Technology: Utah Firm Unveils Web-based Escrow Management.(Oversight International launched Digital Escrow Services Inc.)(Brief Article)

Oversight International, a multibusiness holding company, has launched Digital Escrow Services Inc., an Internet- based process for the administration of loan escrow transactions for residential mortgage servicing.

The company says its Web-based technology automates traditional, labor-intensive, paper-based methods of tax and insurance payments currently in place at most financial institutions that service residential mortgage loans.

Traditional methods of processing tax data for escrow purposes typically involve redundancy, which invites errors, according to Kirby Trumbo, president and chief operating officer of Digital Escrow Services Inc.

Mr. Trumbo told MSN that in doing its initial investigation into automating escrow servicing, his company found that lenders have an error rate that is sometimes as high as 50% when making the first escrow payments for property taxes and insurance on a loan.

The tax service provider or lender may end up paying late fees or penalties to the local tax jurisdiction. And that may be just the beginning of the problem. Homeowners who receive a notice that they are delinquent on their property taxes, which they have been paying through escrow to the mortgage lender, are not a happy bunch.

"Irate customers probably use up the most time of customer agents in the call center," Mr. Trumbo noted.

It's easy to see how errors can be made. First, the loan closing agent with the mortgage lender must write the necessary tax information about the subject property on a tax information sheet. Once the loan has been closed, the data is included in the loan package, which is submitted to the lender, who then enters the sometimes illegible information to the loan servicing system. The tax information is then transferred to the escrow servicing provider, where it is again re-keyed into yet another system, according to Oversight International.