Going Paperless: How Do We Get Started?

The long-lived dominance of paper in the workplace is coming to an end. In just a matter of years, we can safely expect that most businesses will largely operate in a paperless fashion. The big question is, how do companies transition to a paperless environment without skipping a beat?

In the mortgage industry, lenders looking to go paperless face a number of challenges. Lenders must deal with disparate participants who may not be interested in going paperless at the same time; lenders must meet increasingly stringent privacy and security regulations; and they must select a technology solution capable of meeting current and future needs.

So how do lenders meet these challenges and start down the road to going paperless? There are four keys to starting a successful transition to a paperless environment:

1. Choose the best technology for your business
2. Minimize changes in your loan processing workflow
3. Do not depend on things you cannot control
4. Maximize your return on investment

1) Choose the best technology for your business
Each mortgage business has specific requirements and capabilities, and a technology solution that works for one company may not be the best choice for another. The first question lenders should ask themselves is where to source the technology. They basically have three options:

1. Develop the technology in-house
2. Choose a generic solution and adapt mortgage lending processes to match the technology
3. Work with a vendor offering technology specifically engineered for the mortgage industry

The first two options might be appropriate for businesses with a large IT staff, an even larger IT development budget, and the time to develop and perfect a solution. For most mortgage companies, the third option can be the fastest, most cost-effective way to source the technology.

When it comes to going paperless, the technologies that can have the greatest and most immediate impact are electronic document management and electronic document delivery technologies. Ready-to-use electronic document management and electronic document delivery technologies have emerged as essential tools in the transition to a paperless environment. They enable all loan documents to be viewed, edited, delivered and stored in electronic form. They also enable companies to simplify work processes one step or department at a time, and gradually spread throughout the enterprise.

The concept is simple. Documents that arrive electronically, such as via fax, upload, or e-mail, are kept in electronic form and are never printed. Documents that arrive printed are scanned, or better yet, are automatically converted to electronic documents as they arrive.

For organizational purposes, all electronic documents and files, regardless of format or origin, can be labeled by name, document type, borrower, loan number, etc., and placed in an electronic loan folder. Once documents are placed into the electronic loan folder, they can be simultaneously viewed by all authorized parties without ever having to undergo the slow, person-by-person routing process. There is no opportunity for losing documents while routing, and no room for anyone to claim they placed a document in the electronic loan folder if it is not there. For auditing purposes, the program tracks what actions have taken place, when they took place, and by whom.

Electronic document delivery technology enables the secure exchange of electronic documents with all involved parties, both inside and outside of a company or organization, and can include eDisclosures, the electronic delivery and signature of applications. Unlike e-mail, electronic document delivery provides a secure and compliant method of exchanging confidential loan files over the Internet. When exchanging loan documents electronically, a lender subscribing to an electronic document delivery service can enable borrowers and third party service providers to use the same system without requiring them to invest in the technology or compromise security.

2) Minimize change in processes
When it comes to technology that needs to be as widely adopted as electronic document management and electronic document delivery software, one thing is certain: if it cannot be easily adopted by borrowers, brokers, and other third parties, chances are it will not be readily adopted.

Companies such as SwiftView are increasing adoption by ensuring that users don't have to re-think the way they do business. Instead, they offer a service that lets lenders create paperless processes that mimic the paper-based process, storing documents in electronic loan files and folders in a similar fashion as mortgage professionals would do with paper files and folders.

Birgitta Natale, AVP of Operations and Fulfillment for American Home Bank, explains the company's experience with deploying the technology. "When we deploy new software, we usually hear grumbling about it. After all, we have people who've been doing their jobs for 20 years and have seen plenty of new technologies fail. But using SwiftView's eLoanFolder felt natural right from the start. It didn't require us to change any processes, which would have otherwise caused resistance. With the eLoanFolder, we follow the same exact processes as we did before, but now we just don't use paper."

American Home Bank has experienced great benefit in deploying a technology that is easy to adopt and effective to use. "There have been no grumblings in regards to deploying or using the eLoanFolder. On the contrary, our staff would never go back to the old way, and I can't imagine that they would want to, either!"

3) Do not depend on things you cannot control
Since loan processing is a series of interrelated and interdependent processes which involves many participants from outside entities such as borrowers, appraisers, underwriters, and closing agents, it could be a challenge to get the buy-in of all involved. Face it, not everyone has enough of an incentive to go paperless, and you cannot force them to change.

One key to successfully moving towards a paperless workflow is to transition from paper to paperless in such a way that does not hinge on the buy-in of outside entities. A company's chance of success is inversely proportional to the degree of change the company requires of the outside entities. That is, the more a lender needs third parties to change how they currently do things, the lower the likelihood of making a successful transition.

As such, the onus falls on the lender to encourage the use of electronic documents, while also being able to easily convert paper-based communications into electronic documents. Once all documents are in electronic form, the lender's path to a paperless process will be underway. The key is not to allow paper to ever enter the system by transforming printed documents into electronic ones upon receipt.

4) Maximize return on investment
The value of any technology hinges greatly on its return on investment (ROI). In terms of electronic document management and document delivery options, ROI can be measured based on initial investment, adoption, and resulting benefits.

With electronic document management and document delivery solutions from companies such as SwiftView which offer pay-per-use services, the ROI is extremely compelling. There is no upfront cost, deployment is swift, and benefits are experienced immediately. Furthermore, a company's current technology assets such as loan origination systems or imaging systems, can work in concert with the electronic document management and delivery system, thus enhancing the capabilities of current assets, not replacing them.

If there are no upfront costs, savings are experienced immediately. These are savings in overnight shipping and document storage, as well as benefits from a clear audit trail, reduced manual handling of paper, instant delivery, and much more. Overall, users experience shorter loan cycle times, lower labor and processing costs, as well as greater control and efficiency in their communications and rate locks with the secondary market.

From ability to action

The availability of easy-to-use, low cost technologies that enable companies to go paperless have eliminated perceived barriers to entry. Right now, going paperless, or at least going with less paper, is largely a matter of logistics. Best of all, every step a company makes toward going paperless, no matter how small, can save significant time and money.

Much like switching to a computer to replace a mechanical typewriter, electronic document management and document delivery systems have opened the doors to all-new levels of efficiency. And in just a matter of years, we'll see our dependence on paper vanish much like our dependence on typewriters. What a great thing that will be.