Practical Applications of eMortgage Adoption: Acceleration through the Pandemic

Abstract

In eMortgage Adoption: Acceleration through the Pandemic, from the Spring 2022 issue of The Journal of Structured Finance, author Mike Fratantoni of the Mortgage Bankers Association explores the significant uptick in eMortgage adoption over the last few years. He outlines the legal and technological advances supporting this growth, including the passage of legislation like the federal ESIGN Act and the development of digital securitization methods. Fratantoni is quick to note, however, that multiple barriers discourage lenders from fully embracing the technology, such as initial costs to consumers versus profitability among early adopters, industry-specific practices like warehouse financing, and reliance on third-party vendors for transactions. Nevertheless, he draws on prior research on fintech adoption in comparable industries to plot the potential progression of eMortgage adoption and utilizes industry data to assess the impact of eMortgages on lender productivity.

Fratantoni acknowledges the Covid-19 pandemic as one of the greatest motivators of eMortgage adoption, in part due to the necessity of nonphysical transactions and in part due to the swell of technology, like remote online notarization (RON), that supports eMortgage usage. He says that adoption will likely continue to increase for the foreseeable future due to competitive pressures, a desire to reduce cost, and the realities of operating in a post-Covid world. He urges investors to monitor how adoption will impact productivity in the years to come.