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GSE Survey Identifies Ways to Speed eMortgage Adoption

By Cathie Ericson | August 18, 2016

GSE Survey Identifies Ways to Speed eMortgage AdoptionIs “e” finally nearing widespread use?

eMortgages have gained momentum in the past year for several reasons.

Chief among them is that consumers are clamoring for faster, simpler, and more reliable service from mortgage providers.

In addition to making consumers happy, eMortgages can provide key competitive advantages to lenders, including:

  • More efficient loan origination and cost reduction.
  • Faster loan funding and delivery to the secondary market.

As part of that effort, the GSEs surveyed key stakeholders earlier this year – including lenders, technology providers, warehouse bankers, servicers, and title/settlement providers - to gauge their interest in eMortgages and their experiences with them.

Valuable Feedback

The survey sought to identify perceived obstacles that might hinder broader industry adoption and to gather suggestions for boosting adoption.

“We are grateful that survey participants took this opportunity to share in-depth and candid feedback,” says Jennifer Parker, Fannie Mae’s eMortgage manager. “The results illuminated some issues that we hope to resolve and also presented some new opportunities.”

According to the survey, the top challenges facing stakeholders include:

  • Intra-industry dependencies. (Stakeholders seem to be waiting for someone else to make the first move.)
  • The GSE requirement to deliver eNotes in MISMO SMARTDoc v1, and the complexity associated with this older technology.
  • Lack of clarity and alignment among the enterprises’ policies and procedures.

Challenge 1:  Intra-industry Dependencies

Currently, eMortgages present a chicken-or-egg dilemma. Which comes first? Warehouse lenders stated in the survey that they see a lack of customer demand. But lenders believe that the unavailability of warehouse funds for eNotes is a significant barrier to their entry into this space.

Fannie Mae’s Recommended Solution:

“Fannie Mae recommends that all parties consider the advantages of eMortgages to their business,” says Parker. Lenders are in the driver’s seat and must drive adoption through their partners – including servicer relationships, title/settlement partners, and warehouse lenders. "We feel confident that if lenders spearhead the process, all of their key partners will find ways to support them,” Parker says.

“Fannie Mae has supported and will continue to support lenders’ efforts through its continuing education series, by developing clearer guidelines, and by seeking new ways to improve adoption through the removal of barriers, both real and perceived,” adds Parker.

Challenge 2: Delivering eNotes in MISMO SMARTDoc 1

As one respondent notes, “The single biggest challenge is that the GSEs are accepting the Closing Disclosure in MISMO V3 SMARTDoc v3 format, but the eNote is in a different and outdated version. This process requires three different systems: one to produce the Closing Disclosure in an electronic form, one to create the eNote, and another to create paper.”

Another respondent requests acceptance of eNotes in PDF or SMARTDoc v3 with PDF view, which would ease vendor implementation and remove additional operational steps.

Fannie Mae’s Recommended Solution:

Having recognized this challenge, Fannie Mae is in discussions with key interested parties to explore various eNote formats. It will seek opportunities to transition to a new, more user-friendly format, and will continue to explore various formats. Fannie Mae expects to announce its plans in a few months.

Challenge 3: Lack of Policy Alignment

Lenders say they are confused by the current process, which lacks clear policies and uniform guidelines. As one technology provider notes, “The lack of a consistent and uniform set of processes and policies forces the industry to adopt different closing processes – depending on their ultimate investor – which is a major hindrance for adoption.”

This lack of consistency is operationally cumbersome for lenders and leads to industry uncertainty, acknowledges Parker.

Feedback indicated that there should be better alignment of the GSEs’ policies with each other,  wherever possible.

Fannie Mae’s Recommended Solution:

Fannie Mae is working hard to collaborate with Freddie Mac to provide more alignment, Parker says. “We will officially transition all eMortgage servicing into our servicing guide during the third quarter of 2016. By combining all policies into a comprehensive and reliable source, we should streamline the process for lenders and servicers to service eNotes,” she says.

It’s clear, says Parker, that eMortgages are the future. They will provide cleaner, more transparent, and more reliable data in the loan manufacturing process, she says. They will also help establish efficiencies and eliminate errors. Fannie Mae has a commitment to helping overcome obstacles for today’s lenders, with an eye toward widespread adoption and easier implementation of eMortgages, she adds.

Editor’s note: For more information, contact the Fannie Mae eMortgage team at or visit the eMortgage/eClosings page:

Cathie Ericson is a freelance writer for The Oregonian,,, and other online and print publications and has been writing for Housing Industry Forum since its launch.