We recently hosted an eClosing for Investors webinar to help bring clarity to the subject of mortgage eClosings. Docutech EVP of eStrategies Harry Gardner was joined by experts from Fannie Mae, MERS and Simplifile to discuss the foundations of eClosing, the state of the industry today, investor eClose requirements and how investors can get started. If you missed the live webinar, we encourage you to watch it at your convenience.
Foundations of eClose
In the webinar, we discuss the various foundational components of eClosing. The fact is, any mix and match of the components of a full eClosing or hybrid eClosing can create value for investors. The five major components of an electronic mortgage are eSignature Engine, Doc Engine, eVault, eNotarization and eRecording. These can exist in a variety of combinations, whether from a single vendor or multiple.
Today, 87% of loans are categorized as Hybrid Mortgage B and include electronic ancillary documents and eRecording. About 45% are Hybrid Mortgage Type A, which includes ancillary documents, eRecording and an eNote. Currently, only 22% of mortgages are fully electronic, consisting of electronic ancillary documents, an eNote, electronic Mortgage/Deed of Trust and Property Deed, electronic notarization and eRecording.
There have been many legal and technical developments over the past several years that have expanded the possibilities of eClose, but this has also added to the confusion. As the industry began working towards eNotes and eClosing years ago, the assumption was that the signee for the notarized documents would still physically be in the same room. To a large extent, this is still true, but these exchanges are also happening across states or even entirely online through Remote Online Notarization (RON).
Unfortunately, the legality of RON can be difficult navigate. Even once legislature has passed a law allowing it, in many states the secretary of state or another executive level branch of government needs to write administrative rules to provide guidance. Simply finding out whether or not RON is legal in your state may not be enough. Through our integration with Simplifile, we leverage a team that is constantly surveying counties to find out their positions on the various forms of electronic notary to provide information for customers on a loan-by-loan basis so you know how “e” you can be.
There’s no question that eNote adoption is rapidly increasing. While there were not quite 17,000 eNotes entered into the MERS registry in all of 2018, more than 19,000 new registrations were filed in the first quarter of 2019 alone. July saw over 9,000 new eNotes hit MERS’s servers, making it the most active month in history. Investors who don’t start making efforts to adapt now risk being left behind.
Investor eClose Requirements
Fannie Mae has some requirements in place to ensure customers have the technology and processes in place to succeed with eClose. These requirements include general requirements for physical technology and processes like monthly reconciliations, requirements for reporting payment and non-payment transactions, calculations and more. You can read about these requirements in depth here, but our webinar gives a brief overview of the most important areas for investors to be aware of.
eClosing Adoption – Success Drivers
As with most major technology advances, a fundamental step to eClose success is having a leadership team that champions positive change. New technologies mean new processes and changing the way people have traditionally handled loan closings. Having leadership that advocates for the benefits eClose, executes a clear plan, and fosters true process change can lead to a better experience for the borrower, and bring added value for the lender, originator and investor.
For more eClosing Insights for Investors, be sure to watch this free recording of our recent webinar.