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Over the last few weeks, we’ve written posts on the concept of digital transformation for the real estate industry. In the three key areas that enterprises are digitally transforming, we’ve touched on the Customer Experience area most frequently, pointing out some statistics on customer service and experience, and pulling from some relevant key trends of homebuyers from the search giant, Google.
Let’s make the conversation around the key area of customer experience for digital transformation much more relevant to what we’re facing today. To do that, we’ll point back to an article in April from the CFPB, where they focused on the following three major pain points for consumers during the closing process:
- Not enough time to review: Many consumers are frustrated by the short amount of time they have to look over the closing documents. Often, they do not see the paperwork until they arrive at the closing table. Consumers reported feeling pressure to rush through the paperwork and sign — even when they did not understand the terms.
- Overwhelming stack of paperwork: When consumers close on a home, they often face stacks of paperwork. Some of the forms are intended to help consumers better understand the costs and risks of their mortgages. Other forms are included by lenders as a result of their legal risk assessments. Remaining forms may fulfill federal, state, and local government requirements. The volume of paperwork varies from lender to lender.
- Complexity of documents and errors: Most closing documents are full of legalese and technical jargon. The terms and acronyms are unknown to most consumers. In addition to having little time to read through and understand a large stack of paperwork, consumers often complained that they had little help from the others in the room. Consumers also mentioned that they found errors in their closing documents. Those errors often led to delays as closing agents had to redo the entire closing package.
First of all, ask yourself, “Do I agree with these pain points?” Believe it or not, that’s the first hurdle in developing a strategy to overhaul the customer experience of your organization. If you aren’t honest with yourself on the issues customers are facing, you’ll have a tough time embracing a plan to improve your service levels to match customer expectations.
Now I know these are generalizations of closing, but the fact remains that enough businesses in this nation are doing things during the closing process that have led to the consumer perception that produced those three pain points. In that same article, the CFPB highlights three goals of their eClosing pilot (which was recently announced) to tackle those pain points directly. Per the CFPB, those goals are:
- Enable consumer understanding: The CFPB plans to test whether educational materials like document summaries, term definitions, or process explanations that can be reviewed prior to the closing table help improve the process for consumers. The Bureau also plans to evaluate whether the order of the documents changes the consumer experience.
- Incentivize early document review: The CFPB plans to study the various technologies that would let consumers see the entire package of closing documents ahead of time. Within this pilot, the Bureau would like consumers to have at least three business days prior to closing to review the stack of documents. The Bureau wants to evaluate how early review of the documents may impact the closing process.
- Facilitate error detection: The CFPB wants to test tools that will help both industry members and consumers spot errors and discrepancies in the closing documents. Such a tool could help consumers easily find the differences between their original estimate and their closing disclosures, preventing last minute surprises.
From the digital transformation posts we’ve written discussing the customer experience, this couldn’t be more relevant to what we do and offer TODAY at Pavaso with our platform and Digital Close solution.
- To help enable consumer understanding, we provide the capability to add hot spots to the forms which can launch information content, even in the form of a video, to help educate the consumer throughout the closing process. It also makes it simple for the customer to keep up with all parties in the transaction as they only have to worry about going to one portal.
- In order to incentivize early document review, our platform brings everyone on the closing together (including the consumer) to keep communication and collaboration fluent and under control. This helps you march toward the three-day delivery rule of the TILA-RESPA Integrated Disclosure.
- And to facilitate error detection, the integrations of our platform allow businesses to leverage data from multiple systems in order to eliminate the rekeying of data between different systems of different business partners. This not only minimizes the points in which errors can be made, but provides tremendous efficiencies and upticks in the time required to collaborate with others on a closing.
While Pavaso does much more, these points are extremely relevant to our discussion right now on customer experience and digital transformation. Around the office and in conversations with customers and others in the industry, our CEO, Mark McElroy, puts it best by referring to our solution as “the silver bullet” for TILA-RESPA, enhancing the consumer experience, and helping businesses achieve higher levels of efficiency to thrive in a market of uncertainty.
Okay, sales pitch aside, I’ll close with a question. With everything we know about how closings are overly complicated, and the fact that the world gets more digital and faster every day, I’d like to ask you all out there:
Do you think TILA-RESPA is a bad idea?
All information and views expressed or implied are provided without warranty and are only the opinion of Pavaso, Inc. Each participant should seek legal representation for legal interpretation of the ruling and the CFPB directly for final instruction and interpretation.The final rule can be found here.