Before the pandemic, one of the major roadblocks to implementing eClosings was a lack of serious commitment. Companies talked the talk when it came to eMortgages, but in many instances the commitment was surface level at best. That all changed after COVID-19.
In 2020, with much of the country on lockdown or under stay-at-home orders — and with business threatening to grind to a halt — many mortgage companies finally decided it was time to seriously consider eClosings.
However, this decision to offer eClosings collides with the challenges of implementing them. The pandemic may have spurred lenders to consider eClosings, but many are unprepared for the reality of the road ahead of them. To get past this hurdle, lenders need to adopt the mindset that they will pursue electronic closings — whatever it takes.
Did You Know: A basic hybrid eClosing is easier than you think?
“No one can sit in a boardroom now and say they won’t do eClosings. They’d get fired,” said Brian D. Pannell, DocMagic's Chief eServices Executive. But much more common are the lenders who are enthusiastic when they start the process and then balk when they encounter difficulties. “There are people who come to the table and say, ‘I'm ready to do this,’ and then two weeks later say, ‘I didn't realize I had to do this much. I'm not ready to do this now.’”
Here’s a sampling of the obstacles that may sidetrack lenders who’ve made the decision to go “e”: They have to invest, sometimes heavily, in new systems; there is confusion over states’ varied eNotarization laws, including the temporary emergency orders; they may encounter resistance from secondary partners and investors; they want to offer eNotes but are confused about how to become a MERS eRegistry member, etc.
“When we talk to someone in the very beginning, we have to get them oriented toward the thought process that this has to be a commitment,” said Daniel McGrew, president and CEO of Elite Digital Advisors and the leader of DocMagic's eClosing team. He added that when he holds a best practices call with lenders who’ve decided to move forward, he informs them, “If your attitude today is, ‘we'll dip our toe in the water’ or ‘we'll just give this a try,’ you're setting yourself up for serious trouble. If the commitment's not there, this thing is going to fail.”
Additionally, this committed mindset needs to come from the top. “Regardless of who initiated the change, at the end of the day you must have executive sponsorship,” Pannell said. “Otherwise, organizations may reach the end of the implementation process only to find that even the pandemic couldn’t accelerate adoption and their company is only eClosing one or two loans a month. Then the executives will ask, ‘Why did we do this?’ Companies need a sustained strategy.”
The commitment needs to be there especially if the initial eClosings don’t go well. McGrew recalls one credit union that began implementing eClosings in 2020. Their very first eClosing, undertaken to great fanfare with high-level executives participating, ended up lasting almost two hours because the notary was completely new to the process.
That could have been a “one-and-done” situation, McGrew noted. However, the credit union was undeterred, learned some lessons from the mishap, and pressed on with electronic closes. By the end of 2020, the lender ended up closing almost 90 eNotes — with a lot more planned for 2021.
Pannell worked with a Midwestern bank that took an aggressive approach, insisting forcefully that all their stakeholders and partners get on board. “It was an uncomfortable change for a lot of people, but the bank made them do it,” Pannell said. The result? “They’re killing it right now.”
Another key reason why lenders must be prepared to push past any obstacles: Borrowers today are demanding some form of eClosing. In the past, they were content to follow the lender’s lead when it came to closings. However, amid the pandemic, borrowers have a new risk tolerance — and in many cases, that tolerance doesn’t allow for a traditional closing that involves a large stack of papers and a drawn-out, in-person signing. They want the safety of a quick or remote closing.
Additionally, borrowers have gotten used to the convenience of an Amazon-type experience, where they order something and it arrives almost immediately.
As a result, lenders need to have more flexibility when it comes to borrowers who want an eClosing on their terms. Since the pandemic, Pannell has gotten calls from lenders requesting help in the evenings, sometimes as late at 10 p.m. — while they were in the middle of conducting a RON closing. When asked why the ceremony was happening so late, lenders would answer, “This is the window the borrowers have.”
“So now lenders have to make themselves and their support staff more available. It’s no longer a world of 8 a.m. to 6 p.m. office hours,” Pannell said. “Lenders are at the beck and call of the borrower now. You’re going to work some unique scenarios, and you have to be committed to that. You have to know that this is the new norm.”
To learn about four other key hurdles to eClosing implementation — and how to overcome them — download the full white paper here.
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