With major industry influencers like Fannie Mae, Freddie Mac and the Consumer Financial Protection Bureau affirming the benefits of eClosings and eMortgages more strongly this past year, lenders have the support they need to move forward with full digitization of the closing process. Also, now that the TRID rule has been in effect for a few months, the industry and borrowers are getting more comfortable with the delivery of electronic documents relating to the closing process. As a result, the stage is set for the widespread adoption of eClosings, and the eMortgage.
While lenders are expected to benefit tremendously from eClosings, title and settlement companies are beginning to lead the way. This makes sense, considering their in-depth knowledge of the closing process and the fact that they are the ones ultimately insuring the transactions. Plus, they are able offer a variety of closing methods to borrowers including hybrid, electronic or traditional paper processes, empowering consumers to select the method that best meets their needs.
When working with a title and settlement company, it’s important that lenders understand the capabilities of their eClosing technology. Ideally, their title and settlement partner will have selected an eClosing platform that was developed by partners who have intimate knowledge of the closing process and have conducted mortgage closings. That deep understanding of the closing process often translates into a more comprehensive eClosing system with functionality that delivers greater efficiency and better results.
Lenders should make sure their title and settlement partner’s technology can support eClosings now, and are able to accommodate any current or future plans to execute complete eClosing packages with eNotes. Some advanced eClosing technology providers already offer complete eNote execution by obtaining a “re-issue” of the loan documents in an eSignable SMART Doc format through a direct integration with document preparation company systems.
Also, lenders should make sure that the eClosing technology provider meets or exceeds security standards. The safest eClosing technology will utilize encrypted user authentication, enable protected account access, and offer a tamper evidence security system.
In addition, as loan documents and the eNote are processed, lenders will want to make sure the eClosing technology is able to provide a detailed audit trail with time-stamped tracking for every step in the process. This level of detailed tracking allows lenders to demonstrate compliance with current and possible future regulations.
Lastly, as lenders evaluate the eClosing technology their title and settlement partners are using, they should require partners to utilize an electronic document vault with an intelligent information infrastructure that is easily accessible at any point in the workflow. With that innovative functionality in place, loan documents can be quickly accessed in the event of a dispute, and even later on at any point in the life of the loan as title searches are needed for home equity or default activities.
Once eClosings and the eMortgage become the standard, lenders will benefit from the operational efficiency, risk reduction and cost-saving benefits. If their title and settlement services partners utilize eClosing technology that supports life of loan activities, they could benefit even more.