‘Paperless’ Service: A New Mortgage Model?

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Everyone’s going green these days - with varying results.

But Bank of New York Mellon (Stock Quote: BK) may be on to something with its new eVault service, which helps clients electronically process and store key mortgage  documents. BNY says it not only helps the environment, but also helps customers save time retrieving their “papers.”

No matter how you feel about the bank’s efforts, at least they’re ahead of the times. A new study from Xerox (Stock Quote: XRX) Mortgage Services predicts it may take up to seven years before the financial services industry is handling more than 50% of all mortgage loans electronically.

BNY Mellon doesn’t want to wait. Its eVault service, released this summer, not only helps the environment, but should also save time and money on both the borrowing and lending ends of the mortgage paperwork exchange.

Rick Stanley, head of structured credit at BNY Mellon Corporate Trust, agrees.
“Documents no longer have to be printed on paper to be signed, and they don’t have to be manually shipped or physically stored,” Stanley says. “By making the mortgage process fully electronic, eVault allows lenders to reduce their costs through automation.”

The mortgage industry formed an alliance to make digital mortgages  a priority, and eVault is BNY’s effort to climb aboard. According to a statement, eVault uses the Mortgage Electronic Registration Systems (MERS), an industry-led initiative to identify and track individual mortgages and related information electronically.

BNY also decided to outsource a major portion of eVault’s software development efforts. The bank partnered with eSign Systems, a division of Wave Systems Corp (Stock Quote: WAVX) to build the life cycle management software at the heart of eVault. The software is fully integrated with MERS and offers anti-tampering features to protect borrowers’ and lenders’ critical financial documents.

Consumers are increasingly expecting the companies they deal with to provide electronic statements, bills, and other financial and business documents. They like the convenience of digital documents, and believe they help the environment. Banks and mortgage lenders not currently offering these digital documents might risk losing such customers.

Consumers who value green documents might be onto something as well. According to a 2010 study by PayItGreen, “if one in five households switched to electronic bills, statements and payments, the collective impact would save 151 million pounds of paper, avoid filling 8.6 million household garbage bags with waste and avoid producing 2 million tons of greenhouse gas emissions.”

That’s not a bad deal  - and it makes good business sense for mortgage servicers, too.

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at BankingMyWay.com.

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