PERSON OF THE WEEK: Digital closings – including hybrid and all-digital – have been in use for years now, but mortgage technology companies continue to perfect their craft in terms of creating better, smoother and more satisfying borrower experiences, as well as delivering greater efficiencies for the back office. This includes building tighter, more reliable integrations with the leading loan origination systems, point-of-sale systems, e-vault providers, remote online notarization providers and other systems. As such, digital closing technology, a standardized as it may seem, is ever-evolving.
Snapdocs is a digital closing provider that seeks to continuously refine and perfect the digital closing experience by reducing errors, improving QC, and creating automations and integrations that lead to increased operational efficiency. To learn more about the new ways today’s digital closings are benefiting both borrowers and lenders, MortgageOrb recently interviewed Todd Maki, vice president of customer success.
Q: What is the benefit of a digitized closing for the borrower?
Maki: The biggest benefit of e-closing for borrowers is the convenience. Today’s consumers have grown accustomed to having their needs met almost instantaneously. We order our groceries, trade stocks, pay bills, and do many of our daily tasks with a few clicks on our phones. Why isn’t that the case for buying or refinancing a mortgage too?
Borrowers want to do business digitally when it’s convenient and have little patience for slow and convoluted processes. With a traditional closing, however, the borrower needs to coordinate with a lender and title company to schedule the appointment, drive to a closing agent’s office, and review and sign a huge stack of documents, all while other people wait on them. It’s time-consuming and stressful. Many borrowers do not know there’s even a digital option available.
Digital closings transform the experience into a streamlined and comfortable process. With a digitized closing, the borrower reviews and signs loan documents electronically in advance, at their own pace from the comfort of their homes, using a computer or smartphone. If the lender offers remote online notarization (RON), the borrower signs final closing documents at home, too. This automation also creates a smoother, error-free closing experience for the borrower. Because electronic documents and eSignatures ensure greater accuracy, it’s extremely unlikely that the borrower will find mistakes in their closing documents.
Our lender-clients have seen a measurable increase in borrower satisfaction (via Net Promoter Scores) after implementing e-closing. Borrowers appreciate when their digitized loan closes as planned—on time, quickly, and without errors.
Q: Are there any other beneficiaries of digitized closings?
Maki: Yes, every party that touches the transaction benefits from a digital closing. It’s not just borrowers who benefit from digital closings—lenders, title companies, signing services, and notaries benefit as well.
Traditional closings involve many manual tasks, from organizing loan documents to coordinating closing appointments. Digitization automates many of these processes for lenders. For underwriters and processors, digitization helps ensure all loan conditions have been met ahead of time. This creates faster turnaround times and reduces the likelihood of missing documents or errors, which can trigger a costly redraw. Digitization also enables real-time tracking and monitoring of the closing process, helping to avoid the kind of last-minute issues that often happen with traditional closings. For closers, e-closing provides a centralized system that streamlines communication between different parties, ensures all required docs are readily available, and provides visibility throughout the life of the loan.
Of course, lenders save money, too. According to our research, lenders that adopt digital closings save an average of $110 per loan with hybrid closings. When the digital closing includes an eNote, the savings can nearly triple to $290 per loan, and for fully digital closings with RON, it can jump to over $400. The bulk of these savings stems from reductions in manual process costs, paper and postage, errors, and delays. Beyond cost savings, e-closings significantly reduce the type of errors that can delay transactions. This boosts borrower satisfaction, which gives lenders a competitive edge by unlocking more referrals.
Title companies and notaries benefit from digital closings as well. In addition to reducing manual tasks, title providers can also automate and standardize the settlement process. This includes setting up the borrower’s signing appointment and lining up the best notary for the job based on the title company’s criteria. For notaries, RON transactions mean they can perform their duties remotely, which enables them to generate more business. It’s a major reason why Snapdocs has the nation’s largest network of notaries. When everything is connected on the same eClose platform, all parties can streamline communication and gain greater visibility into the closing process with real-time updates. So really, e-closing creates a ripple effect of benefits across the entire spectrum of stakeholders.
Q: Do digital benefits end at the closing table?
Maki: After the loan closes, the benefits are just beginning. For example, a lender’s auditors can review digital loan files much faster to ensure they are compliant with lending standards and all applicable regulations. Digitization also allows lenders to automate parts of the post-close review process instead of spending significant time and resources on manual reviews.
Digitization also creates substantial advantages for the secondary market, where most loans and servicing rights are sold. Compared to paper-based loan files, digital files are inherently easier for servicers to organize and ingest into their systems. Safely storing and sharing electronic notes in an eVault also cuts costs and speeds up loan sales, making loans more profitable and appealing to buy. Investors reviewing a loan, or a portfolio of loans for purchase, can review entire files quickly without having to deal with cumbersome physical documents.
The same goes for residential loan servicers and subservicers that acquire mortgage servicing rights. When borrowers ask for help with their mortgage, digital files make it much easier for customer service representatives to quickly reference details of a borrower’s loan. As the industry continues to embrace digital closings at scale, these benefits will become even more pronounced.
Q: What are your lender clients saying about the business impact of digital closings?
Maki: The feedback from our lender clients is overwhelmingly positive. Many lenders are making digital closings central to their operations and a core theme in their messaging to their borrowers. Our lenders have realized first hand that offering borrowers the ability to review and sign documents electronically at their convenience is a winning strategy that leads to more referrals. By digitizing as much of their portfolio as possible and leaning into adoption at scale, lenders are able to maximize the benefits they, and their borrowers, realize.
A key theme we hear is efficiency. Lenders appreciate how digitization streamlines the closing process and significantly reduces the time and effort involved in closing a loan, ultimately making them more profitable.
For example, after implementing eNotes, one lender experienced a 60% increase in funding productivity. They also found their loans were being purchased within 5-6 business days, whereas paper notes spend up to 16 days on their warehouse line.
