"We can close a loan with only six clicks," Cooper said. "We share the savings with our members."
Using the credit union's eMortgageAxis program, Navy Federal members can electronically sign all necessary documents - including the note, the application, the closing-costs form, the right-to-cancel paperwork (applicable when refinancing), and consent forms - by clicking a mouse a few times. A lawyer then prints out a complete set of mortgage documents for members, who also have the option of receiving them on a CD-ROM or a floppy disk.
Elizabeth and Wallace Felts of Fairfax, Va. refinanced their home electronically in 2001 when Navy Federal introduced its program. They acknowledged some hesitation when they came face to face with the new technology.
"But we found it very easy to do," Elizabeth Felts said. "It makes a big difference when you trust your lender."
Others in the real estate industry also are venturing into cyberspace.
Because relatively few notaries are equipped and trained to notarize documents electronically, the National Notary Association plans to hold workshops on electronic notarization and Web-based electronic mortgages at its conference in Philadelphia next month.
But few lenders have a process for facilitating even partial paperless mortgages.
Sig Anderman is founder, chairman and chief executive officer of Ellie Mae Inc., a provider of Internet services for the mortgage industry in Dublin, Calif. Since 1999, Anderman said, the industry has made the most progress in developing electronic documents for e-mortgages.
"Since 1999, we've seen the advent and acceptance of e-documents in both the origination and approval stages," he said.
Ellie Mae operates E-Pass, an Internet program that connects various mortgage professionals including lenders, underwriters and title companies. Mortgage professionals used it to close more than 8 million transactions last year, double the number of transactions completed in 2002, the company said.
The federal government gave electronic mortgages a big push on June 30, 2000 when President Bill Clinton signed the Electronic Signatures in Global and National Commerce Act. The legislation provides the same legal recognition and enforcement for electronic signatures, contracts and records as for their paper counterparts.
In addition, Congress is working on a proposed Uniform Electronic Transactions Act, which would help speed acceptance of electronic mortgages by offering both lenders and buyers more protection.
"The basic components for an e-closing exist... but once again, we are reminded that reaching a working-electronic closing requires both legal approval and consumer acceptance ... so there are hurdles to leap before the industry can embrace the benefits of e-closings and see the e-mortgage process through completely from origination to close," Anderman said.
The biggest hurdle, he said, is electronic recording of the documents. Before the technology can be developed and implemented in the title and recording aspect of a mortgage, county recorders' offices have to come online.
"For all of the time- and money-savings that e-recordings promise, the reality of a national working electronic recording system is as far away as acceptance of the technology and processes," Anderman said.
No titles recorded
Baltimore County, for instance, has no plans to record title transfers electronically, said Sonya Reynolds, manager of licensing and recording. Like many governments, Baltimore County has computerized most of its real estate records so that consumers can look up property transfers quickly. But many governments are not equipped to accept electronic titles when a home is sold.
"Due to budget constraints, we don't expect to move in that direction in the foreseeable future," Reynolds said.
The mortgage industry also must deal with a lack of borrower confidence.
"It is very easy to forget that for many, if not most borrowers, the mortgage process can be confusing and intimidating," Anderman said. "Top this experience off with asking for an intangible signature and it may be too much for some borrowers to handle."
Assuring borrowers that their electronic signatures are valid and secure is a far greater challenge than obtaining industry data standards and legislation, Anderman and others said.
But demographics and a growing acceptance of Internet commerce make bunny-slipper closings the next big thing, they said.
"The next generation of borrowers, having grown up in an electronic world, they will be much more amenable to the whole experience," Anderman said.