Online Mortgages for consumers and electronic documents.

mortgage technologyThe next phase of the Irish mortgage market, and certainly the Irish broker market is to overcome the intensive levels of paper creation and associated running costs, one UK based firm has come out stating that technology will be the key to the survival of the intermediary market.

Paper costs accrue to more than just the physical paper, the storage areas required to hold them, the additional stationary, photocopiers, and toner cartridges, paper also has a massive ‘human’ cost in terms of man hours. If the market was to gain efficiencies in document storage and movement then it would make sense that a document would only ever need to be copied once.

Currently a broker will obtain documents, copy them, verify them, and then send them on to a lender who will copy them once they witness that they have been verified and usually they will scan them in as well. This means that the broker copied them (and maybe scanned them), then the lender copies them and scans them, the same document is often handled up to 6 times and there are entire departments in banks dedicated to scanning documents that come in from various sources.

How does the industry overcome this? The answer is to use electronic documents, over and above the increased efficiency in this would bring about, it would mean less delays for customers, it would also be more secure than having pieces of paper lying around in offices or en route to financial institutions. One copy should suffice, anything more means that there are more and more duplicates lying around. The speed and enhanced security would also be in favour of data protection and speedy service.

mortgage standardisationThe problem with brokerage and indeed finance is that there is no ‘standard’ box to solve all of these problems, there are excellent software offerings on the market but none of them have the kind of market penetration that will give an absolute lead to them. Imagine a world with no ‘Microsoft word’ and you get the picture (personally I like to use openoffice but that’s just me!), actually the better analogy for brokerage is if we looked at server software prior to 1998 when Novel still had a big share, it wasn’t until Microsoft server took hold that we saw much industry standardisation and on that front, the ‘standardized software’ front, Microsoft are to be commended, without uniformity the only other option is a mix mash of chaos.

The good thing though is that there will come a time when you can truly do an ‘online mortgage’, finance will be sourced, placed, and transacted via the medium of the Internet, quickly and simply.

The barriers to this becoming a real life working option are several, firstly, solicitors and the Law Society will have to be able to work with the documents and indeed, maybe they are the lynch pin to the whole thing. In order for the wheels of commerce to turn there has to be a point at which we accept the word and documentation of a person or institution, so one answer may be for solicitors in various areas and towns to become ‘official document verification scanners’ which means that if a person from Clonbur in Galway is doing a mortgage that they can go to a local solicitor (or the nearest on the panel) and they will scan in all of the necessary documents – naturally there will be a fee for this, probably similar to commissioner for oaths stamps – and send them to the appropriate business, where ever in the state that may be.

solicitors Once a broker or bank receive these docs from the solicitor they can safely deem them to be true, and that is probably the best way to ensure from the very start that the electronic doc’s are genuine, there have been corrupt solicitors in the past, the story of Michael Lynn is far from forgotten, but by and large the ethics and practice of solicitors in terms of documentation is about as good as you can get in this nation across any sector. This would be advantageous to solicitors as well because it would involve them in the mortgage process from the very beginning and if a person was going to be doing a refinance they could get them to sign the deed request at the time of scanning etc. and that would help make the whole process quicker and smoother.

Undoubtedly the mortgage industry is in for an interesting ride in the remainder of 2008 and beyond, and for that reason it is vital that we now turn to innovation and efficiencies in order to maintain any sensible margins, not many people feel sympathetic towards banks but without them society as we know it would quickly decay into something that any right thinking person would avoid at all costs.

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