AS THE MORTGAGE INDUSTRY ADOPTS E-DELIVERY of the Loan Estimate and Closing Disclosure and settles into Truth in Lending Act (TILA)/Real Estate Settlement Procedures Act (RESPA) Integrated Disclosure (TRID) rule compliance, it finds itself much closer to the complete e-mortgage process. Still, the next step in the process is a big one: the widespread implementation of e-closings.
While the idea of e-closing has been discussed for quite a while--and some recent pilot efforts toward implementation have been beneficial--it still has not gained momentum across the industry. But it looks as if that's about to change.
Throughout 2015, several major industry influences have gone on record to show stronger support for a complete e-mortgage process. Fannie Mae released an e-closing fact sheet earlier this year, which stated that e-closings "facilitate a better quality mortgage closing process for both lenders and consumers while efficiently moving the housing finance industry forward through automation." More recently, the Consumer Financial Protection Bureau (CFPB) noted in a report on its Know Before You Owe e-closing pilot project that e-closings were found to be associated with better consumer understanding, a more efficient process and greater feelings of consumer empowerment.
All indications are that these influences will continue to encourage the industry to adopt e-closing in the near future. And with research showing the benefits of e-closing for both lenders and consumers, it's likely that e-closing will continue to gain momentum. But which industry segment is really best suited to conduct the e-closing process, and what is the approach that makes the most sense to encourage rapid, widescale adoption?
The ideal e-closing conductor
In the early days of e-mortgage discussions, many assumed that lenders would move forward with a complete e-mortgage implementation once investors were ready to accept signed notes in electronic format. But incorporating e-mortgages into lender processes requires a tremendous effort from financial institutions, and it would take quite some time to implement on a mass scale, considering the number of lenders in the industry. Interestingly, a new ideal candidate for conducting e-closings has emerged.
When thinking about which entity is best suited to lead the industry's advance to a full e-closing reality, it appears that title and settlement companies are the clear front runners. While other parties, including...