them in an office with their attorney or
real estate broker present.
Even so, each new generation is more
comfortable embracing complex financial
decisions online. Many younger consumers embrace mobile banking and online
stock trading, for instance. As the younger
generation buys first homes, there will
be a natural extension from searching for
homes online to filling out Web-based
applications and signing disclosures and
supporting documents electronically.
By Scott K. Stucky
Chief operating officer
Docu Tech Corp.
Embracing the Possibilities of Paperless
e-mortgage systems are key to staying compliant and responsive to clients’ preferences
becoming a mainstream best practice.
For many originators, the concept of
moving to 100 percent digital mortgage
documents might seem overwhelming.
The good news is that digital loan-document processes can be implemented
in stages, with each new stage adding
more efficiency and cost effectiveness.
Many loan officers conceive of the paperless process as simply converting
existing hardcopy documents into
digital copies, but with a true digital
mortgage, the documents never exist
in paper form, and the borrower signs
Paperless origination can offer a range
of benefits. In particular:
• integrity: Changes made to electronic
documents are applied instantly to all
areas of the closing documents and
disclosures. This eliminates redundant
data entry and reduces data errors,
which is especially important in light
of today’s regulatory environment.
• Time: Paperless mortgages can enable loan officers to eliminate much
of the time-consuming effort involved in handling, processing and
verifying paper documents.
• Security: Electronic files can be
encrypted for secure transmission
and to prevent unauthorized access
to the data. An electronic “seal”
also can limit when, and by whom,
changes are made to the loan file.
When making the commitment to
electronic documents, the first step for
many lenders and loan officers is to embrace e-disclosures and e-signatures.
These documents are easier to convince
borrowers to sign digitally. Also, they
facilitate the importing of data into
your LOS program, which assists with
meeting regulatory demands.
Loan officers sometimes encounter borrowers who are wary of signing loan
documents electronically. Many borrowers want to hold hardcopies and sign
Paperless mortgages are hardly new, but many mortgage banks and brokerages remain reluctant
to accept them. Skeptics have cited a
number of barriers to adopting digital
loan documents, from borrower comfort
to the perceived complications inherent
in certain documents requiring a physical
signature. With regards to the latter,
however, this past year’s acceptance of
digital signatures on IRS 4506-T income-verification forms means that another
barrier has been removed, opening the
door for brokers and lenders to take the
final steps toward adopting paperless
The benefits of digital mortgages are
numerous: less paper, reduced costs,
faster closing times, enhanced digital
tracking and more accurate reporting
for compliance are just the beginning.
In the past few years, innovations like
electronic file vaults, e-signature support and Web-based loan-origination
systems (LOS), have brought the
paperless mortgage process closer to
« articles »
It’s also a good idea to speak with any
accountants, lawyers and real estate
agents you’ve worked with, as they
might know of nonbankable clients
seeking commercial loans.
Some of the borrowers looking to
obtain small multifamily financing
will be turned away for reasons other
than low property-value amounts.
Some you choose to work with will
be turned away for less-than-perfect
credit. They will most likely have a good
reason; for example, they were hit particularly hard by the recession, there
By emily landgraf
APEX Mortgage Corp.
Grow Your Business by Turning “No” Into “Yes”
expand your mortgage offerings with small-balance multifamily loans
Understanding the niche
A small multifamily loan usually is
defined as any loan less than $5 Million.
At many banks, the minimum multi-family loan amount is $1 million, as
anything less is generally not considered profitable. Competition tends to be
minimal for mortgage professionals who
focus on multifamily borrowers seeking
$500,000 or less.
Enter the small multifamily lender.
These lenders often service nonbankable
borrowers, and much of their business
comes from residential brokers. These
are the lenders you’ll work with should
you decide small multifamily mortgages
are a product you’d like to offer.
When you work with the lenders in this
niche, you’ll usually make between 2. 5
points and 3. 5 points. Some small mul-
tifamily lenders will protect a broker up
to 5 points. This can result in lucrative
profits for you. For example, if you have
a borrower who needs a $350,000 loan
and you receive 3. 5 points, that’s $12,250
in your pocket after close, and it won’t
mean much extra work for you. Another
benefit of small multifamily loans is
that they can often close in as little as
two to three weeks, so you receive the
Once you enter the small multifamily
mortgage market, you’ll work with
borrowers who need financing to pay
off debt, expand their businesses or
purchase commercial real estate, but
are unable to qualify for Small Business
Administration (SBA) or bank loans
because the amount required is too low.
When prospecting for small multi-family deals, start by considering your
past customers. Some of the clients you
secured residential financing for also
may own multifamily investment property. Another good source for leads is
contacting local banks about customers
whom they’ve turned down. Banks
usually look to recommend alternative financing to nonbankable clients
to salvage the business relationships.
As a residential mortgage bro- ker, chances are you’re always looking for ways to increase
your revenue. If this is the case, you’re
in luck. There’s an underserved market with plenty of pent-up demand that
any residential broker can navigate
with the right know-how: small multi-family mortgages.
You may ask, “I understand multi-family mortgages, but why is it worth
my time to focus on small-balance
loans?” The reason is because as the
loan amounts for multifamily properties decrease, the competition among
brokers also decreases, which means
there are plenty of opportunities and
money to be made within this niche.
Adding this product to the services
you offer is a great way to boost your
revenue that doesn’t require a lot of
extra effort on your part. Before you
can start working with borrowers who
need loans for small multifamily prop-
erties, however, you need to get to
know the market.
emily landgraf is a marketing specialist for
APEX Mortgage Corp. APEX is a noncon-
forming national lender that specializes in
small commercial mortgages ($25,000–
$500,000). APEX understands the issues
faced by the self-employed and generally
closes a deal within three weeks from appli-
cation. Reach Landgraf at (800) 262-2739,
ext. 211, or firstname.lastname@example.org. Learn
more about APEX at apexmtg.com.
continued on page 88 »
Scott K. Stucky is chief operating officer at
Docu Tech Corp. Since 1991, Docu Tech has
provided compliance services and documentation technology for the mortgage industry.
Docu Tech’s soft ware interfaces with leading
loan-origination systems and enables
mortgage professionals to generate documents
locally. Docu Tech manages and secures all
information needed for a loan, guaranteeing
accuracy, security and compliance.
Reach Stucky at email@example.com.
Learn more about Docu Tech online at
docutechcorp.com or on Twitter at @Docu Tech.
continued on page 88 »