Sign here. Initial here. Sign, sign, sign… From the moment a house goes on the market all the way through to closing, one thing that hasn’t changed much is the endless trail of contracts. And with those contracts comes paper. Lots and lots of paper. Real estate brokers, title companies and mortgage lenders all send and swap whole forests of documents in a single day.
In this new environmentally conscious era where green principles are a hot topic, paper is one material that this industry has had a tough time eliminating. However, paperless technology is ever-so-slowly finding a foothold with brokers, lenders and title companies.
“Real estate has always been paper intensive,” said Prudential Gary Greene Realtor Judson Tate. “Houston agents are slow to change, but ZipForm has become an industry standard and many have started using DocuSign for signatures.”
Tate was one of the first in the industry to start using DocuSign. “Four years ago nobody knew what it was. Nobody wanted to accept it. But now it is pretty much recognized by everybody. I use it 99 percent of the time when I have a document for someone to sign. There’s only one form I can’t use it with and that’s the seller’s disclosure. The seller has to fill that out by hand.”
Envoy Mortgage started its journey to paperless technology back in the dark ages of 2004. Co-Founder David Zugheri said, “We have a very well-defined paperless process. Inside the four walls of Envoy, we are completely paperless. In 2004, paperless lending platforms didn’t exist, so we actually built out and designed a proprietary piece of software to facilitate our paperless quest. We had this system until 2010 when we switched to Avista Solutions, which has now developed a product specifically for the mortgage industry. All of the paperwork, every page of what used to be a 400-page loan file is now stored electronically. We don’t mail out anything. It’s all done online. The borrower assembles all the information, then they e-mail it over to us and we organize it within our software. Envoy mortgage will also accept electronic signatures.”
Stewart Title has led the paperless charge for the titling industry. The company created SureClose, which is an online document management system for reviewing and approving documents. Michelle Taylor, Branch Manager for Conroe Stewart Title, said, “I’ve always considered Stewart at the forefront of any new technology. I came to Stewart six years ago and they were already utilizing the SureClose online management system. I didn’t even know it existed. Stewart is designed to handle the transactions from front to back, totally paperless. We upload the documents to the website and anybody associated with the file is given a login and a password.”
From a realtor perspective, this makes the process so much smoother than it has been in the past. Tate said, “You can log into SureClose as the agent, the buyer, the seller or the lender and you can see all the documents there. There is also an online transaction organizer called Relay that some real estate agents use. You open up a file and everything’s right there.”
Envoy Mortgage and Stewart Title are the exception when it comes to paperless documentation. Most title companies are not fully electronic. And neither are most mortgage companies. Stewart Title may be set up for an electronic closing, but the lender may not be. And Envoy has similar issues from the opposite perspective. So for now at least, a closing will continue to be face-to-face.
Taylor said, “Even with the paperless documentation, the closing process has remained pretty much the same. But it is now possible to do it paperless if the lender’s on board.”
Zugheri gives a baseball analogy. He said, “In order for a closing to be completely paperless, the mortgage company needs to pitch and the title company needs to catch. This is because the closing paperwork comes from the mortgage company. Envoy may be ready to pitch, but we don’t get to pick the title company, the seller or their real estate agent typically does. We have locations in 37 states across the nation, but so far, we’ve only done three fully electronic closings.”
Taylor said, “Stewart has had electronic closings nationally. However, in Texas, we don’t see that happen very often. Most lenders prefer the old-fashioned way and what they refer to as ‘wet signatures.’ I think that in the future people will eventually go with e-closings, but it is a few years down the road. You will start to see pockets, but across the board, I think it is going to be awhile before people will be doing them.”
One issue is that the mortgage industry and the title industry are not exactly speaking the same language. Even the ones that have the capability to complete an electronic closing may not necessarily be able to do that transaction with each other. There are too many different systems at play. Only when an agreed-upon format emerges can this be resolved.
Another reason that it isn’t exactly moving full speed ahead is due to the current climate of the business. “You’ve got a lot of mortgage companies that are busy doing refinances, they’re busy dealing with delinquent loans, it’s just not a normal time. Everybody’s goal is to make it entirely electronic. But I don’t think there will be much advancement until those issues start to subside,” said Zugheri.
But some progress is better than none. Tate said, “I’ve only been in the business for 10 years and I’ve seen so many changes. I remember having to use a flatbed scanner when I first started, scanning pages one-by-one. Now we have a scanner that supports 100-page documents. I can only imagine 25 years ago when nobody even had fax machines. If you wanted to submit a contract, you had to drive over to another office and drop the contract off. We may not be where we need to be yet, but at least we aren’t getting reamed like we used to be!”
Sarah Nichols is the former editor of Houston Construction News with experience writing about the many facets of the construction and real estate industry. She has served as a technical writer and internal communication specialist for several Fortune 500 companies and has been a freelance writer for America Online, Livestrong.com and Houston House and Home magazine. Sarah is a graduate from Texas Christian University with a B.S. in Journalism and has received certification as a Graphic Illustrator. Sarah can be reached at firstname.lastname@example.org.