If pandemic restrictions to in-person settlements prompted you to evaluate eClosing solutions, you are not alone. A national study by STRATMOR/ClosingCorp showed an overwhelming 82% of recent homeowners prefer e-signing documents before closing. Additionally, a recent survey by the American Land Title Association found that the number of companies offering digital closings has jumped 228% since 2019. So it comes as no surprise that eClose has been the hot topic in the mortgage industry this past year. If your company’s digital transformation strategy is not hyper-focused on a digital closing software solution – we are here to help!
SimpleNexus provides a seamless homeownership platform that includes an eClose Portal to fit your unique eClose strategy. However, even as we see pandemic restrictions easing with in-person settlements coming back as “norms,” many lenders are still struggling to understand how to get started evaluating eClose software and precisely what “eClose” means.
Where to Begin – The Terms
First, industry terms surrounding “eClose” can have many different meanings, but there are some common terms that will help give you the lay of the land.
- eClosing: generic term to indicate some portion of the settlement documents were electronically signed (eSigned) by the borrower, notary, or both.
- Traditional Closing: when a borrower schedules an in-person closing with a title agent or attorney, the closing documents are all “wet signed” with pen and paper. Typically the documents are also notarized in person using a traditional notary seal.
- Remote Online Notarization (RON): a digital process where the documents are eSigned and then electronically notarized (eNotarized). The borrowers do not have to be physically present with the notary to complete a RON settlement. The eNotarization and eSigning occur via a two-way webcam on a secure online portal.
- In-Person Remote Notary (IPEN): While the borrower and notary are in person together, the Notary will apply their electronic eNotary seal to any digital document requiring notarization.
- Hybrid eClose: Any combination of closing documents are eSigned. Typically the documents required to be recorded and notarized on paper are also wet signed by the customer, while all other closing documents not requiring notarization are eSigned.
- eRecording: The electronic transfer and recording of completed loan documents. This is a feature wholly controlled by the State and county jurisdiction in which you are lending. There is no additional technology to provide – service offered by Settlement Agents where applicable.
- eNote: An eNote is the electronic promissory note. In order for this eNote to be negotiable and transferable it must be labeled the authoritative copy of the promissory note. (An eNote is: Created, executed, registered, transferred and ultimately stored electronically). A paper note, signed and scanned is not an eNote.
- eVault: An electronic repository that stores copies of eNotes. Connectivity to the MERSeRegistry is established, enabling capabilities to validate, maintain, transfer, and report life of loan event for eNotes, such as Paid in Full.
- eRegistry – The MERS® eRegistry is the only national registry for eNotes used by the mortgage industry and is the system of record for identifying the Controller (holder) and Location (custodian) of the authoritative copy of an eNote. The Controller of an eNote can have the equivalent rights as that of the “Holder in due course” of a paper negotiable promissory note.
- eMortgage: Generally refers to the use of electronic processes and signatures in the mortgage production process. More specifically, it refers to electronically-signed closing documents paired with an original electronic promissory note (eNote) at a minimum, signed on an eClosing platform and registered with the MERS ® eRegistry within 24 hours of closing.
Don’t Stress – With the Right Software, Hybrid eClosing is Plug and Play
With so many interpretations on what constitutes a true “ eClose,” the exciting news for the mortgage industry is that a Hybrid eClosing can be a plug-and-play solution when you partner with the right software provider. Allowing the customer to sign the bulk of their closing documents electronically ahead of an in-person settlement reduces the total time to close the loan, eliminates quality control errors, and enhances the borrower experience at the time of closing. For your internal Operations team, hybrid eClosings are universally accepted by Secondary Marketing Investors and Agencies (FNMA, FHLMC, VA, FHA, USDA), making these loans easier to ship and execute than a traditional paper package.
Don’t Get Left Behind! Start Closing Digitally Today
Borrowers expect the ease and efficiency of a shorter loan settlement experience, easy-to-use eSigning platform. Give your company the competitive edge it needs to recruit top loan officer talent leveraging best in breed point of sale (POS) and digital closing solutions.
In a 2021 poll of Lender priorities, 54% of Lenders said they are focusing on process streamlining. Although this may appear to be a departure from prior years’ emphasis on enhancing customer-facing technology experiences, streamlining processes categorically includes activities that require foundational digital transformation. For example, lenders seek to speed up turn time, decrease user error, automate communication to push more information readily consumable to the customer, and implement technology and improvements to drive efficiencies. The SimpleNexus digital closing solution delivers the seamless digital experience that borrowers have come to expect and prefer as part of a single-platform experience that spans the entire home buying journey. Through a single UI branded to the lender, borrowers conveniently navigate each stage of the home buying journey without logging into a different platform. Our innovative Closing Portal allows borrowers, lenders, and settlement agents to collaborate on closing documents while reducing loan quality errors and shipping turn times. If you are ready to transform your business processes, don’t get left behind. Contact SimpleNexus today.
About the Author
Andria Lightfoot is a renowned mortgage technologist with experience leading mortgage operations, providing strategy for enterprise software solutions, and implementing innovative change management solutions. As Chief Customer Officer, Lightfoot oversees all customer-centric activities of SimpleNexus’ customer division including, professional services, customer success, support, training, and integration engineering.