For the last few years, there’s been a revolution underway in the mortgage business, as the industry moved closer to a fully digital mortgage, but new data suggests that the digital mortgage is becoming an industry-wide reality.
Developments like Quicken Loans’ Rocket Mortgage helped digitize the front-end of the mortgage process, but serious hurdles still remained to transform the entire mortgage from a paper-ridden practice to a computer-driven one.
One of the main hurdles was the use and acceptance of electronic promissory notes, also called eNotes. An eNote is an electronic version of the promissory note, the record of the obligation to repay the mortgage.
Previously, this document was a paper document, but in recent years, a move towards digitization in the mortgage business saw a rise in a digital version of the promissory note. The eNote needs to be stored digitally in a way that ensures it has the same legal enforceability as a paper document.
And last year, the digital mortgage revolution took a big step forwards when Wells Fargo, the nation’s largest mortgage aggregator, announced that it would begin buying eNotes.
Now, it appears that the truly digital mortgage has truly arrived as the use of eNotes exploded in the first quarter of 2019, rising nearly 5,000% over last year.
A newly released report from MERSCORP shows that the number of eNotes added to the MERS eRegistry during the first quarter of 2019 surpassed the total number of eNotes registered for all of 2018.
According to the MERS report, its member institutions, which include lenders and originators, added approximately 19,000 eNotes to the MERS registry in the first quarter of 2019, compared to roughly 17,000 eNotes that were registered in all of 2018.
The 19,000 eNotes registered in the first quarter is also a spectacularly massive increase of the same time period last year. In the first quarter of 2018, there were only 375 eNotes registered on the MERS system.
That’s an increase of approximately 4,967% in just one year.
According to MERS, the first quarter’s total of eNotes increased the number of outstanding active eNotes to 109,000, representing approximately $28 billion in mortgages.
“As the industry continues to migrate toward a fully-digital process, the early movers gain efficiencies and can remain most competitive in the market,” said Christopher McEntee, president of ICE Mortgage Services (ICE is MERS’ parent company). “We’re excited about the rapid adoption of eNotes, and we expect to see a continual rise as more participants invest in next-generation infrastructure.”
Some of the lenders using MERS’ eNote registry include Bank of America, JPMorgan Chase, Guaranteed Rate, loanDepot, and Quicken Loans.