PERSON OF THE WEEK: Traditional closing practices and paper-based post-closing workflows are fast becoming relics of a bygone era. Lenders that fail to embrace the e-mortgage, or at least go “hybrid,” as we’ve heard many times, will soon become relics as well.
So, what steps must mortgage lenders take to successfully go fully digital with e-mortgages? And how can they accelerate that process?
To find out, MortgageOrb interviewed Jay Arneja, who has spent her entire career digitizing and redesigning the mortgage closing and post-closing processes. Early on, she worked in correspondent and wholesale lending, where she specialized in Mortgage Electronic Registration System (MERS) administration for several organizations and ran the closing department of Green Point Mortgage’s highest-producing branch before the lender was purchased by Capital One.
She later joined MERSCORP, where she spent more than a decade leading product teams, then went on to consult for Freddie Mac, where she helped high-profile lenders make improvements to their processes and customer experience.
Today, as senior product manager at homeownership platform SimpleNexus, Arneja is helping to usher in a new age of digital closings that scale back paperwork, get loans to funding faster and emphasize borrower single sign-on convenience.
Q: Given your background in correspondent and wholesale lending, what do you see as the most promising way to help lenders balance their technology spend with the need to lower costs and improve profitability?
Arneja: What lenders may not realize is that they can be innovators and improve the homeownership journey all while lowering costs and increasing business volume and profitability. It’s really about efficient use of capital. It’s easy to build a business case for a modest investment in technology when you understand that a faster closing process allows lenders to pay lower fees, which in turn makes the loan a lot cheaper.
A lot of mistakes happen at the closing table when documents stick together or there is a missing document. Even if the closing goes off without a hitch, physical notes are subject to loss or delays in transit. Any time you drive down the highway and see a broken-down FedEx truck, there’s a good chance there’s a promissory note worth hundreds of thousands of dollars sitting in the back. With an eNote, all these issues are eliminated, accelerating funding time to anywhere from two hours to two days. Technologies like hybrid e-close, remote online notary (RON), eNotes, and eVault also provide competitive advantages that impress referral sources and place adopters above the competition.
That said, lenders are struggling with the number of vendors and integrations required. The fear of the unknown and vast vendor landscape can slow innovation down. Lenders need to educate themselves on their options and opportunities and build upon their roadmap for change.
Q: What is the most prominent disconnect you see between closing and post-closing, and how can technology help solve it?
Arneja: These departments need to understand one another’s needs and how they are mutually dependent on each other for success. It’s like the offensive and defensive lines of the same team; they don’t play against each other because they have the same goal. That goal needs to be laser-focused on creating an efficient experience for the borrower, the lender and trading partners while remaining compliant.
Sometimes lenders that have already purchased an e-closing solution aren’t consistently offering it. Settlement agents are often left out of the conversation when lenders look to roll out a new digital closing strategy. Communication, not technology, is likely the answer to solving this disconnect. Driving adoption and encouraging the right human behaviors to feed that technology is where lenders need to build their competency.
Q: How should lenders evaluate their next closing technology partner?
Arneja: In today’s market, lenders should look at e-close as an off-the-shelf solution. A lender’s main focus needs to be around what it is going to take to implement the solution. I would encourage lenders to start with hybrid closings, which require no major internal development, while they assess RON and full e-close solutions. They may need to build simple workflow diagrams for closing types and bring their closing teams to calls with vendors to stay the course.
When it comes to full e-close, we see lenders achieve the greatest success when they identify and establish e-close champions in each department who can spearhead the change. Lenders will also want to execute on a measurement strategy that tracks business impacts all the way to the bottom line.
In the current market, nobody’s off the hook for educating themselves, their customers and their business partners, including preferred settlement agents, about e-close activities and vendors that provide the technology. e-close technology allows for everyone to be present and part of the closing process.
Q: The last year has obviously been a turbulent one for lenders with record volume and COVID lockdowns. What do you view as the biggest challenges, changes, or lessons of the past 12 months from a lending standpoint?
Arneja: I see a lot of companies trying to figure out how to do the same volume as last year in this year’s market. Instead, they should be scrutinizing their overall process for things they can do differently to impress referral partners and delight borrowers today.
A year of working, shopping and completing other day-to-day activities remotely has permanently shifted consumer preferences. For instance, SimpleNexus recently surveyed borrowers on their signing preferences and found that almost 60% prefer a completely digital closing experience. 33% preferred a mix of electronic and in-person signing, while less than 10% opted for 100% in-person. A lender that doesn’t yet offer eSigning looks at data like that and immediately knows what they need to do. But it’s not just about thinking, “how do we do what we did before, but virtually?” We should also ask,“what new ways can we optimize our processes that work moving forward?”
Q: What’s something a business colleague or peer in the industry did over the past year that helped or inspired you?
Arneja: It’s hard to avoid analysis paralysis when considering a new technological advancement. I’m inspired by peers who deliver the best homeownership experience when it’s time to deliver and don’t let perfection hinder their progress. While quality is always the goal, quantity and consistency are the drivers that keep you top of mind as we serve the ultimate client, the borrower.
Q: Any final thoughts?
Arneja: Acceleration in digital closings will likely continue as more lenders seek efficiency gains in the closing process in response to increased purchase business, higher rates and continued strong demand for housing. Understanding the full signing workflow — including scheduling, communication, coordination, lender and title document preparation and final execution — is critical to creating an improved, digital version of the process. Fortunately, technology providers in the industry have already done the heavy lifting of developing and managing e-close solutions and testing them for validity via MISMO’s e-close and RON certifications.
There’s no question that digital mortgage applications and digital closings provide borrowers with a lot of benefits, from improved ease of use and accessibility to more effective information-sharing, collaboration and communication with lenders and settlement agents using borrowers’ own, familiar smart devices. As important as these benefits are, I encourage lenders to get up close and personal with how these technologies improve the business as well, from enabling faster turn times to providing greater control over funding.