By: Jim Rosen, "Pixelation Nation: E-Closing in the Mortgage Industry," for Progress in Lending
Digital photography was invented 43 years ago. Today, we have grown so accustomed to taking photos with digital cameras – including our cell phones – that we no longer think twice about this technology. Sure, most of us grew up taking rolls of film to the store to be developed, but would you really trade the immediacy we have today for film? For most of us, the answer is “no way.”
The all-digital mortgage is similar to digital photography. It has gone from being a novel concept – something for lenders to strive for – to being something we hear about all the time. The need for all-digital-everything in mortgages has been driven by a number of considerations, including consumer demand for more timely and efficient interactions, complex compliance requirements, and a need to expedite lending activities. Non-bank lenders add to this mix with non-traditional lending practices and different risk profiles, creating a hyper-competitive lending environment.
In light of all of these factors, tack-on solutions or limited technology that only supports digital disclosures is just no longer going to cut it. As we adapt to the needs of today’s borrowers, we believe that embracing the all-digital mortgage experience is the best option for lenders to ensure that they have a lending platform that will support their future activities. Just as camera film has become all but obsolete, so too will be paper-based mortgage processes. Here’s how you can ensure you are at the forefront of this part of our digital revolution.
As mentioned, digital disclosures have long been an accepted first step in the digital revolution. Electronic signatures on early and upfront disclosures carried low risk and were simply implemented, and the options and flavors of eSign are numerous. However, lenders are realizing – and consumers are demanding – that you can’t just offer digital disclosures and then revert to paper for closing to realize the benefits of the digital mortgage.
There are two reasons for this. First, because of increased regulations that require compliance checks and procedural validations, lenders today automatically face higher costs per loan. And while increased costs can be mitigated with procedure redesign and staff training, lenders can only retrain so much without having to rely on technology to go further. Second, many of today’s mortgage borrowers seek automated, efficient financial solutions that they can control at the time and place of their choosing. While digitizing disclosures is a great start, today’s borrowers demand more and will go where they can find that all-digital experience.
That brings us to eClosing. The digital camera revolution took nearly fifteen years after its invention before consumers had a viable product they could buy. Similarly, the industry “standard” over the past decade for eClosing required lenders and platforms to dig deep. Their options included:
In the cold calculus of cost/benefit, lenders often could not make the conversion-to-payoff based on the large investment required. Costs to implement and maintain could not justify the potential or perceived benefits in consumer efficiency and/or backend reductions in cost, time, or processes. Faced with these tack-on approaches, many lenders waited for better options to come along.
Fortunately, just as digital cameras now are ubiquitous, all-encompassing digital mortgage solutions have proliferated, as well. Digital experts in the financial services industry have begun banding together to create fully-integrated solutions for lenders of all sizes. Lenders can now adopt the complex underlying technology for eNotes without the heavy investment in research, development, or infrastructure. With the availability of these solutions, consumers will begin demanding all-digital mortgages exclusively. Paper-based mortgage processes, while already on the way out, will hopefully become completely obsolete.
That brings us to the key question for lenders: Where are you on your digital mortgage journey? The movers and shakers in the industry are already providing borrowers with an all-digital mortgage origination experience. Taking the next step today can help meet borrower demand tomorrow.
eNotary Expansion to Evolve eMortgage Market, Seeking Approval as Official Fannie Mae Technology Service Provider
BOSTON; October 25, 2016 – At the annual Mortgage Bankers Association (MBA) conference and expo here today, DocuSign – the global eSignature and Digital Transaction Management (DTM) leader – announced a series of expanded features that will allow lenders and title companies to complete a mortgage 100% digitally.
Known as eMortgage, the new service will empower lenders and their clients to electronically-sign the mortgage paperwork associated with the more than 12 million real estate documents and 2.5 million real estate transactions already DocuSigned every year.
The news marks an expansion of DocuSign’s ‘lead to close’ strategy for the real estate industry, first announced by the company’s Chairman and CEO Keith Krach in July this year. The strategy entailed DocuSign making its biggest investment in the real estate industry to date.
“DocuSign’s vision is to make the home buying process fully digital, from lead to close. DocuSign has transformed several aspects of home buying, but enabling a seamless, digital mortgage remained a paper-burdened experience for home buyers and sellers. Today’s expanded investments in eNotary demonstrate our commitment to making a completely paperless eMortgage reality,” explained Georg Gerstenfeld, general manager: Global Real Estate Solutions, DocuSign.
“This is against the backdrop of the real estate industry's widespread adoption of DocuSign, and is helping to add more than 130,000 new users to the DocuSign Global Trust Network every day. eMortgage is a natural next step to simplifying the end-to-end experience.”
Today’s announcement centers around two key areas:
• eNotary – this enhancement ensures that in-person eNotarizations can now be performed via DocuSign in Florida and Washington (in addition to North Carolina, which has been available since 2014). It is also expected that more than ten other states could be added before the end of the year. With eNotary, there is no need to print, scan or mail closing documents – all actions can be performed within the DocuSign platform, including applying a seal and exporting a notary log.
• Fannie Mae – reflecting the potential for the DocuSign platform to help speed the adoption of the broader eMortgage process, the company (with eOriginal as a partner) is seeking certification as an official Fannie Mae eMortgage Technology Service Provider – a certification that only a handful of technology organizations have been granted by the mortgage lender. Certification is expected by the end of year.
Several of DocuSign’s partners and customers have thrown their weight behind today’s announcement – including Fannie Mae and Accenture Mortgage Cadence.
“Fannie Mae is pleased that DocuSign is undergoing technical compliance testing with us for delivery of eMortgage loans, and is seeking approval to join our eMortgage Technology Service Provider listing,” said Cindy McKissock, Vice President of Customer Digital Experience, Fannie Mae. “Supporting our customers’ transition to digital closings is a priority for us – and we expect DocuSign’s platform to help remove barriers and obstacles to the adoption of eNotes, thereby increasing usage across the industry.”
For its part, Mortgage Cadence, an Accenture Company – an existing DocuSign partner – is excited about this focus on eMortgages.
“Mortgage Cadence is committed to making digital mortgages a reality. Combined with DocuSign’s digital mortgage strategy, these additional enhancements align well with our own vision to provide the last lending solution our customers will ever need,” said Jim Rosen, Document Center Product Manager at Mortgage Cadence.
“Today, lenders and title companies tend to rely on paper or hybrid processes to complete loans,” explained DocuSign’s Chief Product Officer, Ron Hirson. “We are supporting our Real Estate customers for today’s launch by delivering new eNotary and eNote features to our DTM platform – that helps more organizations move to a paperless process that is fully auditable, less prone to errors, and results in faster closings.”
The enhanced features are being shown this week at the MBA conference and expo are slated to come to market towards the end of the year. For more information, visit www.docusign.com.
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