In today’s lending market, eClosing is the fundamental component to providing a true digital mortgage. Now, with the availability of integrated eClosing solutions, combined with the growing investor acceptance of eNotes, Lenders are making the investment in eClosing platforms to deliver a truly optimized and convenient mortgage experience.
Lenders, title, settlement, investors, and borrowers all benefit from eClosing in a variety of ways:
- Competitive Edge
The Wall Street Journal covered the intense competition to close loans faster, as it’s become a major competitive differentiator for lenders. With the average time to close on a purchase mortgage sitting at 42 days with an average cost of $9,299, closing loans faster and more efficiently reduces costs. And, if a lender can deliver a loan to an investor electronically, it’s possible that the loan can be certified and funded within 24 hours of closing.
- Cost Savings
By turning loans in a shorter time period, lenders remain more liquid and realize cost savings. Because lenders are using funds for shorter periods and can reduce the size of their overall lines by turning them more frequently, they save on warehouse lending costs. Per Docutech’s ROI Calculator, the average cost savings of a hybrid e-closing is around $155 per loan. For a lender that's originating roughly 25,000 units in annual volume, going even partially or hybrid “e” could save more than $3.8 million per year.
In addition, the high cost of post-closing QC and the lengthy process of acquiring and organizing the correct documents can be reduced with eClosing packages. Because the eClose platform knows which documents are required and where they must be signed, the issue of missing or inaccurate signatures is mitigated.
- Regulatory Changes
One initial hurdle to wider adoption of eClosing had been that many counties in the U.S. did not allow eRecording of all mortgage documents. Fortunately, regulations changed quickly to accommodate this opportunity for progress and the majority of the American population now lives in counties that allow eRecording. In 2018, 15 new states opened the door to allow a 100% digital closing process.
Freddie and Fannie have also worked tirelessly to support the entry of other entities into this space by establishing processes and requirements for permitting eMortgage deliveries from aggregators that purchase loans from correspondent lenders. The GSEs have also provided education on eMortgage requirements with other agencies, such as Federal Housing Authority, Ginnie Mae and Federal Home Loan Bank financial institutions.
Adapting eClosing technology into your mortgage process allows for all parties to save time and money, provides borrowers a more convenient, streamlined and informed experience and reduces risk. See how much you can save with eClosing by running our ROI calculator.