MIAMI - Lenders are "finally starting to get" the importance of mortgage technology but have yet to develop end-to-end systems that reduce costs, according to the president and chief operating officer of E-Loan Inc.
Mortgage executives have been quick to implement automated underwriting tools, Mark Lefanowicz said, but should start thinking about technology solutions as wholes rather than parts.
The industry is "not applying technology as well as we should," Mr. Lefanowicz told attendees at a mortgage technology conference here Sunday. "We have used it ineffectively for years."
Because only a handful of counties nationwide accept electronic signatures, one of the biggest obstacles to creating an end-to-end electronic mortgage platform is automating the closing process.
Conference attendees murmured in agreement as Mr. Lefanowicz said pressure should be exerted on counties to allow electronic closing.
"It's going to take a political initiative on a national basis," Mr. Lefanowicz said. "Everybody has to work together to put pressure on Congress to get these individual counties to adopt the technology."
He said Stewart Title Guarantee Corp. of Houston and First American Corp. of Dallas had set good examples in electronic closing.
"Some of the other title companies are not doing as good a job because ultimately they are going to lose revenue," Mr. Lefanowicz said.
He also emphasized the importance of implementing common technology standards, including those developed by the Mortgage Industry Standards Maintenance Organization, known as Mismo.
Fannie Mae and Freddie Mac agreed 2001 to adopt the Mismo standard for their automated underwriting systems. "Mismo is going to be the standard adopted," Mr. Lefanowicz said. "This time let's stick with it. If we truly want automated underwriting … [a standard] is key."
Mortgage technology was initially slow to evolve because changes must be accepted on the front end (where loans are made to consumers) as well as on the back end (where they are sold in the capital markets), Mr. Lefanowicz said.
"It's the only industry I know of in which something has to be sold twice."
Lenders have created their own barriers to innovation by not participating, Mr. Lefanowicz said. He cited the lack of involvement in the electronic mortgage registry, particularly in home-equity lending.
"Being a barrier or a nonadapter hurts all of us," he said.
According to Mr. Lefanowicz, his company receives over 90% of its applications, 2,400 a day, over the Internet.
When asked if technology could eventually replace people altogether in the underwriting process, he said, "It would be very difficult."
But he conceded that car loans may one day be processed entirely electronically. (Last month E-Loan, of Pleasanton, Calif., began offering car loans through the online auctioneer eBay Inc. and announced that it had entered into a marketing agreement with Edmunds.com, an auto information site.)
Thomson Media, which publishes American Banker, organized the conference.
