By David Thorpe
2011 turned out to be another tough year for most international markets with the Eurozone capturing most of the headlines. It’s still not clear whether the accord signed at the EU summit in December will actually achieve the required amount of fiscal discipline, especially given the past failures in abiding by budget deficit rules. Meanwhile in the US, it is anticipated that the overall real estate market will continue to struggle heading into 2012. The Mortgage Bankers Association is forecasting a $900 billion market next year, which is perhaps the lowest purchase mortgage market they have seen in the last 20 years. Yet despite all this gloom and despondency there was one story that caught my eye over the Christmas break and it had to do with mortgage processing in New Zealand. Possibly not one of the most fascinating of subjects but one that should be of interest to UK mortgage lenders, particularly those with an interest in clouds!
When Polynesian navigators needed a name for the large islands at the bottom of the Pacific, they called them Aotearoa – the land of the long white cloud – strangely enough, after the long white cloud created by the updraft from the land that sits over the hills on a hot summer’s day.
Because it’s a small country and there is not much to do, other than fish, sail, ski and play rugby, they seem to have developed a fascination with another kind of cloud – internet cloud. In 2002, the New Zealand government declared their land registry to be a computer register. It dragged conveyancers into the 21st century in 2009 by making it mandatory to register only electronic instruments to change the land register. But conveyancing is not just about sticking land instruments into publicly accessible pigeon holes, it is also about creating them in the first place and completing the transactions that they were created to record. The government uses a Citrix based system and digital certificates assigned to each conveyancer to provide an elementary version of the cloud. Citrix could be described as a means of creating virtual PCs over the web and giving individuals the ability to access the virtual PC for a specific purpose from the physical PC on the conveyancer’s desk that houses the conveyancer’s digital certificate.
This is without doubt old and clunky but nevertheless an effective way of creating an internet cloud. IBM has now allowed our sister company in New Zealand, First Mortgage Services (FMS) to create virtual servers in a more modern cloud. Using IBM cloud, FMS is providing the private sector conveyancing elements in "a software as a service" environment. It has also utilized IBM‟s PKI vault to enable it to store, allocate and manage digital certificates so a person can use the certificate to digitally sign a document without having to have the digital certificate stuck on the persons PC.
On 15 December 2012, the first entirely electronic mortgage loan in New Zealand was competed and registered, within three days from loan approval. Apart from some initial paperwork to apply for the loan and prove identity, the loan was documented, signed, settled and registered electronically. The process is relatively straight forward and goes something like this. Data from the mortgage lender is sent to FMS who then create the documents and upload them to its web signing site. The customer accesses the web signing site through their internet banking log in, sign the documents online and complete additional information required to settle the refinance. FMS then contacts the outgoing lender and arrange to be instructed to register the discharge for the outgoing lender. FMS then advise the new bank of the amount to settle and create the eDealing to register the discharge and new mortgage online and procure a solicitor to certify the eDealing.
The new bank transfers the funds to repay the old bank by interbank transfer and the eDealing is released for electronic registration. Finally, an electronic copy of the registered dealing and confirmation of registration is packaged together with the web signed loan agreement and sent to the bank electronically and actually stored for the bank providing the new mortgage. No trees are felled and no ink is spilt in the making of this new mortgage.
So if clouds are the future then what about cloud cuckoo land? Nobody could have missed the passing of Kim Jong Il. Of all the many stories surrounding his time in charge my favourite has to be the one concerning his golfing prowess. In 1994, it was reported by Pyongyang media outlets that he had shot 38 under par on a regulation 18 hole golf course – including 5 holes in one! That score is 25 shots better than the best round in history! I wonder what he could have done for mortgage processing had he turned his hand to it?
Group CEO First Title