Providing borrowers with a simple, streamlined eClosing process is critical in today’s competitive mortgage industry. From a borrower standpoint, eClosings can add convenience and improve the overall customer experience. For lenders themselves, they equal faster funding, greater flexibility, and better loan quality. Additionally, they also allow for quicker delivery to the secondary market.
Still, enabling eClosing is complex, and it takes the right partners — both up-front and downstream — if you’re going to do it right. We sat down with Brian Pannell, senior implementation executive at DocMagic, to find out how lenders are navigating these complexities and how DocMagic can help.
Q: What do lenders need to get started?
Brian: The first step is to have a clear picture of your loan lifecycle. To understand this, you need to know who will be funding your loans, who will service them, and who you’ll eventually sell them to.
If you’re planning to outsource any of these steps in the loan process, then you’ll need to know up-front and early on who those partners will be, as well as what technologies and capabilities they have at their disposal. Ultimately, they’ll need to be an integrated part of your loan system, with the ability to communicate securely, share and access borrower documents, and transfer eNotes securely.
Q: What technologies will I need to begin eClosings?
Brian: The most important technology you’ll need is a comprehensive, start-to-finish eClosing platform. The platform needs to take a loan from initial application, allowing you to upload or digitize existing documents for signature, all the way through the closing process, final notarization, and eventually, storing the loan, registering it with MERS, and delivering it to your secondary investor.
It sounds like a lot, but there are platforms out there can do it. It’s just a matter of finding the right platform, as well as a title company that’s accustomed to working within that platform on a daily basis. Your title company and your technology provider are your all-stars when it comes to your eClosing team. Choose them wisely.
Your eClosing platform should allow for:
- Digital delivery of documents – You should be able to upload or integrate your existing documents, as well as auto-recognize and enable e-signature fields on them.
- Pre-closing collaboration – The platform should allow consumers to view and sign initial documents and collaborate with their title company, the lender, and their attorney, if necessary.
- Fully online closing procedures – Borrowers should be able to eSign their documents and have their closing paperwork notarized in a fully digital landscape. You should also have the ability to scan and digitize wet-signed papers, as well as register the eNote on MERS.
- Post-closing wrap-up – Once closing is over, borrowers should be able to access their closing documents remotely. The platform should also allow for storing the loan via eVault and transferring the loan to the secondary market.
Q: What is one of the common hurdles many lenders encounter when implementing eClosing?
Brian: Once you have the technology in place, there are still a few hurdles that can hold up your eClosing efforts. One of these is that eNotary and eRecording services may not be an option, depending on where your borrower is located.
Nearly 2,000 U.S. counties currently support eRecording, covering about 85 percent of the population, but still, there are pockets where this process is not allowed. There are also 15 states that don’t currently allow eNotary services. Keep this in mind as you move to implement your eClosing efforts and as you communicate with borrowers about their digital expectations.
Despite this, we expect the eNote movement to continue growing across the country. Just this year, the industry has originated nearly 40,000 eNote-based loans, accounting for more than $8 billion borrowed. That marks a 200-percent jump in just the last few years. With more counties, states, and lenders entering the space at breakneck speeds, those numbers are poised to grow exponentially in the years to come.
Q. What are some critical implementation requirements organizations often underestimate?
What is oftentimes overlooked is the unwavering commitment lenders need to have to eClosing adoption. The directive to provide eClosings should come from the C-suite and trickle down to the operational level. When it does, executives, operations and loan officers are all kept on the same page. The motivations for each party may differ but the main goal remains the same.
During successful digital implementations, every key player involved realizes that this is transforming the business process, not just a sales cycle event. Management should also understand that going through the change in processes comes with possible bumps in the road but shifting to new vendor partners will ultimately provide a more efficient and better workflow — resulting in a better borrower experience.