A recent survey of lenders, technology solution providers, warehouse banks, servicers, and title/settlement providers conducted by Fannie Mae and Freddie Mac showed that one of the obstacles preventing the mortgage industry from going fully digital is a lack of investors willing to buy digitally created mortgages.
Now, there’s one more investor willing to buy a digital mortgage note, as Mid America Mortgage recently announced its intentions to begin buying eNotes from approved sellers through its correspondent lending channel.
An eNote is an electronic promissory note created as part of an eMortgage, which is defined as the electronic creation, execution, registration, transfer and storage of a mortgage.
According to Mid America’s owner and chief executive officer, Jeff Bode, the company is already using eNotes and conducting eClosings, which are defined aselectronic closings involving parties applying eSignatures to electronic closing documents, in its retail channel.
“After implementing eClosings and eNotes in our retail channel, we immediately saw their potential to improve liquidity for smaller market players, especially brokers seeking to transition into mortgage banking, and we wanted to incentivize the market to adopt eClosing and eNotes by providing a secondary market channel for these types of loans,” Bode said.
“By utilizing eClosings and eNotes, lenders can decrease turntimes on their warehouse line to 48 hours or less, which, in turn, reduces the amount of per-loan interest and fees they are charged by the warehouse bank,” Bode said.
According to Mid America, one of the traditional barriers to eClosing has been a “perceived lack of acceptance” from investors and warehouse banks.
In an effort to relieve that concern, Mid America established relationships with several eWarehouse bank providers, including FirstFunding and Merchants Bank of Indiana, to give participating lenders added confidence that eClosed loans will be purchasable, the company said.
“We are excited about the marketplace enhancements made possible via a well-planned eNote strategy, said Jim Dunkerley, founder and president of FirstFunding. “Mid America is dedicated to the development of strong eNote standards for itself and its correspondent lenders.”