For years, the mortgage industry has been on the brink of a digital transformation. While the COVID-19 pandemic might have fast-tracked the implementation of digital mortgage processes, pressure to meet the growing demand from borrowers for a fast, seamless, and transparent experience was the initial catalyst.
Although the primary focus of lenders’ technology efforts is typically on the front-end of the mortgage process, many lenders have digitized at least some aspects of their closing. Adopting the right tools to support an end-to-end digital mortgage – from online application to eClosing – can create a customer-focused ecosystem while boosting competitiveness and improving efficiencies.
Benefits of eClosing
The pandemic exposed gaps in many lenders’ ability to quickly adapt to rapidly changing market pressures and evolving customer expectations. And it’s the mortgage closings process that is the most antiquated of all, remaining mostly a paper-based, manual process. Implementing an eClosing process is the next step toward giving borrowers the digital experience they expect.
Other benefits of adopting end-to-end digital mortgage closing processes include:
- eClosings help lenders get more closings done faster and more simply. eClosings also give borrowers a better, less intimidating experience, which results in more referrals and repeat business, increasing customer lifetime value and reducing the cost of acquiring customers.
- eClosings reduce and nearly eliminate the risk of the wrong documents being signed, improper or missed signatures, incorrect loan amounts, or even borrowers backing out due to feeling uncertain or intimidated.
- eNotes and eVaults provide a more secure, trusted loan. The digital loans are more quickly processed and certified though automated processes. eNotes are also in higher demand in the secondary market because they are safer and more trusted.
Choosing the right eClosing platform
Mortgage lenders should choose a best-in-class eClosing platform that contains all of the components needed to close loans, and readily shows evidence of compliance with easy access to borrower data and a secure audit trail with detailed timestamps.
An effective eClosing platform, such as Wolters Kluwer’s eOriginal® ClosingCenter, should offer complete functionality, including:
Doc prep integration. Turnkey integration with document preparation, such as the Wolters Kluwer Expere® doc prep system, ensure instant access to compliant lender documents. Expere improves efficiencies and encourages growth across the entire enterprise by managing all aspects of compliance documentation – from automated document selection to document assembly and packaging.
eSignature execution. Support for eSignatures streamlines and accelerates the eClosing process and ensures a legally valid means of signature authentication. Wolters Kluwer SmartSign® Plus helps mortgage lenders provide a customizable, branded signing solution that enables faster eClosings, reduces operating costs, and provides a more efficient eClosing experience. As a truly omni-channel solution, SmartSign Plus provides a frictionless signing experiences on all digital device types, including personal computers, tablets, and mobile devices. eSignature can be securely enabled across all closing scenarios – from in-person digital to remote digital and email.
Read “When is a digital or electronic signature legal and compliant?,” to learn more about the legal integrity, admissibility, and enforceability of using eSignature for your important documents.
eClosing room. Intuitive settlement agent software enables collaborative eClosing operations and streamlined closing day execution on a single platform integrated with best-in-class providers. ClosingCenter’s remote pre-closing and closing day capabilities allow settlement agents to execute more closings faster and with increased overall revenue potential.
Remote online notarization (RON) connections. A built-in RON hub helps lenders simplify closing by leveraging digital mortgage technology to complete the notarial process when parties can’t be in the same physical location as the notary. With RON, the notary participates through live videoconferencing with the borrower and notarizes the documents virtually. This approach satisfies the regulatory compliance associated with documents, including recording the deed of trust.
For more information on RON, read “Remote online notarization (RON): Why mortgage lenders need it and the best way to achieve it.”
eNote creation. An eNote is an authoritative digital promissory note that indicates mortgage asset ownership. Your eNote technology should provide an auditable and tamper-proof digital chain of custody. The digital asset certainty provided by an eNote is allows lenders to demonstrate the digital mortgage meets all Safe Harbor requirements and assure legal enforceability under laws such as the Uniform Commercial Code (UCC) Section 9-105, Uniform Electronic Transactions Act (UETA), and Electronic Signatures in Global and National Commerce Act (ESIGN).
eNote technology enables a remote and contactless digital loan experience that is executed with speed, accuracy, data quality, and transparency. The benefits of shifting from paper to eNotes are tremendous, especially given the digital lending scenarios that emerged during the pandemic. Read, “The critical importance of eNotes in the mortgage ecosystem,” to learn more.
eVault document storage. When lenders generate eNotes, their eClosing solution should automatically and immediately store them in an eVault. The purpose of the eVault is to reliably establish the person or entity to whom the single, authoritative copy of the eNote is assigned, issued, or transferred. The eVault provides a secure environment that ensures the eNote remains negotiable and transferable. An effective eVault allows privileged access to the document without compromising the integrity of the original. To learn more about the nine features of a best-in-class eVault solution, read, “Electronic vault (eVault) solutions: What every lender and finance leaders need to know.”
MERS® eRegistry. MERS eRegistry is the legal system of record for identifying the holder, custodian, and servicer of every eNote. MERS registration is required by Fannie Mae and Freddie Mac for eNote transfers. The number of eNotes registered in MERS soared 261 percent year-over-year in December 2020, with a total of more than 460,000 eNotes reported by the end of that year .* About 95 percent of eNotes in MERS were generated by Wolters Kluwer eOriginal eNote technology.
Closing flexibility. Wolters Kluwer’s eOriginal® ClosingCenter provides support for every closing scenario – from paper to hybrid to contactless and eClosing – giving settlement agents maximum flexibility to ensure borrowers receive an excellent customer experience.
The time for eClosing adoption is now
Forward-thinking lenders understand that an end-to-end digital mortgage strategy is now a competitive necessity and are taking the necessary steps toward full digitization. According to the Wolters Kluwer 2021 Regulatory & Risk Management Indicator survey, 47 percent of the respondents said they made some progress with digitizing their lending capabilities in 2021, while 24 percent reported that they have made significant progress or are fully digitized.
Although some mortgage lenders’ digital journeys may have started as a sink or swim response to the pandemic, eClosing is quickly becoming business as usual for lenders looking for a competitive advantage and market growth.
Speak to a product specialist to see how Wolters Kluwer’s eOriginal digital solutions can accelerate your eClosing strategy.