analyzing the documents and accounting for the variability in the narrative text, AI could extract key pieces of information and other relevant details, such as in the example above: the lender’s name as “XYZ Bank” and the loan amount as “$3,000,000.”

To accelerate the digitization of commercial mortgages, AI could analyze documents to generate uniform templates for different types of documents, such as loan agreements, promissory notes and security agreements. With the import of standardized data, AI algorithms could automatically prepare loan documents by having previously identified where data is in the text. The algorithms could be customized for borrower- or loan-specific information.

A borrower’s financial information could be used to generate specific loan covenants or clauses. Machine learning rules may include specific regulatory or legal requirements such as zoning restrictions, environmental regulations and land-use laws. Using AI technology to translate loan data and documents could increase efficiency, reduce costs and improve accuracy.

Future challenges

Introducing a new technology has potential benefits but also brings challenges. AI systems will raise concerns about privacy, along with the potential for the data to be misused or shared without consent.

As with any technology, AI systems are vulnerable to cyberattacks that could further compromise sensitive information. AI needs safeguards to ensure that the technology is used in ethical and responsible ways. AI systems are only as good as the data on which they are trained. So, if the data is biased or incomplete, the results generated by the AI will also be biased or incomplete.

Additionally, users need to understand that AI algorithms may produce unexpected or undesired results. It is important for technology solution providers and lenders to be alerted to these potential issues and take steps to mitigate them. A review by humans, not robots, will be necessary at every stage of development and use.

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It’s going to take time, but AI may become a revolutionary business tool that will automate repetitive tasks while enabling faster and more accurate decisionmaking. We are off to see the wizard, but this may be a very long yellow brick road to the Emerald City.

This journey will take the commercial mortgage industry to some new and unfamiliar places that may even be a little scary. There are challenges to using AI, but there also are many potential automations and outcomes that have yet to be imagined. Toto, it feels like we’re not in Kansas anymore. ●

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Up In The Air

Rachael Sokolowski — Tue, 31 May 2022 17:00:00 +0000

Despite all the advances in technology in recent years, the commercial mortgage industry has been slow to adapt to the digital age. The reasons include the fact that commercial loan transactions are composed of more than just real estate. The loans themselves can be much more complicated than residential real estate deals because there are often multiple entities and properties included.

A commercial mortgage deal can include literally hundreds of pages of documents, which is certainly more than the typical residential loan. In addition to the note and deed of trust, the documentation may include loan agreements, environmental indemnities, rent rolls, assignments of contracts, security agreements, financing statements and guaranties. With all these documents in mind, wouldn’t the process be faster and less expensive if the paper disappeared?

Airlines evolution

First, let’s add some perspective on the reduction of printed documentation in an industry unrelated to mortgage banking. After a long history of using paper, the airline industry has been quite successful at eliminating it. The first printed airline tickets were issued in the 1920s and were created by individual companies.

If digitization is delayed, commercial mortgages will remain mired in a difficult and expensive paper process that will be increasingly difficult to move to the next technological step.

As air transit grew to span the globe, the airline industry soon recognized the need for standardized ticket information and appearances. In 1930, the International Air Transport Association (IATA) developed the first standards for a handwritten ticket, which were used by the industry until the early 1970s.

With the increased use of computers, an electronic ticket or “neutral paper ticket” was developed by IATA. All airlines were able to process the ticket and electronically exchange information. The ticket was further automated with a magnetic stripe on the back, which stored all travel information and enabled its use as a boarding pass. The first electronic tickets, or e-tickets, were issued in the 1990s. By 2008, IATA bid farewell to the paper ticket as the industry had converted to 100% electronic ticketing.

Did the airline industry become paperless? No. It is still possible to get a paper ticket and you may print a boarding pass, but paper tickets are virtually obsolete these days. The major benefits of e-tickets are that they cost a fraction of a paper ticket, and the information in an electronic format can be recreated at any time and exchanged between trading partners.

Residential goes paperless

The digital transition of the residential mortgage industry has mimicked the airline industry’s flight path. The trajectory to eliminate paper in both industries included standardized data, a common visual presentation and the ability to exchange information among trading partners.

To develop and promulgate standards, the mortgage banking industry formed the Mortgage Industry Standards Maintenance Organization (MISMO). In the early 2000s, MISMO joined with Fannie Mae and Freddie Mac to develop a standard representation for electronic mortgage documents called the SMART Doc, which stands for securable, manageable, archivable, retrievable and transferrable document.

Moving commercial mortgage transactions to a digital form will take effort as these notes are not uniform documents.

There are several aspects to the SMART Doc that were developed to meet the requirements of the industry, including compliance with federal and state laws for e-documents and e-signatures; the use of MISMO standards; and the inclusion of the document’s visual representation that matches what the borrower saw and signed at closing. Investors need to know that the document has not been tampered with, such as changing the loan amount or other terms after the document was signed.

The SMART Doc provides tamper evidencing to detect unauthorized access. Why not use a version of the SMART Doc for commercial mortgage e-notes? This would remove the need to “stare and compare,” or manually extract data and prove that the document remains the same as it did at closing.

MISMO defines the electronic mortgage as one where the critical loan documentation (specifically, the promissory note) is created, executed, transferred and ultimately stored in electronic fashion. This definition narrows what can be described as an e-mortgage in residential lending. Only loans with an electronic promissory note qualify. So, the same could be true for commercial real estate loans.

Finding solutions

In the case of the promissory note document, there are special considerations. Promissory notes are negotiable instruments and are effectively treated as cash. In the paper world, the note is payable to the named payee or the person in possession of the original wet ink signed document. In the electronic world, there isn’t an equivalent of possession.

Since it is easy to make copies of and/or change an electronic document, the mortgage industry agreed to designate a centralized registry that identifies the authoritative copy or electronic equivalent of the paper original. This ensured that the electronic document had not changed in any way after the borrower signed it.

The Mortgage Electronic Registration System (MERS) eRegistry records the location of the authoritative copy and designates the entity that is the equivalent of the e-note holder. The MERS eRegistry has been in operation since the 1990s and the number of e-mortgages has been steadily increasing. MERS reported that nearly 7% of all residential mortgages had e-notes as of this past February, up from about 4.5% one year earlier.

Recently, members of the Federal Home Loan Banks introduced a need for a project to explore e-notes for commercial and multifamily properties, and a working group at MISMO is developing a road map. A runway similar to the one built for residential e-notes is needed. This includes standardized data and forms; e-signature capabilities; security from tampering; designation of an electronic “original” document; and a source to determine the electronic “holder” of the e-note. Much of this framework has been created by residential e-notes, which rely on a centralized system of record: the MERS eRegistry.

The government-sponsored enterprises (Fannie and Freddie) have defined delivery requirements for acceptance of e-notes and some of these requirements could be leveraged. Most importantly, the residential mortgage industry has created a market for e-note salability. Commercial and multifamily loans could easily follow by adopting a centralized registry for transference of ownership rights. This centralized registry wouldn’t need to follow the same path as the residential sector as technologies such as blockchain could provide an alternative means to determine the electronic holder or controller of the e-note. These are issues that will need to be addressed in MISMO’s road map.

Dangers of digitizing

Moving commercial mortgage transactions to a digital form will take effort as these notes are not uniform documents. They can be modified after origination, and they may involve multiple properties and entities rather than a single asset and one or two borrowers. Leveraging the residential framework for e-notes is an option.

The MISMO eMortgage Community of Practice is nearing publication of the next version of SMART Doc specifications, which will support any type of portable document format. If the SMART Doc framework is adopted for commercial loans, the remaining tasks will be to define standards for the data within the promissory note, to build a framework for ownership and to create a marketplace.

MISMO has defined, standardized data for commercial mortgages in a common dictionary or reference model. This includes a property’s financial operating statements, green utility data for multifamily homes, property inspection reports and servicing transfers. Much data exists today on both the residential and commercial sides of MISMO.

What remains to be done is an analysis of the commonalities of the data across commercial and multifamily promissory notes, and to leverage what MISMO already has defined. Additionally, the residential framework allows for loan modifications, but there may be more work to allow post-origination changes to commercial loans.

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Adoption of the SMART Doc system could solve the issue around variability and modification in digital commercial mortgage documents, but this does not solve the issue of how to determine ownership or a lack of liquidity for investors. Multifamily and commercial loans may have different frameworks than the residential sphere.

In a perfect world, there should not be stovepiped processes for residential, commercial and multifamily loans. All of this sounds like a lot of work, so why do it? There are consequences for not doing so. If digitization is delayed, commercial mortgages will remain mired in a difficult and expensive paper process that will be increasingly difficult to move to the next technological step.

It is best to begin the effort now, use standards that already exist and not leave commercial real estate loans up in the air. Without a clear and secure flight plan, however, the destination may not be reached safely. ●

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No Stopping This Train

Rachael Sokolowski — Mon, 28 Feb 2022 18:00:00 +0000

Technology has been uniquely poised for more than 15 years to transform the time-consuming and paper-centric process of closing a mortgage, but it’s taken a major event — a global pandemic — that requires physical distancing to really get things rolling. The coronavirus-induced restrictions for personal contact have created demand for an electronic closing, or e-closing, rather than meeting in person.

Consequently, the lending mindset has shifted to move mortgages online, to find creative solutions for notarization and to eliminate paper, as borrowers don’t want to risk health or safety to purchase or refinance a home. Originators, lenders and title companies are faced with a major uphill battle to put all the pieces in place.

To date, there is not a one-stop-shop solution for an electronic mortgage — there’s a patchwork of providers that offer solutions for each of the necessary components.

This digital shift requires a unique combination of legislation, technology and acceptance by both mortgage professionals and borrowers. The legislation and the technology have been in place for some time, but acceptance has been slow — until now.

Challenging journey

An electronic mortgage requires change — not just a change to new technology but also a change in the way the process operates. Originators often begin with creating an attractive borrower application and approval system but stumble on how to fully digitize the closing process with a seamless consumer experience.

Common hurdles occur regardless of an institution’s size. These include overcoming the perception that it is less risky to use printed documents, integrating siloed systems and processes, deciphering diverse state and local regulations, and understanding investor and regulatory requirements. The following factors should be considered when implementing these projects.

First, understand that moving to a fully digital process is a journey. This shift can be challenging and have speed bumps and forks in the road. It is important to understand how digital a mortgage can be (or should be) for your organization. There are several factors that will influence just how electronic the process will be, such as a loan’s e-eligibility, including trading partner requirements; a local jurisdiction’s recording capabilities; e-notarization regulations; the readiness of settlement and title agents; and investor acceptance. A phased and hybrid approach often works well to incrementally reach the goal of a paperless closing. Some think the move is an all-or-nothing proposition, but it is not.

Not all documents in the loan file need to be electronic. Even though electronic signatures are legally enforceable, it is sometimes easier and less risky to use printed documents, especially with respect to notarization. Acceptance of e-notarization is on a state-by-state basis. Some states have published rules for the process, while others have stated publicly that it is allowed but have not provided any guidance. Additionally, there are states that have remained silent on the issue as well as other states that require an e-notarization approval process.

The good news is that it is possible to conduct a hybrid closing with a mix of electronic and paper documents in which the majority of the loan file contains electronically signed documents, including an e-note, along with wet-ink signed documents for those requiring notarization. How electronic the process is should be a team decision, not just one made by an IT department.

Key questions

Two keys to a successful project are executive sponsorship and the creation of a working group of internal employees. This requires an effort that includes members from various areas (such as IT, operations, vendor management, information security, operations, compliance, audit, risk and legal). This team will need answers to questions such as:

What technologies are already in place and what new systems are needed?
How will different systems integrate within the enterprise to provide an electronic solution?
What legal issues must be considered?
Is e-notarization permitted and can these documents be recorded in public land records?
Are there new or additional information security requirements?
What are the considerations for servicing the loan during its life?
What is required for pledging, selling and delivering the loan?

To answer these questions, a team has to understand how to comply with e-signature laws, state notarization statutes, industry standards and investor requirements.

Common understanding

For a mortgage team to be successful, education is essential for establishing a common framework and understanding about what is needed to go electronic. All members of the team should be educated on key topics.

Many resources exist for educational opportunities. The Mortgage Bankers Association and Mortgage Industry Standards Maintenance Organization (MISMO) offer recorded webinars on the digitization of the residential mortgage industry as well as frequently asked questions. There also are job aids and guides from Fannie Mae and Freddie Mac; videos, webinars and podcasts from the Federal Home Loans Banks; and live classes tailored for your institution by subject matter experts.

The electronic loan process is akin to a diesel train engine, which runs smoothly thanks to the perfect interaction between its components. The engine is made up of various systems — the injection system, turbochargers, exhaust gas recirculation system, engine electronics and so on. Similarly, each of the various technologies of the electronic loan process need to be integrated to make it run. This includes e-signatures, e-note document preparation, an e-closing platform, e-registry connectivity to the Mortgage Electronic Registration Systems, an e-vault and servicing procedures.

The good news is that origination processes for an e-closing are mostly the same except for document preparation. To date, there is not a one-stop-shop solution for an electronic mortgage — there’s a patchwork of providers that offer solutions for each of the necessary components. A readiness assessment can help a team review its current technologies and the need for any additional solutions.

An electronic road map builds upon the readiness assessment and outlines the capabilities of current vendors to provide recommendations for what is needed. The ultimate goals of the road map are to meet investor and secured-lender requirements for pledging collateral and sale on the secondary market; to recommend additional business processes and policies for an electronic mortgage; to enhance the consumer experience; and to shorten the time frames for faster pledging and sales.

The road map phase will typically include performing due diligence, issuing requests for proposals, selecting technology companies and performing outreach to all involved — including business partners such as title and settlement agents. This is the part of the project to determine how to meet regulatory, investor and secured-lender requirements.

Implementing the different parts of the electronic engine, as defined in the road map phase, is the final step in the journey. Typically, this phase includes obtaining necessary materials and approvals; reviewing license agreements; integrating loan origination systems and document preparation systems; and updating operational and system workflows, policies and procedures.

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Change is hard and it may seem far easier to use paper as a settlement crutch than to move to an electronic process. Being determined is key for reaching any goal. The time has come to turn on the engine and start moving on the right track. ●

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A Paperless Odyssey

Rachael Sokolowski — Mon, 31 Aug 2020 18:33:37 +0000

For the better part of two decades, technology has been poised to transform the time-consuming and paper-centric process of closing a mortgage. In order to perform an electronic closing or e-closing, all documents need to be electronic.

Additionally, systems must not only have the capability to sign and notarize electronic documents but also must be able to record the electronic document in public land records. To accomplish this, there are still figurative monsters to slay on this voyage.

Complying with various state and local requirements for notarization and recording were — and in some cases, still are — reasons to use paper as a settlement crutch. The COVID-19 pandemic has forced lenders and title companies to move home loans online, find creative solutions for notarization and eliminate paper.

An e-closing is remote and meets physical-distancing requirements for all parties: the borrower, the settlement agent and the notary. So, why aren’t all closings electronic, especially in these times?

Legislative action

The paperless mortgage has been on a 20-year odyssey requiring a unique combination of legislation, technology and acceptance by mortgage professionals and borrowers. Prior to 1999, individual states had adopted electronic signature (e-signature) laws but the kinds of e-signatures cited and the legal recognition of them differed. Many state laws had “statute of fraud” requirements that made it unclear as to whether electronic documents met the requirement.

Reliance on paper documents and manual signatures assured that transactions were legally enforceable — it was less risky to use printed documents. To overcome this, a model state law called the Uniform Electronic Transactions Act (UETA) was created in 1999 by the Uniform Law Commission to create e-signature uniformity across all states. The states were slow to adopt their own versions of this law and there was no provision for interstate or foreign commerce. So, home loans remained on paper.

When President Bill Clinton signed the Electronic Signatures in Global and National Commerce (ESIGN) Act in 2000, e-signature technology became valid and legal for all 50 states, even for those states that had not yet passed a version of UETA. This was good for the real estate and mortgage industries as ESIGN ensured that electronically signed documents were as binding as paper documents. Twenty years ago, the issue of e-signature enforceability was settled.

Industry standards

One document in the closing package, the promissory note, has unique legal requirements as an electronic document. Since it is easy to make copies of an electronic document and not so easy to determine which copy is the electronic equivalent of a paper original, the industry agreed to designate a registry to identify the authoritative copy, the controller (holder) and location (custodian) of the electronic promissory note (e-note).

The Mortgage Electronic Registration Systems’ eRegistry has been in operation and has served as the system of record for e-notes for more than 15 years. The voyage was not over when the legal hurdles were solved as the industry needed to define standards for mortgage documents and data.

The mortgage banking industry formed the Mortgage Industry Standards Maintenance Organization (MISMO) to standardize electronic data. In the early 2000s, MISMO developed a standard representation for electronic mortgage (e-mortgage) documents called the SMART document.

These documents carry data in a standardized format and link the visual presentation to the data. It is possible to automatically verify that the data provided for machine consumption matches the information presented to humans. By 2005, the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac had adopted SMART documents for delivering e-mortgages. This paved the way for lenders to originate electronically.

Notary hurdle

Even with legislation and industry standards in place, it was still deemed less risky to use printed documents ― especially with respect to notarization. Duties of a notary vary from state to state but, overall, the physical presence of a notary is to act as an impartial and public witness to a signing ceremony.

For an e-closing, the notary’s role includes performing a reasonable check of the identity of the signer, witnessing the actual signing, and electronically affixing a notary stamp and seal to the documents. This attests that the signatures were not executed under duress and by the free will of the signers. There are, however, many issues and potential legal challenges with performing the notarization electronically that are creating confusion and delaying the paperless mortgage as the norm.

One issue is that acceptance of electronic notarization (e-notarization) is on a state-by-state basis. Some states have published rules for the process, while others have stated publicly that it is allowed but have not provided any guidance. And there are states that have remained silent on the issue.

This has created a patchwork of differing rules and laws that is similar to the situation in the 1990s regarding e-signatures and the need for UETA. Technology enables in-person electronic notarization and remote online notarization (RON). With RON, the notary is not face to face with the borrower and conducts the notarization using audio and video technologies. RON also allows for the notarizations to occur across state lines.

With remote notarization, for example, the signer could be in Maryland and the notary could be in Montana. The issue is legally clouded. In some states, a notary is only allowed to perform the notarial act where he or she has a commission. And will a remote e-notarization stand up in court of law?

Pandemic reaction

Certain real estate documents that are notarized must be recorded on public records and this occurs, in most states, at the county level. Recording protects interests in the real property by publicly naming the party who holds these interests. State laws govern local recording offices, and every state has requirements relating to the originality and authenticity of paper documents that are presented for recording.

UETA included optional provisions for governmental authorities to accept and use electronic records. Not all states adopted these optional provisions. Another law, the 2004 Uniform Real Property Electronic Recording Act, addressed how a local recording office could accept and process electronic documents and signatures for recording, known as e-recording. Approximately 88% of the U.S. population now lives in an e-recording county, but it is still important to ensure that the recorder recognizes electronically notarized documents and accepts electronic submissions. If not, the documents will be paper.

The COVID-19 outbreak and the need for social distancing has highlighted the need to remove in-person requirements for mortgage closings. Leaders in many states issued emergency orders to temporarily address notarization in different forms. Some included guidance for remote ink-signed notarization (RIN) in which the notarial act is performed using video-conference technology for witnessing the signing ceremony on paper documents. The notarial act occurs at a later time when the notary physically receives the document. RIN does not remove paper and is only a temporary solution.

Lastly, what about the borrower experience? A paperless mortgage is nirvana for borrowers who are accustomed to a digital experience for banking, bill paying, shopping, searching for properties, electronically signing documents and making purchases. With an e-closing performed through RON, borrowers can review loan documents at their convenience prior to closing; have flexibility in scheduling the closing without the need to take time off from work; and experience a faster and easier signing process that likely has fewer errors on the closing documents.

Are we ready to be paperless? Not quite yet, even though the volume of e-notes registered has increased substantially over the past year. This past May, for example, there were 31,238 e-notes registered as compared to 7,026 in May 2019 and 450 in May 2018.

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In some ways, the odyssey to the paperless mortgage is akin to the journey of Odysseus, which also was a 20-year ordeal between the start of the Trojan War and his return home. Although it is not battling mystical creatures, overcoming terrifying monsters or facing the wrath of the gods, the mortgage industry is slowly slaying the obstacles.

If you are on a quest for e-closing, it is important to keep all of these aspects of the mortgage process in mind. The journey certainly has been long and full of trials and tribulations. But the struggle with paper is coming to an end. The paperless mortgage is the future. ●

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