> Columnist M. Anthony Carr
E-Closings Still Science Fiction
by M. Anthony Carr
Four years ago the first completely electronic home purchase occurred in Broward County, Florida. It was a very exciting day, four years ago. The Wall Street Journal article touting this first-of-it's kind transaction was a short piece, but it was a sign of things to come: "Less than a month after Florida gave official recognition to electronic legal documents, Jose Ignacio Arroyo, a 34-year-old engineer, closed on a $140,000 house in Weston on Monday by transmitting his signature on a promissory note from the Weston offices of Enterprise Title Inc. "Every part of Mr. Arroyo's purchase was done electronically, from his loan application over the Internet with Sunrise-based Mortgage.com, to the recording of the purchase with the Broward County Records Department, to the sale of the loan on the secondary mortgage market via Fannie Mae." The article can be read here. The technology had developed in 2000 to a point to where purchasing a house online for Mr. Arroyo was as simple as buying an airline ticket. And you would think that four years later we would have seen a growing use of this new technology in the home sales and closing industry. Nope. Not quite. In an online article published by Mortgage Originator magazine last week, Sig Anderman, CEO of Ellie Mae, Inc., bemoans the ill-equipped county recordation systems across the country as the number one reason why electronic closings are stuck in the zygotic stages. "The greatest hurdle on the road to e-mortgage acceptance is, and will continue to be, county recording offices," he writes. "…less than 20 of the nation's 26,000 county and other recording jurisdictions are configured to receive and record mortgage documents electronically." When I read about the first transaction four years ago, I was ecstatic. The mortgage industry was coming of age. The Realtors earlier had placed most of their industry at the consumer's fingertips via online listings, CD-based contracts and email property alerts. The only time a home buyer needed to touch paper was to sign the contract and, it seemed the mortgage industry was about to do the same. Instead, they've been sabotaged by the dragging of feet from local jurisdictions. Mr. Anderman is the man to talk on these issues. Ellie Mae provides Internet connectivity to the mortgage industry, connecting loan originators to customers, partners, lenders, underwriters, and service providers. The group's ePASS, which is an industry-standard Internet-transaction portal, is the key component to the connectivity nationwide. Mortgage professionals used this portal to close more than eight million transactions in 2003 -- double the number of transactions completed in 2002. With this type of participation, we can see that the mortgage industry is definitely online to make the transaction simpler and less expensive for computer, internet-savvy consumers. When the first transaction was complete, it had taken 3 weeks instead of the tradition 45 days and the consumer saved more than $700 in closing costs. The use of this instantaneous, money-saving technology makes even more sense, yea, these four years later. Now with multiple listing services promoting 24/7 access to the housing inventory via wireless PDA's and with PDA-based mortgage calculators allowing pre-qualification any where, any time, there's hardly a need to print out paper listings to hand over to consumers unless they just have to have the remnants of trees in their hands. Local recordation systems are the stop gap and, thus, that is where the mortgage industry should concentrate its efforts. Mr. Anderman provides a good plan of action to get the other 25,980 county recordation offices on board with the e-mortgage program: - Organize at the local, state, and national levels.
- Discuss the issues with industry professionals, business partners, and technology vendors.
- Elevate the discussion at association level meetings and conferences.
- Designate one county in every state to become a "beta" to prove the business case for e-recordings.
"It would literally open the gates overnight," Mr. Anderman says. "In a time when local governments are striving to cut costs and provide better service to their constituencies, it might be just what the doctor ordered." | 
