By Rob Katz, President of Del Mar Datatrac
The mortgage banking industry is officially paperless now.
Even though most companies are indeed scanning their loan files at some point in the process (typically as a last step) the reality is that most lenders are not actually paperless.
In fact, lenders that have yet to go paperless are faced with business obstacles that include:
- Slower warehouse turn times
- Higher processing fees from investors
- Reduced productivity due to “lost” files
- Expensive overnight shipping fees
- Increased suspense issues at loan sale
- Unnecessary office supply costs
- Impossible disaster recovery issues
…and the list goes on and on.
What is Paperless?
Picture your lending operation without a single manila loan file. No file cabinets, no off-site storage boxes clogging your hallways, no bins at your underwriter’s desk, no rubber thumbs, no hole punches and no staplers.
This utopian environment is probably a distant reality to many of you – even if you are scanning your loan files. But many lenders across the country have achieved being truly paperless, and the impact on their efficiency and productivity is priceless.
What makes going paperless so difficult is that the technology you need to have in place to actually replicate the flexibility available when dealing with a paper file must be far more comprehensive than simply dealing with PDF files.
Think about all of the things your team does with a paper loan file throughout its journey from inception to storage:
- Stack documents in a certain order
- Insert pages
- Mark-up documents
- Staple, un-staple, reorder, staple
- Pass them from one person to the next
- Make copies of pages
- Turn pages face down when new versions get added
- Ship copy packages
Although some of these actions can be accomplished when working with a PDF editing program, the reality is that most people are much more efficient with a paper file in hand.
Document Imaging vs. Electronic Document Management
When it comes to going paperless, what lenders actually need is an electronic document management (“EDM”) platform – a tool that is quite different than a PDF generator.
Not only does a good EDM system manage everything that you can do with a paper file, but it also introduces new features that just can’t be done with paper. For example, DataTrac EDM, the system offered by DMD, includes a tracking tool that monitors every time someone does something with a document. In other words, it tracks whenever a user views, marks-up, prints, emails, etc. a document – recording the user’s name and the date/time of the event. Also, when an annotation is added to a page (text, highlighting, boxes, rubber stamp images, etc.) the user can choose to make those mark-ups private (only they can see it), public (any user on the system can see it, but they don’t show up if printed or emailed out), or permanent (everyone sees them in any format).
Frankly, you just can’t do that with paper.
But there’s even more upside. A good EDM system can read barcodes included on your disclosures and closing docs prepared by DocuTech so that as they come into the office they are automatically recognized and indexed into the loan file.
When you are ready to ship the file to your investor, a single click runs a pre-defined audit on the file to ensure that all of the required documents are included. Then the file is delivered electronically through a secure internet channel to the investor.
The typical lender can triple their volume without having to hire another shipper when they go paperless. In other words, they can redeploy 60% of their shippers’ time onto other projects.
Unfortunately, the process of actually “going paperless” can turn out to be a bit more complicated than most businesses realize. The steps involved include:
- Prioritizing why you want to go paperless
- Deciding which features the technical solution you select must have
- Searching for available vendors
- Learning about each product offering
- Selecting a solution
- Negotiating the licensing contract
- Deploying the solution
- Training staff
- Going into production
- Dealing with “Culture Shock”
Each of these steps can be broken down into many, many sub-steps – resulting in an overwhelming project for companies that are not prepared.
Of those ten steps, managing the Culture Shock is probably the hardest. People don’t like change. More specifically, your FHA DE certified underwriter really doesn’t like change! So even if the technology you select is like DataTrac EDM and offers features that are more powerful than working with paper, the majority of the people at your shop will complain.
Like the guy on the plane next to me last week that glanced at my Kindle and said “I’ll never get one of those”¦ I like the feel of the pages of a book too much,” you will hear a litany of excuses as to why going paperless won’t work for people on your team.
But as long as from the top down the management of your company is committed to the efficiency gains introduced by being paperless, your staff will eventually come around. For some shops, the Culture Shock wears off after a month or two”¦ for others, it can take upwards of six months. Frankly, if it takes longer than that, someone on the management team isn’t a believer.