Benefits of Digital Mortgage Servicing

According to an ABA Banking Journal survey, 61 percent of American consumers consider mobile or online services very important for obtaining a mortgage or making payments. To meet consumer expectations for quick, convenient access to their mortgage loan information, the mortgage industry is taking advantage of digital technology.  

Mortgage servicing software that includes a digital imaging system makes it easy to automatically generate electronic versions of documents and reports and display them electronically, eliminating the need for paper statements. Statements can be stored electronically and then viewed via borrower-facing web applications. As statements are generated, borrowers can be notified via email that their statements are available to be viewed. This can be helpful in reducing phone calls by borrowers eager to obtain their 1098 and other information.

Digital mortgage servicing benefits mortgage servicers as well as borrowers. By using the right mortgage servicing software and web applications, servicers can streamline operations while containing costs and satisfying credit union members. Here are several advantages of digital mortgage servicing.

Protect the Environment

Digital servicing helps mortgage servicers “go green”—reducing the use of paper is one important step to help servicers meet this objective. According to the U.S. Environmental Protection Agency, the average office worker uses 10,000 sheets of paper per year, which is equivalent to 1.2 trees. Paper use may be even higher in the mortgage industry.

The environmental impact of going paperless goes beyond saving trees. The U.S. pulp and paper industry is among the top industrial energy consumers. Worldwide, the pulp and paper industry is the fifth-largest consumer of energy, accounting for 4% of all the world’s energy use. Assuming that a 50-employee credit union uses 500,000 sheets of paper annually, the environmental impact is significant: 76.5 million BTUs of energy are used over the life cycle of the paper (the equivalent of 91 residential refrigerators operated/year), producing 53,900 pounds of carbon dioxide (equivalent to 4.9 cars/year). By reducing paper, we decrease our energy consumption, thereby reducing our carbon footprint.   

Reducing your credit union’s environmental impact may make a positive impression on younger, environmentally-conscious borrowers. According to one report, Gen Z individuals consider the environment to be the second most important issue today. A survey of 1,000 Millennials found that 70 percent consider a company’s environmental practices when deciding whether to purchase a product. Providing web applications that allow the option of paperless statements and notices may increase member satisfaction and encourage repeat business.

Save Money

Going paperless saves money by reducing the use of paper, ink and toner cartridges, filing cabinets and postage. Employees will spend less time printing and mailing paper statements, filing documents and searching for misplaced documents. Additionally, mortgage servicing software that automatically adapts to the borrower’s format preferences for receiving the various statements and notices sent by servicers, gives borrowers flexible options for opting out of paper statements for each statement or notice. According to PricewaterhouseCoopers, it costs $20 in labor alone to file a document, $120 to locate a misfiled document, and $220 to recreate the document if it cannot be located. That is upwards of $360 on a single misplaced loan document that could be eradicated through digital storage and retrieval processes.

Satisfy Credit Union Members

According to a recent American Bankers Association survey, 72 percent of Americans access their bank accounts most often via online and mobile platforms. Borrowers appreciate having quick, convenient, round-the-clock access to their mortgage information and the ability to pay online. Environmentally-conscious Millennials and Gen Z want to be able to opt out of paper statements and receive documents electronically. Web applications are the preferred method of communication between borrowers and servicers, providing convenient, paperless access to loan information and allowing one-time or recurring online payments. Paperless statements and other mortgage-related documentation allow borrowers to include their mortgage documents with their other digitally stored financial information. By storing digital versions of their statements, borrowers won’t misplace paper copies and call the servicer requesting a historical statement. Web applications allow servicers to send automated email messages to borrowers, encouraging them to view their statements and notices online. Servicers can also send personalized messages to borrowers to read once they log in to the web application. 

Improve Efficiency for Servicers  

According to Craig Martin, mortgage practice lead with J.D. Power and Associates, "While the customer experience is an important thing, it's not the most important thing. The most important thing is how to deliver service more efficiently, which in turn will drive customer satisfaction." Digital servicing facilitates information exchange with borrowers, improving efficiency. Borrower-facing web applications that provide immediate access to mortgage information and statements reduce phone calls from borrowers, saving staff time.

By providing convenient, online payment options, servicers can encourage borrowers to make their mortgage payments on-time or even early, eliminating the need to send late notices. Electronic documents facilitate compliance with regulatory and reporting requirements. The digital storage capability allows for optimum control of the documents for record retention and easier access for audits, research or responding to borrower inquiries. Because access to digital files can be controlled via passwords or login to software storing the files, electronic documents are more secure than paper documents left out on a desk or stored in an unsecured location.

Digital mortgage servicing streamlines mortgage servicing operations, saving money and benefitting credit union members and servicers alike. Convenient, round-the-clock access to mortgage information and online payment options are essential to satisfy today’s borrowers. Paperless processes reduce your environmental impact and may attract younger, environmentally-conscious borrowers. If you’re not already using mortgage servicing software with digital imaging and web applications, now is the time to go digital.   

Susan Graham is president and chief operating officer of Financial Industry Computer Systems, a mortgage-software company specializing in in-house mortgage-origination, residential mortgage-servicing and commercial mortgage-servicing software for mortgage lenders, banks, and credit unions.

Published in CUNA, March 2019