It’s no secret that the mortgage process is paper intensive. But exactly how much paperwork Americans buying homes consume annually may come as a surprise.
A report from the mortgage education website FreeandClear revealed that about 2.2 billion sheets of paper are used each year in this country for mortgages. That translates into 264,000 trees felled to print mortgage documentation. Beyond wood usage, “paper production involves considerable energy and water consumption, and generates significant greenhouse gas emissions and waste,” noted the report.
The company’s report is based in part on data from a 2016 Federal Reserve Bulletin, which said an average of 7.8 million mortgages are processed each year in this country. When that figure is multiplied by the approximately 280 sheets of paper FreeandClear said are used in an individual mortgage, you arrive at 2.2 billion.
To further quantify the environmental impact of this paper usage, FreeandClear tapped Environmental Paper Network, a nonprofit focused on issues surrounding paper production and consumption.
EPN used its “paper calculator” to determine the number of trees required for a year’s worth of mortgage paperwork. Their estimate of 264,000 is based on a calculation involving the total reams of paper required for 2.2 billion sheets of paper and the specific tonnage of trees necessary to produce those reams.
So what can be done about the paper intensive mortgage process?
Florida-based Digital Risk LLC is developing products to allow more of the process to be conducted via digital technology. Over the next several years, there will likely be a shift to greater usage of paper-free technology like e-signatures and the ability to review documents online or on your phone, said Digital Risk vice president Leo Loomie.
“A lot of strides have been made within the last year to move away from the historically paper intensive process,” said Loomie. “The technology is already there. It really just comes down to adoption.”
Here are some actions you can take to help reduce the amount of paper used when buying a home.
Do Your Research
Though it only represents a small fraction of the process, many mortgage lenders have already switched to online loan applications.
“These lenders are beginning to make the transition to a paperless system,” said Tim Milauskas, a loan originator at First Home Mortgage in Maryland. “In many cases, borrowers can now create a secure online portal and upload their documentation directly to the lender rather than print out documents and hand-deliver them.”
Capstone Direct Mortgage Financing, in Thousand Oaks, California, is one such example. Over the past several years, the company has made a concerted effort to use less paper.
“We offer the ability to take your application online, save a pre-approval online and upload all of your paperwork to our (electronic document) system,” said Capstone founder Mike Wise. “We are trying to minimize any paper we use in our office and what we get from the borrower.”
Also on the horizon, said Milauskas, are automated systems that allow lenders to go directly to third parties to obtain financial information required from the borrower. One example includes lenders being able to access an applicant’s bank statements directly from the bank, rather than the applicant providing copies. (Here’s what you need to get a home loan fully approved, including your credit score. You can see where your credit stands for free on Credit.com.)
Ask Questions When Shopping Around
As you’re hunting around for the best mortgage rate and for the lender that best fits your needs, you can also obtain information about how technologically advanced a lender may be.
“Say to them, ‘I want this to be a streamlined, paperless process, do you offer that?’ ” said Loomie. “Ask them, ‘If it’s not entirely paperless, is it mostly paperless?’ ”
Many lenders and brokers allow loan applications to be completed electronically, but the vast majority of the paperwork associated with a mortgage comes at the closing, where wet signatures are still the standard. (Here’s how to plan for closing costs.)
Don’t Ignore Surveys
Surveys represent an opportunity to weigh in on the mortgage process and effect change.
“A lot of folks look at surveys and say it’s not worth my time,” said Loomie. “I can say unequivocally that’s not the case, particularly in the mortgage industry. The surveys are very influential. Both large and small financial institutions put a lot of weight on the customer experience, they read your responses and deeply analyze and track customer feedback.”
In other words, use the survey to tell the mortgage industry you’d like it to use less paper.
“You can say, ‘If I knew how much paper was going to be used, I would have gone to a different lender,’” said Loomie. “And that sort of thing can be done throughout the process. Ask questions all along the way. Say, ‘Hey, why did you make me fax this when I know there are institutions that allow me to directly integrate this information online?’ The customer feedback will drive the adoption. They known being green is very important to customers.”
Lobby for Change
Customer service surveys are not the only place to voice your opinion. Reach out to officials at all levels — brokers, banks, regulators, elected officials and more, said Kim Porter of Environmental Paper Network.
“One of the positives about FreeandClear making this known is a greater awareness among people who want to see less waste,” Porter said. “People can start talking to companies and elected officials, and they can use their dollars wisely, choosing to work with companies who are advocating for less wasteful practices.”
Image: Weekend Images Inc.
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