In a previous post, we discussed increasing use of digital mortgage application platforms as the first of three indicators that digital mortgage adoption is accelerating. In this post, we will look at the second key indicator: the rapid adoption of eNotes.
The industry is embracing the electronic promissory note
The big news out of MERs earlier this year was that more electronic notes were added to the MERS eRegistry in the first quarter of 2019 than were added in all of 2018.
To provide greater perspective, that represents an increase in eNote registrations of nearly 5,000% over last year. As HousingWire editor Ben Lane put it, “it appears that the truly digital mortgage has truly arrived.”
This is a very important development for our industry because eNotes streamline lending processes and reduce cost in many areas by shortening the length of time between origination and sale in the secondary market. eNotes also reduce risk and cost by negating the necessity of maintaining a tedious paper trail. Consequently, investors reclaim the time and money associated with loss mitigation activities. There is also potential for reduced cost for warehouse lines and storage with a Custodian.
Fortunately, more investors are getting on board. Last October, Wells Fargo began buying eNotes. The month before that, Flagstar began offering eNotes for warehouse lending. And last August, Mid America Mortgage told its correspondent lenders that it would begin buying eNotes.
Flagstar’s announcement is noteworthy because one of the hurdles that lenders have had to overcome on their way to electronic lending relates to the tri-party agreements with warehouse lenders. But that is rapidly changing too, as just this month, JPMortgage Chase said it’s warehouse lending unit would begin accepting eNotes. Chase said the move was part of an initiative to save time and money and that the use of e-notes would cut costs by eliminating many paper, shipping and storage fees.
Adoption of eNotes will certainly streamline the post-close process and save investors and lenders both time and money. However, the potential for this technology to simultaneously facilitate quality control and improve compliance posture shouldn’t be overlooked. Digital mortgages allow access to data that would otherwise be impossible to obtain. Investors and lenders can ensure documents are sent, viewed and signed, monitor progress, and provide this reporting as evidence of compliance.
Docutech has long been an advocate for digital mortgage because we believe in its potential to improve the industry for borrowers, lenders and investors alike. We invested early in providing eNote capabilities and partnering with fellow innovators to bring them to the marketplace. Approved by Freddie Mac and Fannie Mae for eClosing, eNote and eVault functionality, the Solex eClosing platform provides lenders with a comprehensive integrated eClosing solution, with eSigning efficiencies from initial document generation through post-closing. We are thrilled to see an acceleration in the adoption of this technology and believe the industry is at a major turning point.
Check back next week for the third blog in our series focused on Digital Mortgage adoption, we’ll take a closer look at hybrid eClose momentum. In the meantime, download our solution brief to learn how Solex eClosing can reduce costs, streamline processes and provide a better and more convenient experience for your borrower.