“A lot of things you want to do as part of daily life can now be done over the Internet.” – Marc Andreessen, co-author of Mosaic
There’s no doubt that technology is seemingly everywhere. First, DomiDocs® answered the call for an innovative cloud-based Homeowner Enablement Platform®, and now the real estate industry is catching up by offering digital mortgage closings, commonly referred to as eClosings. Of course, the availability of an eClosing option depends on your lender, but it’s definitely a concept that’s on the rise as today’s eager buyers are looking for flexibility, convenience, and more efficient ways to purchase a home. Let’s take a look at your guide to eClosings!
What is an eClosing?
According to Snapdocs.com, an eClosing is a mortgage closing where the entire process is completed electronically and the loan package is digitized, eSigned, eNotarized, and includes an eNote.
Here are the eClosing terms you need to know.
These are some of the basic terms involved with the eClosing process, according to Fannie Mae and Notarize.com.
- eClosing platform: is a secure online platform that a lender uses to organize documents, send the eNote, and share information with title agents, real estate agents, and homebuyers
- eMortgage: refers to the use of electronic processes and signatures in the mortgage production process. More specifically, it refers to electronically signed closing documents paired with an original electronic promissory note (eNote) signed on an eClosing platform and registered with the MERS eRegistry® upon execution
- eNotarization: the National Notary Association (NNA) defines eNotarization as being “Essentially the same as a paper notarization except the document being notarized is in digital form and the notary signs with an electronic signature.”
- eNote: is an original electronic promissory note
- eRecording: the process of recording the eClosing transaction and documentation by your local county
- eSigning: is the actual act of electronically signing the paperwork
- MERS eRegistry®: is the mortgage industry’s legal system of record for eNotes
- Remote Online Notarization (RON): “Remote online notarizations (sometimes called webcam notarizations) make use of video and audio technology on the Internet to allow signers to appear before and communicate with the notary in real-time during the notarization,” states the NNA.
How does an eClosing work?
Your options to utilize an eClosing process when purchasing a home are completely dependent on what strategy your lender offers. Two common types of eClosing options are:
- Fully digital eClosing: the mortgage is closed digitally through the use of electronically-signed documents, audio, and video technology; all documents are then notarized and filed online, and participants are located remotely
- Hybrid eClosing: Fannie Mae states this is a hybrid process where certain key documents, such as the promissory note and security instrument, may be printed to paper and wet-signed, while other documents are signed electronically. The mortgage closing still takes place in person.
No matter which option your lender supports, they’ll utilize an eClosing platform, as above in the terms. All documents received into the platform will be annotated noting fields for anything that needs to be completed, like dates, initials, eSignatures, and eNotarizations.
What are the benefits of choosing an eClosing?
An eClosing offers many benefits for all parties involved, but especially so for buyers. Advantages of using an eClosing transaction include:
- It’s convenient – no one has to drive or coordinate appointment times
- It’s more efficient – it saves paper, storage fees for documents, and courier costs, and provides a smoother workflow for title companies and lenders
- Provides a better user experience (UX)) – it’s a competitive advantage for lenders, which then becomes a flexible option for buyers who can review mortgage loan documents before signing, and sign whenever and wherever it’s timely for them
- Reduces errors by up to 33% according to a recent survey: as everything is electronically filed, there can be no missing documents, files, or signatures, which in turn reduces operational errors
- Saves time – shortens the mortgage process as everything is done remotely, and with an eNote, funds are delivered faster
- Saves money – while cost savings can be passed along to buyers, it’s notable to add that title agents and lenders save approximately $100 and $444 per loan, respectively, so it’s to their advantage to offer eClosing services
What are the challenges with an eClosing?
While the benefits of eClosing are many, there are still some challenges faced by some when it comes to the eClosing process, including not having access to a reliable Internet connection. But mainly, any opposition to eClosings seems to be most prevalent with lenders who have concerns about:
- adopting new technology in general in comparison to their current mortgage closing practices that have been in place for decades
- ensuring the eClosing provider they use can fully meet their requirements
- meeting the legal regulatory stipulations
- meeting the needs of their customers who aren’t tech-savvy
- the costs associated with purchasing software and/or equipment
- the lack of training for their staff when offering a new service
Ultimately, it’s likely that eClosings will continue to grow in popularity due to consumer demand and the convenience of online transactions that the world has become accustomed to.
Whether we’re providing educational resources on eClosings or Documenting for Disaster, DomiDocs® is committed to simplifying home management by offering functional tools designed to help save you both time and money, including streamlined document organization, real-time market value tracking, and more!
In addition, DomiDocs® HomeLock™ is our next-level fraud protection system that scans 200+ data points offering 360-degree coverage by monitoring your property 24/7/365. HomeLock™ will alert you about misfilings, unpaid bills, and even missed payments, so you’ll have peace of mind to simply relax and enjoy homeownership! Visit HomeLock™ today to watch our introduction video and check out our FAQs. As a bonus when you sign up, you’ll receive a comprehensive 7-year home history report and scan at no charge.
For more information related to homeownership and technology, read:
5 Ways Technology is Transforming Our Real Estate Experience
Benefits of Smart Home Innovations
Author – Connie Motz
