This article is part of our educational series on the five key factors that determine how digital your mortgage closings can be, known as e-Eligibility.
For more information, download the full eBook or get your free e-Eligibility assessment to determine how digitized each loan in your portfolio can be.
Mortgage industry stakeholders are rapidly digitizing the closing process. Borrower preferences have shifted to where 81% of consumers now prefer a digital experience. By digitizing mortgage closings, lenders are realizing operational efficiencies in a time when low housing inventory and the potential for increasing rates are likely to squeeze margins. They’re gaining a competitive edge with borrowers, as well as a more efficient closing process.
However, lenders that are working on automating and operationalizing closings must grapple with e-Eligibility, or the factors that impact the extent to which a mortgage closing can be closed digitally. Navigating these factors can be fraught with complexity and ambiguity—but they’re critical to master in order for lenders to scale and compete in today’s lending ecosystem.
Overall, lenders that succeed in digitizing their closings see the following benefits, both for their business and for their borrowers:
Lower costs. Physical documents take more resources to produce, transfer, and manage. Comparatively, many investors will fund an eNote within one business day of delivery, reducing dwell times and improving capital efficiency. Costs associated with tracking, shipping, or scanning paper documents are completely eliminated.
Greater operational efficiencies. Documents that are eSigned eliminate manual steps and inherently reduce errors. Staff won’t get bogged down chasing down errors, lost documents, and missing signatures. This empowers lenders to process more loans, faster. And, by better understanding the e-Eligibility of their loan portfolio, a lender can more precisely forecast the resources and tooling required to close loans.
Better borrower experience. The closing is the last touch point a lender typically has with the borrower during the loan origination process. This increases the value and impact of the closing experience. As we mentioned earlier, the overwhelming majority of borrowers prefer digital experiences. By digitizing the closing process, lenders can offer borrowers the choice and ensure a consistent and convenient experience with its borrowers throughout the closing.
Stronger partner strategy. By addressing e-Eligibility, lenders will also empower staff to optimally engage their network of partners and stakeholders throughout the closing process. For instance, a lender might be more inclined to work with investors or warehouse lenders that help them realize the full benefits of digital closings.
At Snapdocs, lenders tell us that the “degree of digitization” matters. The more lenders digitize a closing, the fewer costs they incur, the less time it takes to process, the better the experience for the borrower, and the lesser the likelihood of an error or lapse in security protocols. For example, lenders using Snapdocs generally see an 80% reduction in post-close quality control efforts, and are able to process 40% more closings than they would have using traditional closing methods.
This is why mastering e-Eligibility is so valuable: It enables lenders to better forecast the optimal closing type per loan, which maximizes the benefit they gain from their technology investments. For any type of digital closing, lenders benefit from having the right tools and experts available.
It’s OK if a lender investigates the e-Eligibility of their loans and learns that full eClosings aren’t yet achievable at the rates they had hoped. They can still start digitizing at least some components of their closing processes, by facilitating wet-ink closings using digital technology or by implementing hybrid eClosings. In doing so, they learn valuable lessons that prepare them for the inevitable future of fully digital mortgage closings.
By contrast, lenders who are underinvesting in digital closings and in managing e-Eligibility factors are making a risky bet. Borrower preferences have already shifted. Competitors are digitizing. Laggards risk losing market share. And those that rush their digital transformation risk a costly and error-prone exercise.
We’ve developed a framework for implementing digitized mortgage closings and identifying how digital each closing can be. To access this framework, download our eBook, “The 5 Rs of e-Eligibility for Mortgage Closings”.
New to e-Eligibility? Check out a few of our most popular blog posts about e-Eligibility: