- The Washington Times - Wednesday, January 28, 2004

Four years ago, the first home purchase completed totally by electronic means occurred in Broward County, Fla.

It was a very exciting day. The Wall Street Journal article touting this first-of-a-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.”

For more about this event, visit www.enterprise-title.com/holder/home.htm, and click on the link in the upper right corner.

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 article recently published by Mortgage Originator magazine (www.mortgageoriginator.com), Sig Anderman, founder and chief executive officer of Ellie Mae Inc., bemoans the ill-equipped county records systems across the country as the top hindrance to electronic closings.

Ellie Mae provides Internet connectivity to the mortgage industry, connecting loan originators to customers, partners, lenders, underwriters and service providers.

“The greatest hurdle on the road to e-mortgage acceptance is, and will continue to be, county recording offices,” Mr. Anderman writes. “[L]ess 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 consumers’ fingertips via online listings, CD-based contracts and e-mail property alerts.

The only time a home buyer needed to touch paper was to sign the contract. But mortgage companies have been hampered by the dragging feet of local jurisdictions.

Mr. Anderman is in a position to know about e-mortgages. Ellie Mae’s E-Pass, which is an industry-standard Internet-transaction portal, is a key component to mortgage-industry connectivity nationwide. Mortgage professionals used this portal to close more than 8 million transactions in 2003 — double the number of transactions completed in 2002.

With this type of participation, it is easy to see that the mortgage industry is definitely online to make the transaction simpler and less expensive for computer- and Internet-savvy consumers. The first transaction, for example, was completed in three weeks instead of the traditional 45 days, and the consumer saved more than $700 in closing costs.

The use of virtually instantaneous, money-saving technology makes even more sense these four years later.

Now, with multiple-listings services promoting round-the-clock access to the housing inventory via wireless personal digital assistants and with PDA-based mortgage calculators allowing prequalification anywhere at 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 records systems are the last gap in the process, and that is where the mortgage industry should concentrate its efforts.

Mr. Anderman provides a good plan to get the other 25,980 county records offices onboard with the e-mortgage program:

m 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.”

M. Anthony Carr has written about real estate for more than 15 years. Reach him by e-mail ([email protected]erols.com).

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