Mortgage Insanity or How to Kill Trees

Recently I did something that many of you have done – I remortgaged my home. The whole process of getting a mortgage approved to me is crazy, but my critique of that process is for another article. This article is about the closing.

After my mortgage was approved, the lender contacted a mobile notary public who called me to make an appointment to sign the closing documents. The appointment was for 10 AM and she was coming to my house. That was great as years ago I can remember having to go to a notary’s office to sign documents. At least one part of the closing process has improved.

Closing on a mortgage is not new to me. Including my home and rental properties, I have probably closed on at least twenty mortgages – maybe more. Like most people I sit there and taking a cue from the notary I sign my name on a bunch of papers I don’t read at the time, and even though I am left with a copy of those papers, I never read them.

Usually, after signing, I just put the paperwork away and don’t give the process much thought. But this time it was different. Maybe it’s because I have spent a lot of time working on business process improvements or maybe it’s because I like to be efficient. Whatever the reason, I grabbed the stack of papers from the notary and started counting. In total, the closing package of documents was 141 pages. Then I counted the number of times I placed my signature on a page. That was 47 times. Then I counted the pages I had to initial (in some cases the same page I had already signed). That was 15 initials.

Wow! That was my first thought. 141 pages, 47 signature and 15 initials to close one mortgage. Then I got to wondering how many pages, signatures and initials are required for all the residential mortgages that are closed each year? You would think that would be easy to find. So, I typed into my Google search bar the following phrase “number of new residential mortgages in 2020 in the US.” Google nicely came back with 500,000 results. Unfortunately (as is not unusual for Google) the top ten results did not include the information that I asked for in my search.

Not to be dissuaded from my goal, switch over to Bing and found a site that gave me the information I was looking for, for 2019. Apparently in 2019 there were 8.1 million mortgage originations in the US. So, assuming those other borrowers went through what I went through, that totals 1.2 billion pages, 413 million signatures and 122 million initials. It is estimated that one tree produced about 10,000 sheets of paper. That means we used up about 240,000 trees just for mortgages in a year (including the copy that the borrower signs and the copy that the borrower keeps for his or her records). Further, it took about an hour to sign all these documents. So, in total we borrowers spent 337,500 days (925 years) signing documents.

Why are we using up all these trees and spending all this time to close about 8 million mortgages? Well, we know the reason – our legal system. I am sure that any first-year law student could tell you that all these signatures are absolutely necessary to keep the lender and the mortgage broker protected from lawsuits.

Just imagine what we could accomplish if we put those 337,500 days of time and those 240,000 trees to use creating products and services that could be sold for a profit to create wealth? Could this situation be fixed? Of course, it could. We are the country that sent men to the moon and that developed a vaccine for COVID-19 in less than a year. But we won’t fix it.

It seems we don’t fix things that common sense says need fixing, and we don’t use much common sense when we fix things that do need fixing. But who knows – maybe changing the way we close mortgages with be part of the Green New Deal. Think of all those trees!