A game-changer for the mortgage industry: E-closing
Closing can be extremely overwhelming for all stakeholders in the mortgage process.
It has always been document intensive and expansive, where closing agents or escrow officers would sit with the borrowers, hand holding them to navigate the maze of compliance requirements, regulations and numbers. But with e-closing this exhaustive operation that would have taken a week could be over within 15 minutes with a check on all boxes of compliance, customer education and borrower delight.
Traditionally closing or settlement involves the process where the seller transfers the property to the buyers along with the mortgage. The buyer meets with the settlement agents from the bank or the escrow company to sign multiple disclosures, property transfer documents and loan papers. If the customer does not attend the discussions, he can also pre-sign the documents and the agents would have to pick through the documents for errors. In case of any, the process gets extended as the agent would have to reach out with documents to get is signed again. The deed and mortgage is sent to the country recorder and the documents and recording is distributed to the lender and the buyer.
New kid on the block, E-closing:
Electronic closing enabled through technologies like e-signatures, loan origination solutions, deed recordings, Document Prep etc can instantly exchange and approve documents across parties. The buyers, sellers and the lenders are able to view the documents simultaneously and approve them. Once everything is in order, the e-documents is encrypted which preserves the sale forever.
Review is extensive
Contrary to belief every step of the e-closing would have extensive information and notes about the process which can be reviewed by all stakeholders leisurely. It is estimated that the buyer education is more complete for e-closing processes compared to traditional processes. A Consumer financial Protection Bureau survey found that there is a 7 percent positive difference in perceived understanding of the borrowers during e-closing.
The faster documentation, e-signatures, easy review, and instant correction make loans process more foolproof and efficient. The entire process is estimated to be only 15 minutes long. The CFPB survey found a 17 percent positive difference in efficiency perception for e-closings.
No paper stacks
E-closings being a zero paper process helps eliminates the expenses like printing, storing, photocopying and duplication of work. this can result in immense cost savings.
E-closing is a highly visible process and can integrate information from divergent sources. Borrowers can easily see which stage their loans are, sellers can review the transaction information and the lenders can interact with everybody within the process. With role based access controls it is possible to empower each participants to review various disclosure documents.
Electronic encryption processes ensure high degree of safety for your information. Moreover every information leaves a audit trail and disclosures are time-stamped which does not allow for any interference with the data.
E-closing has made the mortgage process simpler, efficient and quicker. The CFPB study corroborates the fact that consumers feel more empowered and educated with e-closings which results in better appreciation of the process. Lenders cannot ignore these new developments as customers are gaining more choice and power in the market.
Preethi vagadia is a business architect worked in Mortgage and Finance software department with top notch companies and has over 8 years of experience in Mortgage technologies, business Mortgage Loan Servicing software ,mortgage management software etc. She has also worked in several process improvement projects involving multi-national teams for global customers in warranty management and mortgage.