Jennifer Keigl: COVID-19 Crisis: Cutting-edge Technologies in the Mortgage Industry in 10 Years

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CHARACTER OF THE WEEK: The COVID-19 pandemic has impacted many aspects of the real estate and mortgage industry. Fortunately, some of its effects have been positive. To learn more about the positive impact of the coronavirus on our industry, especially the accelerated adoption of e-closures, we spoke with Jennifer Keigl, vice president of product development for credit manufacturers at the company. FIX (Financial Industry Computer Systems, Inc.), a mortgage software company that provides flexible software for disbursing loans and servicing mortgages.

Q: What positive impact has the pandemic had on the mortgage industry?

Kagle: We’ve certainly seen some positive impact on the mortgage industry. Some of my colleagues suggested that COVID propelled our industry 10 years in terms of digital adoption.

This is especially true for digital lending. When COVID erupted, lenders were forced to conduct transactions remotely, causing many to take advantage of the digital tools that had been available to them for years. Electronic closure is beneficial to borrowers, lenders and investors.

Q: How does eClosing’s capabilities help you understand the mortgage process?

Kagle: Many borrowers view the complicated mortgage process as a confusing mess. Digital lending has simplified the process by improving the experience of borrowers and lenders.

Electronic closure allows borrowers to sign documents at a convenient time and place. Borrowers may spend more time studying electronic documents before signing them, rather than feeling rushed at the desk in the closing agent’s office. Electronic closure allows a spouse who cannot be present at the closing table to sign the required closing documents without a power of attorney. Eliminating the need for the borrower to show up at the title company’s office at a specific time for the closing ceremony reduced the stress of home buyers. Handling closures with remote notaries is faster and easier than dealing with traffic jams at a specific location in a building. It also saves gas and reduces air pollution.

Digital lending also benefits lending institutions by streamlining supplier interactions, eliminating the need to place and process paper orders and, most importantly, discontinuing the analysis and comparison of the lender’s staff. Electronic closure also streamlines post-closure quality assurance and financing processes. In short, electronic closures save time and money.

Digitizing the closure process enables suppliers to obtain accurate and verified information. For example, asset verification through a technology portal provides lenders with correct and up-to-date information, accompanied by specific GSE guarantees.

Q: Is e-closure an all-or-nothing process?

Kagle: No, e-closure is not an all-or-nothing process. Hybrid closure was and remains one of the most popular types of electronic closure today.

Historically, hybrid closure meant that borrowers signed most of the loan documents electronically at a closed table, but some documents, including promissory notes, were signed in a wet way. Initially, lenders were not sure that they would be able to profitably sell electronic banknotes on the secondary market. Those days are over. Now the country’s largest investors are ready to buy e-banknotes, which is why we are seeing hybrid e-closings where certain documents, including e-banknotes, are electronically signed.

Q: Is there a security issue related to the electronic signature of the borrower’s documents?

Kagle: Security concerns sometimes prevent lenders from implementing electronic closures. Rest assured that investors are not interested in buying e-banknotes if there is no level of security in what they take as a risk.

Electronic notes – security tools for large sums of money – should be SMART Docs. Smart Doc is an electronic document created according to the specification standardized by MISMO. This format associates data, visual presentation of a form, and signature. Smart Doc can combine data and presentation so that it can be verified in the system to ensure the integrity of the document, ensuring that what the borrower sees and signs on the computer screen is exactly the document that will be saved. It also ensures that the data displayed on the screen is the exact data used to process the loan.

Q: What do you need to start the electronic closure process?

Kigle: Many lenders think of electronic closing and digital mortgages in a general sense and do not use these methods because they feel overwhelmed by what they need to do to get there. If we delve deeper into specific step-by-step procedures, it will be much easier to understand the process and move on.

Lenders should start by using electronic notes to increase efficiency and benefit everyone involved. Implementing e-notes is easy as long as you partner with the right mortgage software and documentation service providers. You need a relationship with an Electronic Mortgage Registration System (MERS), an investor who accepts electronic notes (Fannie Mae and Freddie Mac lead), and a mortgage software partner who can help you deliver eNote to an investor-approved electronic vault. If you have not already done so, establish the relationships with the partners you need to create and sell eNotes: MERS and a document service provider that offers electronic documents and electronic storage.

In many cases, the lender’s loan software vendor already has this relationship built into the LOS. So, the very first step for most lenders is to sit down with their technology partner and talk about it.

Q: What tools or software do service personnel need to work with electronic closed loans?

Kigle: If lenders work with the right lending software provider – a company that truly understands what it means to be a technology partner – they will have what it takes to implement e-closure. This also applies to service companies that can benefit from electronic closure by receiving digital packages, making it easier to adapt in many situations. eNotes increase efficiency and therefore profitability for both service providers and originators.

The implementation of electronic closing of deals is not so much about the specific software that the lender uses, but more about the introduction of new processes for issuing loans that support electronic closing. The lender’s mortgage software partner can guide and support them in implementing e-closures.

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