The Need for Speed: Examining New Mortgage Industry Research on Loan Velocity

Webinar Overview

In today’s market, speed is the name of the game for mortgage transactions. Lenders must find ways to be more efficient and cost-effective in their operations—ultimately helping borrowers expedite the homebuying process. Many lenders are leveraging technology to achieve these results, but some are more successful than others.

In this webinar, we will explore new research that compares the loan velocity of 150+ mortgage lenders. Join experts from Legacy Mutual Mortgage, STRATMOR Group, and Snapdocs as they discuss the variables that impact loan velocity—including the role of eClosing—and how speed translates to cost savings and customer retention.

Agenda:

• New research evaluating loan velocity, based on five key performance metrics 
• Hear Legacy Mutual Mortgage share how eClosing has helped to improve their loan production timelines
• The Snapdocs eClosing formula, proven to increase operational efficiency and loan velocity 

Read the full webinar transcript:

Todd Maki

Let’s dive right into today's webinar topic, which as a major Top Gun fan I have a major kudos out to our marketing team for, is called The Need for Speed - Comparing Loan Velocity Among 150+ Mortgage Lenders. We'll discuss new research that compares the loan velocity across a broad swath of the industry. But before we dig into the data, we'll do a quick introduction with our panelists for today. Since I'm already talking, I'll start. My name is Todd Macki. I'm the Vice President of Customer Success for Snapdocs. And today we have two very special guests, Raven Johnson from Legacy Mutual Mortgage and Garth Graham from STRATMOR. Raven. Would you like to introduce yourself? And then Garth you can follow.

Raven Johnson

Sure. Hi, everybody. My name is Raven Johnson and I'm the VP of Business Systems at Legacy Mutual Mortgage, and we're a medium size National Mortgage bank. I've had the pleasure of growing alongside Legacy over the past nine-plus years. And my role here is primarily to pursue the most well-oiled machine possible, whether that involves human or machine processes or combinations thereof.

Todd Maki

Thank you for being with us. 

Garth Graham

Hi. Garth Graham, I'm a senior partner with STRATMOR Group. We generally participate in the mortgage industry in a wide range of consulting engagements and a big thing that we do is we aggregate data from a number of sources including from lenders themselves, (some of which we'll be sharing today) in order to help lenders make informed decisions. 

Todd Maki

Thanks to you both for joining us. Here’s a quick overview of the agenda and today's conversation. We'll give a sneak peek of the new research from STRATMOR Group surveying 150 lenders to understand the need for speed on the loan velocity of their average mortgage processes. We'll take a closer look at Legacy Mutual's results in particular, and get Raven's thoughts on what strategies have influenced their performance on their digital closing journey. And then we'll each offer you our top recommendations on how to speed up load velocity. Finally, we'll leave as much time as possible for a live Q&A and make sure we get to as many questions as we can from the audience. 

So with that, we want to set the stage with a quick overview of how and why this research was conducted. Since STRATMOR conducted the research, Garth will take us through the approach and methodology.

Research Findings on Lender Loan Velocity

Garth Graham

Yes, sure. At STRATMOR, we aggregate a lot of industry data on how lenders perform versus others. We host round table meetings where lenders can discuss how they perform versus others. And then we provide the data back to lenders so they can understand how they perform within certain segments. So we have thousands of data elements on a lot of these lenders. This specifically focused on lenders over the last two years who do or do not use Snapdocs in this case related to eClosing. So we'll get into some of the specifics, but this includes banks IMBs, and credit unions. The subset of this data represents over 50% of the industry’s transaction volumes. It's a pretty big data set. It is pretty much larger lenders that probably do at least 5000 units a year or greater. So it is your independent mortgage banker, mid-size such as Legacy Mutual, Raven can talk about that, as well as large banks. It's roughly 150 lenders' data points that we'll be sharing today. 

Todd Maki

All right, let's dig into the results. So again, as we talked about, this is a measure of total loan velocity from loan application to shipping. And so can you talk us through the high-level data?

Garth Graham

Yes, sure. So, basically what we have is a lot of lenders who report their data to us, what they do report in this context is the application date, the closing date, the shipping date, and how fast the loan gets off warehouse. So, the specifics for today's session really focus on speed and velocity or velocity overall.

Overall, lenders who used Snapdocs versus those who did not were roughly 18 days faster. That breaks into three different pieces and we're going to talk about all three in a second. So before everyone jumps in and goes, which, where, where was the segment? We're going to walk through that. Some of it is in the application, and what occurs up to and including closing, some of which occurs then post-closing, which is the part of the industry everybody forgets about. So we can talk about that when we get to that slide, but it includes what occurs up to and including the closing as well as what occurs after the closing. It’s roughly as I said, in this context, roughly 18 days. 

And I'm interested in hearing from Raven. Legacy’s transactional volume total within the segment was even faster than the overall average for Snapdocs lenders, whereas non-Snapdocs lenders were longer overall until they got to that shipping stage or got the loan off to the investor.

Todd Maki

Awesome, thanks. And to that point, Raven, we’d love your perspective on this as a lender who participated in the survey, particularly given how fast Legacy is moving its loans. What's your perspective on the 70-day average?

Raven Johnson

You know, it's really interesting to me to see this and it feels really good to know that we're doing so well. Until you see data like this, you're kind of in a race against yourself, right? So you're like, oh, I can do better or that can be faster. So to see that it just really makes you feel good. 

But, to Garth's point, this is also considered application to shipping. So there's always this race for the closing table and that part is easy, right? I mean, we say it's easy, but that's the common part of getting a loan from application to closing, but then everybody kind of forgets about it and moves on to the next one. But we still have deadlines and we still are trying to move quickly to get the loan shipped. So it's really important to have tight processes, not only for the customers involved but after as well.

Garth Graham

Yes, but by the way, I'll make one comment here, and I think Raven nailed it. We have a couple of funky things that we do as an industry talking about ourselves. One of them is that we always talk about basis points. Nowhere else in the world do people refer to basis points with such frequency. 

We also talk about the goal of getting to closing, which is certainly the consumer's goal. The consumer aims to get to closing to obtain the money for their life event, whether it's purchasing a home or securing lower monthly payments. However, at the closing table, the lender has only incurred more expenses. There's no profit that occurs at the closing table itself. We're all essentially in a warehouse business. The lender has to turn that loan around and fund it somehow. Nothing really turns into cash at the closing table; it's only after closing that cash is generated. For an independent mortgage banker, what they've done is incur debt, drawn on their warehouse line, and take on risk. So I think breaking the process into pieces is critical. This data we're focusing on covers everything up to and including getting the loan off the warehouse line.

Todd Maki

One of the other things I think about a lot in general is time equals money. But this industry is so nuanced in terms of how lenders make money and different business models that exist, and the different market dynamics at play. It is intuitive, of course, that loans moving faster through your business would require fewer resources to handle and likely lead to more cost-efficient operations. But there's obviously a lot more to it, Garth, as you imply. I'd love to hear your thoughts in terms of how you think about measuring the financial impact of time savings or any other perspective or are right.

Garth Graham
Raven, you start. 

Raven Johnson

That's fine. Yes, I mean, there's tons of factors that are more easily quantifiable than others. But the main point is that the sooner you have a loan off your hands, the sooner you can work on the next one. So the sooner you can get to another one, the sooner you get to the one after that. So more loans equals more dollars.

Garth Graham

Yes. There's this old reference that I sometimes use. And that is if you're in surgery, the worst thing is keeping the patient open longer. So bad things can happen. And for every extra day that loan is floating around you have to give the borrower a status update. There's a chance that the consumer might find a better deal and cancel. There's a chance the consumer might lose their job, obviously, a bad event. There's a chance that the consumer might go on a shopping spree and change their credit profile. So, all these bad things can happen when you open the patient up for this operation that lasts 70 days overall, or if you’re Legacy for 45 days.

So the faster you can turn these things, the better off you are overall. As well as, and I think Raven alluded to it, the capacity implications of this, a processor can only handle so many, a closer can only handle so many, and a post closer can only handle so many. The faster and the less frequently you have to touch that loan, the more loans overall that you can do with fewer people.

So now you begin to get into the productivity and the cost per year. So I think that speed is a pretty crucial element. The other thing from a consumer perspective, and we'll probably talk a little bit more when we get to the application to closing, is consumers don't want it to take this long. They might be used to it and maybe they don't need it significantly faster on a purchase loan because they need to line up movers and everybody else. But all the stakeholders and the consumers don't say, “You guys should take your time because, as long as I get the loan and get the money someday, I'm good.” They don’t think that way. We survey hundreds of thousands of consumers and the results say they think things should NOT take as long as they do. 

Application-to-closing 

Todd Maki

Let's take on that application-to-close section, the pre-close time period. So, in terms of days spent on application to close, what the research showed is that for non-Snapdocs lenders, the average number of days spent was over 48 days, with Snapdocs lenders averaging about 41, and Legacy Mutual coming in at under 39. As we just talked about, obviously there are a lot of activities that happen from the time a borrower applies for a mortgage and when the loan is closed. And I think it's fair to say that most folks wouldn't typically associate those with the eClosing platform. So the fact that there's a correlation between a Snapdocs or a digital closing platform and a faster application-to-close is interesting.

Raven, as a lender both on Snapdocs, of course, and participating in the study, I'd love to hear your thoughts on the factors that you see speeding up application-to-close. And how you think that may tie back to your digital closing platform.

Raven Johnson

So for us, it's a lot of the processes and planning them all along the way. Everybody's doing the same process and working the same systems in the same way, it's going to make you more efficient overall. There has to be constant evaluation. You can never settle in and get too comfortable with what you're doing because factors that influence your processes are changing every day.

When we're talking about the actual closing event, which is applicable here, having platforms that are widely used with other partners like title/escrow helps a lot, and ensures smooth coordination between all the parties involved. And when there are fewer questions, everyone's doing the same thing in the same system, and that equals speed. When you have a uniform collaboration space, and documents are moving bidirectionally between all the parties in one set way, there are no questions to ask or emails to search for, or instructions to get. Our customers have a better expectation for the closing and the closing window, they get to review documents in advance which reduces the signing time. And then there are guard rails in place so that no one can sign too early or too late. The timeline isn't impacted. The closing window is honored and there's no pre-work to be done and fewer mistakes can be made.

Garth Graham

One of the most critical elements in the process occurs up to and around the closing. When it goes bad, it often goes very bad. It's not usually just a few minutes to fix; it can be days. That's what you see in this data point. The closers may be significantly faster for all those integration points and design elements that Raven referred to, but it's also likely impacted by the fact that there's less fallout or fewer issues associated with scheduling the actual closing process.

When closings go bad, you don't tend to lose minutes; you lose days. Not all of them go bad—some proceed perfectly smoothly. But each one that does go bad significantly impacts the average time because it usually affects it in a substantial way. And that's not even considering cases where customers, due to frustrations that may occur at or around this critical process, decide to bail and go elsewhere. Those aren't even factored in here. These data represent the ones that do get to closing, and they're generally getting there faster.

Raven Johnson

I was just going to also mention, in that interim when your closing did get delayed a day or two, maybe now your rate lock expires. There's a cost with that. So it all snowballs.

Todd Maki

One thing we've seen, which goes to both of your points, is the borrower preview functionality. By allowing borrowers to preview the documents 1, 2, or 3 days in advance of a set closing date, we've noticed a dramatic increase in errors being identified by the borrower at that point. These errors can be fixed prior to the closing date, so you don't have to find them at the closing table. As a result, you don't have to delay the closing. The issues are resolved before closing, you maintain your planned close date, and the process moves forward smoothly.

Closing-to-shipping 

Todd Maki

All right. Let’s move on to the next phase, average days from closing to shipping.  So in this research, we found that Snapdocs lenders are over 10 days faster than the industry average and Legacy Mutual is even faster clocking in at just 6.5 days. This is the stage where you'd really expect to see eClosing having a big impact and you'd expect to see an even greater impact when you have eNotes involved because they can be a more instantaneous process with the notes to be funded. However, as is clear with Legacy's results, there's significant value in hybrids as well.

So, Raven, you're moving through the stage more than three times faster than the industry average. And you're doing so primarily with hybrids and not with a high volume of units. Does this result surprise you at all? Or what do you attribute it to?

Raven Johnson

It was a little surprising. But when you think about everything that's involved, maybe not so much. We're always in competition with ourselves which makes it better and we're always examining all the processes. So, specifically when closing is involved, this is where the data and the document integrity, as well as the technology, have an impact for us with regard to the digital closing, and the collaboration space itself. So when closing docs are signed when they should be, with the correct name, and correct signature, and they're returned in a manner that doesn't allow scanner errors for instance. And when funding docs go straight into your LOS instead of requiring someone to save a PDF from an email or another portal, open a loan file, upload the document, and then review them—those are huge minutes saved.

Garth Graham

This is another one of our manufacturing errors or simply manufacturing delays that cause a dramatic impact. Shipping is a process that must be completed in its entirety. So, if you don't finish the whole thing, the loan is still sitting in this stage. And so this affects any document that didn't show up, any document that got misindexed, any document that someone opened the wrong envelope and accidentally put it in the wrong file folder. It doesn't happen a lot, but when it happens, that loan’s hanging around now, your average is going up because this error's created an event that's going to make this loan hang out at this stage for longer than it needs to. So you're potentially picking up time on every single one, by avoiding those where the delays can really extend into days. Anybody who works in that post-closing area knows you open it and go, “I can't finish this one. So I'm going to move on to the next one.” By the way, when we prepared for this call, I had a visual artifact that I was going to use to make this point. And now I realize that I'm sitting at a client's office and can't do it. But I still have a letter opener on my desk that I was going to hold up and say you don't need this ancient letter opener anymore.

The idea of opening the envelope, pulling out documents, shuffling the papers. So a lot of it is right here on this post-closing step. And, as I commented in one of the first slides, this is the often-forgotten part of our business. Loan originators claim victory at closing, the realtors earn commissions, and the loan officers earn commissions. Everybody's high-fiving because they closed this loan. But really nothing's happened. You haven't made any money yet. You must get through this stage and sell this loan to an investor to recoup the cash that you've now borrowed on warehouse.

So getting it out of this stage is a pretty key part of it. And part of the overall process. So Raven, when you went to the eClose platform, are you finding that the documents get to you much faster?

Raven Johnson

Yes, you mean funding-wise? Yes, when we receive funding docs back, yes, way faster. That was a big goal when we went into this process and one of the things I loved about the Encompass® integration with Snapdocs. As I said, it takes a long time to open a loan and then upload the documents when it's a huge PDF. That process takes about five minutes and I think at the end of March we closed or we funded 60-something loans that day. So 60-something times five minutes, you're saving a lot of time with Snapdocs—time that those funders and shippers have to put towards other tasks. 

Garth Graham

Yes, you're saving time on every single one of these that is coming through this process, and then you're hopefully saving time on the bad scenarios where something is missing out of the process, which means it just stops.

Raven Johnson

So, yes, it's going into the loan file and the correct placeholder before the funder even gets to it. So by the time the funder sees that the documents have been returned, it's already where they need it to be. Yes, that's right.

Average days on warehouse lines  

Todd Maki

All right, let's look at the last cut of the data. And so for this piece, STRATMOR looked at the average days on warehouse lines which of course, as Garth had mentioned have meaningful financial impact depending on different market conditions. And so what the research shows is that Snapdocs lenders are faster off warehouse lines by 10.7 days—with non-Snapdocs lenders coming in at 29, and the average Snapdocs lender coming in at 18.6, and Legacy coming in even below that at 17. So Raven, what's your take on this data?

Raven Johnson

We touched on it earlier. This is the real money maker or the money taker. I mean, anybody involved in the secondary process knows what it costs every day you don't get a loan purchase while you're waiting on investor slips. So it's simple; better document data integrity equals faster loan purchases, which equals more money. So when the documents, especially in an eClosing scenario, when there's no human error or very little human error, then those documents are coming back correctly and everything's getting out of there quickly. The investor is not suspending it, it's getting purchased quicker.

Garth Graham

The warehouse line can be really critical for an independent mortgage banker. They're constantly trying to think; ‘How many times can I turn my warehouse debt in a month?’ This means that the shorter the amount of time, the less warehouse I need for the amount of funding I'm getting. During that time, you have to borrow the money. Now you have an offsetting revenue stream with the note rate. But with high interest rates right now, you're not making a whole lot of money, or any money by holding loans in a warehouse. So one, financially getting them off of there is a big, big advantage. The second is, that it is an existential threat for an independent mortgage banker to hold loans on warehouse. And I may be being overly dramatic. But when you hear stories of lenders that go out of business or get really whacked by their counterparties, whack is a technical term by the way, but you get really crushed by your counterparties. It often is the warehouse. 

So there are not that many warehouse lenders in our industry. You need to keep a very good relationship with them and the longer loans stay on there, the chance increases that something bad can happen. And especially in a climate where it's a tight market and you're not making money. As an independent mortgage banker, I'd be asking, ‘How fast can I get this thing off my warehouse line?’  Because you're not making more money than a warehouse. You're just exposing yourself to more risk. So trying to turn it as fast as possible is a very efficient way of running your business. 

By the way, I'll do one little data point that I'll contribute here. When we looked at this data, there are some lenders who are significantly below 10 days. So they're turning the warehouse three times a month and some of them are sub-10.  Those that are, are usually at a very high percentage, because once you get that you can burn through in just days, and get them off your warehouse line very quickly. So, it's not that every lender has got a significant eNote adoption rate internally in the organization, but the industry is accepting a lot more eNotes. Those that are going all in on eNote are able to turn these loans off warehouses very, very fast. So it is possible that lenders, on average, can be well under 10 days, which now is even more meaningful than some of the numbers we see on that slide.

Todd Maki

Yes. And even with industry adoption of eNotes, still holding in the 8- 10% range, we're seeing it increasingly common amongst our customers who are pushing 30, 40, 50 plus percent. So it's certainly being done. It's being done more and more often as we see it.

Garth Graham

Yes, they're the sub-10, by the way. They're a sub-10 average warehouse time… those that are up around 50% eNote or above.

Raven Johnson

Yes, challenge accepted.

Lender Spotlight: Legacy Mutual Mortgage

Todd Maki

I love it. Cut it from 17 to 8.5 days!  All right. So not only did we walk through all the research results, but I also wanted to give an opportunity to dig into Legacy Mutual’s digital closing journey as well as any particular insights that Raven is able to provide. So, Raven, I'd love to hand it over to you to walk us through your story with digital closings as well as how it applies to some of the results we talked through here.

Raven Johnson

Yes, I mean, we have 95% eClose adoption. I mean most of that is hybrid. We're definitely not 30-40 range for eNote, but we do have goals. So we're working towards that, we have a huge product mix and an investor library. So, getting all of that in place is a lot. But we're getting there. When we first sought out our digital closing solution, we knew that the goal was to provide a better closing solution for our customers and our partners and

our employees and everyone was committed to that goal. And that's what you need, everyone to be committed. The name of the game is efficiency for me every day. And for us, a digital closing collaboration platform gave us four main benefits which all contributed to faster overall loan velocity. 

And the first would be security. In my role security is of the utmost importance. We are now sending and receiving the data and documents in a more secure manner that also happens to be more user-friendly and Snapdocs is widely accepted. So there are fewer variables and questions when it comes to our partners accessing that portal and our documents. So that's created a lot of ease. 

The second benefit is the guard rails that we're able to set so we can set the closing window, no one can sign too early or too late. And that reduces mistakes which can snowball and require redraws and resigning. And then you have all the problems that come along with that. As I mentioned, the data and the document integrity, but for any kind of eClosing, all the documents are signed correctly on the line with the correct name, and they're dated with the correct date. Again, mistakes are being reduced which can cost time for everybody involved in the closing and post-closing process. 

And then finally, it's just the inherent speed. Customers can sign faster when they're given the opportunity to review the docs ahead of time. For us specifically, when Snapdocs can automatically send those funding docs to Encompass, that saves huge minutes of opening the file, dating the PDF, uploading the PDF, and reviewing the documents. So the funder can get to those faster to get the loan documents reviewed, fund the loan, and ship the loan. Our e adoption is this high because we see the results that come from it, and our people are also committed. So it took a little while just to make sure we had everybody committed, but once they were, then it just flew right along.

We also make the hybrid closing the default. So a lot of people will make a wet closing the default. And then you have to request some sort of eClosing. But for us, the hybrid closing is the default. And if you want to opt out of that, you can. If a customer is not comfortable with that, they can go in and wet-sign. Then if they want to go with a hybrid eClosing option, even if they’re not fully closed, then they can opt for that as well.

And so we are talking about the general loan velocity right from application loan purchase. But there's a real focus on the closing process because the closing also affects the shipping and purchase times in a positive way. So we really do have to call that out.  Also, the signing event is the customer's last experience with us, right? So it can make or break their satisfaction with the entire process, and giving them that positive lasting impression should be a real focus.

Garth Graham

That's amazing. When did, when did you launch your eClosing initiative?

Raven Johnson

It was early COVID. So probably 2020. It took us about a year. Well, maybe longer than that because it didn't go well with the first vendor we partnered with.

So we kind of had to start over with Snapdocs.

Garth Graham

What was the biggest difference the second time around?

Raven Johnson

It was the commitment and the nurturing, I guess I would call it. Snapdocs just really wanted to get you to that finish line and to the highest eClosing possible. Once we were really strong with hybrid, they were like, ok, let's get to eNote. So they provided resources, training materials, and even marketing materials to help our partners understand the route we were taking and where we were going with this initiative. So it was just a full-on partnership.

Garth Graham

I'll share another data point because we love data here at STRATMOR. We survey consumers on the overall process, including the application and closing stages. We collect hundreds of thousands of surveys every single year—over a million in total. It's a very deep data set.

50% of all consumers say they experience a problem during the overall process. Interestingly, these aren't necessarily the same problems we in the industry might anticipate. For example, 20% say they have a problem around closing. Again, it's not always the same issue we might expect from an industry perspective. In some cases, it's just that the closing didn't start on time. 

Think about a doctor's appointment scenario: you show up, sit in the lobby for 30 minutes—that's frustrating. So that is a consumer problem. It has nothing to do with the manufacturing process; it's about the consumer experience.

Overall, consumers are often intimidated by the amount of paperwork. They're not really sure what is going on. It's an emotional transaction." 

That is where lenders fall short by clinging to the outdated process of having borrowers sit around a table, anxiously reviewing stacks of paper documents under time pressure. The more we can do in advance through hybrid-type processes or electronically, which is the way we buy almost everything we buy in our lives on Amazon or whatever. What consumers are getting asking is, ‘Why does it take so long?’ and also, ‘Why is this experience so confusing’? 

When consumers have these problems, net promoter scores drop significantly, like I said earlier, send me an email and I'll send you the slide. When a net promoter score drops, it doesn't mean the consumer complains, but what it means is they're not going to refer you or recommend you. So there's a customer satisfaction, customer experience element here that is also at play. As more and more lenders adopt a fully digital process, it will become the standard by which lenders will be judged because consumers are not going to be the ones opting out of a digital process. That just doesn't happen, they don't say, ‘I want the paper, print that stuff out.’ It's lenders who sometimes struggle with adoption, and cling to the old way of doing it instead of embracing digital. So you're like like a breath of fresh air as you're embracing a different way of doing business. And obviously, you’ve got the results to prove it.

Raven Johnson

I like the next shiny thing as long as it's effective and not just shiny.

Todd Maki

I appreciate that. I think you've got a lot of best practices in there too. We see that making hybrids the default is one of the most critical elements.  You’re just establishing the way you close and setting that expectation about the business. That resonates within Legacy, but also across a lot of our customer base as well. Truly appreciate your partnership, Raven, thanks for sharing your story. 

All right, we've got one last bit before we get to Q&A. So, prior to the webinar today, we had asked Raven and Garth to provide recommendations for anyone looking to improve their loan velocity. So, Raven and Garth, can you please share your insights and your recommendations? 

Panelist Recommendations

Raven Johnson

I feel like I've said this a lot over the last half hour or so, but it's just simple—many small positive adjustments over time add up to major improvements. So anytime you implement a new process, it's an opportunity to examine all the ancillary processes related it and to see where adjustments are needed. So change for the sake of change can be counterproductive. So the key phrase here is making small positive adjustments over time. So give yourself time to make an adjustment, and then see how it affects your process and then maybe make another one. 

Garth Graham

Thanks Todd, I appreciate the question. In this case, it's changing the pace of the velocity. But change is really about combining the right people, processes and technology. So I respect the fact that Snapdocs is a good vendor and is very active in the space, but it's only a piece of it. It is the technology part and certainly having the right people and processes. Raven is a good example. She's obviously the right person to lead a

change initiative like this. She's designed processes that try to improve the overall experience. She measures all the various manufacturing improvements in the process. So it's a people process and technology initiative. But it's certainly not impossible when you embrace it that way. So Todd, what do we learn from her today?

Todd Maki

I think from my view, the largest impacts result from the greatest adoption of the most digital closing type. Going from wet to hybrid has dramatic impacts, and we saw Legacy’s results. And Garth shared some insights on what taking the next step that can do as well.

I think we see that go even further again when organizations are able to make the final step to remote online notarization, where the entire process is digitized. And so I think it's all a journey, right? We talk about it at Snapdocs when we say crawl, walk, run. It’s sort of tongue in cheek, but major efficiency improvements occur going from wet to hybrid, hybrid to eNote, and then ultimately eNote to RON.

Q & A

All right, we've been taking questions throughout the webinar. If you have any additional questions you haven't already submitted, please go ahead and submit them. So let's go ahead and get some of these queued up. Raven, we’ve got one targeted at you specifically; Does Legacy allow borrowers to view and sign, or only view ahead of the closing day?

Raven Johnson

Only view. But, well it depends on the location. So again, you can set the closing window and it depends. Arizona, for example, has a closing window. So we set the earliest signing date and the latest signing date, and they get their docs as soon as they can and they're not able to sign them until they're within that window.

Todd Maki

Okay Raven, why don't you start on this one too? What are the most typical investors that we see among Snapdocss lenders? I think I'll expand the question a little bit and ask, particularly since you're primarily hybrid. Are you seeing any issues or questions around investor acceptance with hybrids, and how are you considering your investor mix?

Raven Johnson

Yes. So now I was trying to think of this earlier. Investors that don't allow at least hybrid, and I think there may be a couple of like our state down-payment assistance programs that don't. I can't think of who they are at the moment. Primarily, it's rare that the investor does not accept at least the hybrid. When it comes to the eNote, and investor acceptance, that's a little harder because while it is becoming more widely accepted, you still have to know where you're selling that loan. If you sell loans, like we do, you have to know where you're selling that loan before you can allow it to be eNote, and that may affect your pricing. So definitely you need to think about that and set guard rails with regard to loan product, loan type, loan purpose, and any kind of knockout grid items. And you just have to know your grid.

Garth Graham

I'd like to make one comment regarding the data we used. The 150 lenders we analyzed represent a mix of entities selling to Fannie Mae, Freddie Mac, and traditional investors. Over the past year, some have been selling to aggregators. Fewer independent mortgage bankers are retaining servicing; more are selling to third parties and correspondents. In our data set, we see lenders selling to aggregators, directly to agencies, and to banks.

While there are still these outlier cases where digital processes haven't been fully embraced, it's becoming far more standard in the industry overall.

Todd Maki

Yes. All right. Another question. What is the biggest challenge lenders have when implementing digital closings in their process?

Garth Graham

I sort of alluded to one. A few years ago in the industry, we went down this path that the consumer would not do these digital experiences. That has totally not proven to be the case. Consumers will share their information, they'll share their data, and they'll execute a digital process. They're not opting out, it's not the consumers. It's us in the industry that generally are the resistant ones. I've always done it this way. It's too hard. I'll just keep doing it this way because I'm used to doing it this way so you have to get through that inertia and resistance to change, but that resistance to change is from much more internal issues than consumer issues.

Todd Maki

Looking at our acceptance rates or opt-out rates and the consumer opt-out rate of hybrids that we see is 0.03%. So 99.97% of the time consumers will have the digital close. So, it just doesn't happen, that consumers are opting out. And frankly, even our settlement agent opt-out rate is 2%. So it’s still 98% of the time it's it's going through, and then they're participating in the scanbacks digitally as well. So even to the point of the hurdle being internal, as the industry matures with digitization we'll continue to see that the internal hurdles decline as well, which is great. 

Raven Johnson

Our biggest hurdle, and we're still going through it as we try to increase our eNote usage, is investor acceptance, which is becoming better. Then you have all the other variables, such as your warehouse. Your warehouse has to accept eNotes, and we use multiple warehouses. So you have to get that approval and you need your MERS® approval. So there are a lot of pieces that require approval that you have to go through. But Snapdocs has really pushed us and helped us a lot. So we weren't alone. But there, there are a lot of pieces, it then you have to know which ones to conquer first. But again, do it and do it quick and make sure everybody’s bought in because if you do it slow, you'll do one piece and then you gotta do another piece and then you might have to do another piece over because you waited too long. so you’ve gotta make a commitment and go forward.

Todd Maki

Yes, I think the one thing I'd add and I mentioned it earlier, but, let me say the biggest challenge to lenders adopting digital closing at scale is really when they don't take the step of defaulting to digital, defaulting to hybrid or whatever their most digital closing is. Because then you're requiring an opt-in, and you're putting the control of your operations in the hands of your field effectively. 

All right. And I think we're at the final question.  Due to many counties in California requiring wet signatures is eClosing still a viable option for California lenders? 

I'll clarify this a little bit. The primary restrictions that exist within California are around the notarization. So, remote online notarization, eNotarization has some restrictions within the state of California. But hybrid or hybrids with eNote are unrestricted by the state. So we see all of our lenders doing business in California doing so with hybrid, and even RON with special scenarios as well. Raven or Garth, would you like to add to that?

Raven Johnson

So, we're not even doing RONs yet. So, I mean, if our turn times are this good with primarily hybrids and a little bit of eNote, then yes, you can benefit.

Garth Graham

These are very specific state questions. California always gets to ask the specific state question because it's such a huge part of the market. But yes, I agree with you, it's not really a big issue. There's a ton of this being done in California. But obviously, the notary piece is the one that's evolving.

Todd Maki

Great. I truly truly appreciate the conversation and time, Raven and Garth. Thank you so much for doing the webinar with us and for having this conversation, and thanks to everyone in the audience for joining us.