Docutech recognized as 2025 HousingWire Tech100 Mortgage Award Winner
Apr 25, 2019
As the industry continues to push more aggressively toward a digital mortgage, electronic closing becomes more critical. After all, this is where the borrower gets the most benefit out of the paperless process and when done correctly it improves borrower satisfaction, which can increase repeat and referral business.
As you might expect, many lenders have questions about the process. When these questions arise, we often call on Harry Gardner, Docutech’s Executive Vice President of eStrategies, for answers.
In this post, we offer you answers to three interesting questions that come up periodically regarding the eClosing process.
What is the difference between a hybrid eClose and a full eClose?
The difference between a fully electronic mortgage loan closing and a hybrid eClose has to do with the number and type of documents the borrower signs electronically. In short, a hybrid eClosing simply means that some of the documents in the closing package must still be on paper and ink-signed, even though some of the package can be eSigned.
Gardner points out that you can think of the closing package as having four discrete components:
In most hybrid eClosings, the borrower can eSign a number of documents in advance in the comfort of their own home, primarily the upfront disclosures and other ancillary documents. Then the actual loan collateral docs are wet-signed and notarized at the closing table with the notary. This closing ceremony looks similar to a traditional paper closing, except that since the ancillary docs have already been eSigned, there’s only a small number of paper docs remaining for the borrower to ink-sign.
In many hybrid eClosings, the note is also signed electronically – this is determined by the end investor and whether they accept eNotes yet.
Many lenders still want all the closing documents to be signed on the same date, depending on their investor requirements. Most eClosing platforms provide options to allow the borrower to preview the documents prior to the closing day, and some can then automatically enable the ancillary docs for eSigning on the day of closing, at the borrower’s convenience.
In a hybrid eClose, one or more of those components is being signed on paper.
Can you just print out an electronic closing package?
Not every title & settlement company is ready to host an electronic mortgage loan closing ceremony. In purchase money transactions, lenders may not be in a position to choose the title company they work with. In those cases, the documents are generally printed and signed with traditional wet signatures.
Most documents can be printed and wet signed, even if they have been tagged for eSignatures by the document provider, however there is one important caveat.
An eNote that has been prepared for electronic signatures includes an additional section that is not present in a paper Note. That section contains legal references to the MERS eRegistry as the identifier of the Controller (the electronic version of the Holder in Due Course) and the Location (the Custodian). Because of this, you can’t simply print out the eNote for a paper closing – the closing package should be regenerated by the document provider specifically as a paper closing.
Why are lenders so interested in eClosings?
There are many benefits for the lender, the title company and the borrower.
To see exactly how much you could save by closing electronically, request a demo of our eClose ROI calculator for your customized cost savings and ROI request.
The preceding is for informational purposes only and is not and may not be construed as legal advice. No third-party entity may rely upon anything contained herein when making legal and/or other determinations regarding its practices, and such third party should consult with an attorney prior to embarking upon any specific course of action.