Paperless Myths

We’ve been talking about the “paperless mortgage” for…decades. Why has it been so difficult for so many lenders to still make the full transition?

Lenders and everyone one else out there, confuses paperless with process. Whether you work with paper or images, you have to have a process.

People look at going paperless as a mandatory change in the way they process. People believe their new document management solution should be the process, known as workflow. Paperless is about converting the paper, not eliminating it. To embark today with the goal of never creating or receiving paper is not reality. The “paperless mortgage” should be clearly defined as the end process, all paper documents should be digital. Efficiencies are produced when you can reduce the amount of paper coming in the front door. Providing tools to people to convert paper to image before you receive it.

The biggest challenge is removing paper from people’s hands; change like that is a steep climb for many and it takes top down leadership. Introducing electronic document management and removing paper takes about a year to become part of the culture. Trying to change the process at the same time usually is the killer and document workflow just doesn’t work. People process data, not documents. Documents collect data which only serve as a transaction of record with legal traditions, workflow or processing is a data system.

Now back to the original question, “paperless mortgage” promised not to create paper. One single document “the mortgage” was going to change the world. I remember sitting in MISMO meetings in 2000 as the “SmartDoc” was being defined. Then I referenced over 300 different document types which could play into processing a mortgage application and concluded, good luck. The fundamentals of standards group defining holistic formats to be taken back to different groups to implement rarely ever works; everyone always has their twist which requires customization and eventually you return to the place you started from.

Lenders and their staff that have achieved removing paper from their process will candidly tell you that they will never go back to paper. Their process virtually remains the same and significant efficiency gains realized. If you process paper today, it cost you about $1.30 per page, cradle to grave. When you go paperless, it cost you about 25 cents a page, a dollar savings. Look around your organization, look at all the paper but see them as dollar bills. All that money sitting around with no ROI!

The typical responses are “it’s not legal”, “it cost too much”, “it introduces fraud” and “my customer wants paper”. Except where there are still some government agencies that require paper, the legal world is well past this discussion. Often sited is the “Best Evidence Rule” which allows facsimiles in all formats (imaged, faxed, micro film) as long as the integrity of the electronic document is not challenged. “Costing to much” is relevant. Many organizations store their documents on local or network hard drives with some filing index that works for them, however compliance is questionable. Hosted document management has greatly reduced the cost relying on the principle of “economy of scale”. Vendors with experience are most favored because they understand the management of large objects. They have infrastructures designed to manage large objects throughout its life cycle. Disaster Recovery, Business Continuation, Compliance and special tools and services that add value to the process that most Lenders would fine daunting. Introducing fraud is further from the truth. Someone committing fraud by manipulating information on a document is best found and traced in a document management system than in a paper system. One person can change something on a page and deny it, change an imaged page and you leave finger prints. A well deployed document management system will have an audit trail reporting on every change made to a page and when users know that, information fraud all but disappears. Consumers wanting paper is true, majority of customers still want paper because it’s theirs; not the lenders, not some vendors or stored on a local hard drive that in time will die; they still want paper because it tangible and they can trust it.

Paperclip focuses on three core principles, paperless capture, paperless communications and compliance; to us it’s about eliminating physical paper as soon as you can within your process. Paperclip hosts its document management service called Virtual Client Folder (VCF) whereby we have industry specific indexing models. Indexing structure is the cornerstone where we utilize standard organizations’ terms and content where we can. Free form indexing models in concept sounds great, but ultimately will betray you.

Paperclip provides several paperless capture solutions to include VCF capture tools (scan, import & print2tif), web based “The Capture Place” allowing remote capture to consumers or producers, our B2B document exchange network “Internet eXpress” and eM4 Compliant Email crossover where emails are converted into Internet eXpress traffic.

Paperless communications provide the ease of “Point, Click & Send” pages, documents and/or entire loans directly to trading partners’ workflow systems, documents to consumers via email with “Proof of Delivery” & “Proof of Readability” and Inter-Office Mail where documents can be sent to other departments where they need their own copy. Scheduling services for the collection of documents and automatically releasing them.

Compliance solutions enabling customers to operate paperless and not be concerned with regulations and best practices; services, such as vcf4Compliance, Document Recognition, pcAudit and Disinterested Third Party (D3P) Auditing. vcf4Compliance is a read only access repository where documents processed in production are automatically replicated into a separate system accounting for change management (versioning) and providing a complete document life cycle chain of custody. Document Recognition (Image-In) where outbound loan packages are finger printed so when they are papered out, executed, scanned and returned, analysis is conducted on the return set for changes and completeness. pcAudit captures all user access and change to metadata and documents, separate from production users insuring the integrity of the check and balance nature of auditing. D3P communication audits are stored for complete chain of custody of documents, helping to resolve conflicts when they arise.

The Paperclip solution set enables organizations of all size to go paperless with the confidence that they have a partner that draws on the community and addresses the challenges and needs of the same.

Oddly enough, not a lot. Because we don’t promote significant workflow or process change, users quickly grasp that all they’ve done is replace paper for electronic documents. Inherent to that, ease of working with images saves time and reduces cost. Paperclip’s training on average last one hour and within a week, users are quite proficient and comfortable. On any given day, Paperclip manages an average of 7 help-desk calls generally resolved the same day.

Paperclip operates within a Tier IV data center environment implementing best practices and adherence to industry standards for protecting access all the way through disaster recovery. Paperclip employs third party evaluations, welcomes customer onsite visits and invests in state of the art computing systems. Data and documents are encrypted and internal access is managed by two factor authentication. Paperclip participates in financial services standard forums and routinely speaks about security at industry conferences. Over 600 companies of all sizes entrust Paperclip to secure their documents and comply with strict governance (SEC, FINRA, GLB, HIPAA and others) on their behalf.