Since the advent of the pandemic, organizations are integrating information technology into virtually all aspects of their firm. The housing industry is increasingly adopting digital mortgage processes to meet the growing customer demands.
One of the recent innovations in digital transactions is eClosing. The digital process allows buyers to complete some or all transactions electronically. Discover how electronic closing can transform customer service, streamline processes and reduce errors.
What is eClosing?
You may think of eClosing as a digital version of the manual mortgage closing process. Some or all of the closing stages are transacted over a digital platform.
An online platform allows borrowers and lenders to sign electronic documents. Electronic closing may utilize digital technologies and applications to streamline transactions.
In traditional mortgage closing, the parties involved in the transactions must physically sign the document. In eClosing, the process is completed digitally. While some paperwork may require signing in person, it still has many advantages for borrowers and lenders.
What does an e-closing software do?
The purpose of eClosing software is to streamline the closing process and make it cost-effective and transparent. It reduces the need for in-person meetings and the requirement to send physical documents to the other party.
The software completes these tasks by utilizing several technologies including:
E-Delivery: E-delivery is a technology that securely sends messages electronically. It ensures all parties have real-time access to compliant lender documentation. eClosing relies on automated document selection to ensure compliance across the organization’s departments.
E-signature: E-signature is another component of the digital process that allows each party to sign documents electronically. The secure technology enables signing from mobile phones, pcs, or portable devices. The paperwork signed is legally enforceable.
RON (Remote Online Authorization): RON is a digital process that seeks to mimic the in-person notarial process. The notary can communicate via a video link while the documents are delivered electronically.
Digital storage: Parties can instantaneously access documents on the server. Lenders and borrowers can review and approve documentation necessary for the closing process.
What is driving eClosing adoption?
The eClosing technology has been around for more than two decades. But market challenges and legal technicalities have been holding back its implementation. However, there is evidence that the housing sector is ready to adopt digital mortgage processes.
Surveys show an increase in spending by 64% for eClosing in 2022 compared to the previous year. 30% of the group planning to invest more in the digital process intend to spend more than 10%.
A practical solution for lenders amidst diminishing volumes and revenues while costs per loan are increasing. Lenders’ profitability is spreading thin as they struggle with lower figures for loan units. eClosing is an effective approach for reducing costs and raising profit margins.
The implementation process of an eClosing system involves more than acquiring cutting-edge digital technology. Organizations must first carry out a rigorous assessment of vendors, skills and technology. Experts recommend a phased implementation before the deployment of a digital closing system.
What are the benefits of using the software?
An eClosing software can be beneficial in several ways:
Streamlines closing and reduces errors: The process cuts down the large amounts of paperwork common in manual closing. Since documents are on one platform, lenders and title agents can verify their authenticity in real-time. It virtually eliminates errors and reduces the need to rework documents.
Saves time and resources: The software eliminates paperwork and the need for in-person meetings. In traditional closing processes, the notarial process could take two weeks or more. But digitizing the closing saves time and reduces the resources needed to complete the transaction.
Enhance data transparency: eClosing software enables you to access and review the documents on the platform. You can check the documents and confirm they are ready for the transaction. The application boosts transparency and allows you to prepare before closing.
Meet evolving customer expectations: The digital process improves transparency and reduces errors. It enables faster loan processing which is easier and more convenient for customers. Statistics show customers expect a shorter mortgage closing process from lenders.
Generate more revenue: eClosing can reduce the cost and time necessary to complete a transaction. It improves profitability by boosting the business image through transparency and efficiency. Lenders can generate more revenue with a more efficient and convenient closing system.