By a large margin, PROGRESS in Lending magazine’s 90,000+ readers say that eClosing technology is in high demand. 

The magazine ran a reader survey asking whether, in their experience, demand for eClosing technology was poor, average, or huge. The response: 75% said demand was huge, 25% said it was average, and 0% said poor.

“Whereas in previous years eClosings were a ‘nice to have,’ the events of 2020 made them a ‘need to have,’” Michael Chaney, DocMagic’s National Sales Director, told PROGRESS in Lending. 

“Although most lenders were aware of the benefits that borrowers could gain from automating and removing paper from the closing process, it simply wasn’t enough of a driver to create widespread adoption. However, the need for social distancing, stay-at-home requirements, and safety as a result of the pandemic ended up catapulting eClosing technology to the top of lenders’ must-have technologies pretty much overnight.”

There is increasing evidence of the industry’s growing embrace of eClosings. In January, Ginnie Mae — which announced last year that it would start accepting eNotes as digital collateral — issued its first mortgage-backed security (MBS) backed by digital pools consisting entirely of eNotes, with a total value of approximately $24 million. Ginnie Mae says it expects to see even more growth in the volume of eNotes securitized under its MBS Program in 2021.

“The issuance of securities backed by digital pools validates the viability of the securitization model outlined in our Digital Collateral Program and sets the foundation for broader and more rapid adoption of digital mortgages,” said Angel Hernandez, Ginnie Mae’s Director of Policy and Program Development, in a statement. “This event is the culmination of efforts by numerous internal and external stakeholders in our digital initiatives, including issuers, document custodians, warehouse lenders, technology providers, and other industry partners.”

Vendors have responded to growing demand by enhancing their offerings.

“Whether a lender takes a phased approach to implementing eClosing technologies with various hybrid models or they elect to establish a 100% paperless eClosing workflow complete with RON technology, eNotes, and eVaults, it is nonetheless refreshing to see the industry as a whole working to create a better mortgage experience for borrowers,” Chaney said.

Related Content:

• Survey: Homebuyers adapt to eSignings, remote closings during pandemic (10/29/2020)
• DocMagic's CEO honored with Lending Luminary Award (10/27/2020)
• Ginnie Mae, 3 FHLBanks start accepting eNotes (8/5/2020)

Brian D. Pannell, DocMagic’s Chief eServices Executive, examines some of the key changes the mortgage industry has seen over the last year.

What a difference a year makes. A year ago, many lenders in the mortgage industry were still inching their way toward an electronic closing. Now, after facing an unexpected pandemic, most lenders realize that paper-intensive processes are outdated and they are clamoring for some form of digital transformation.

Looking back to an industry-wide survey of lenders that DocMagic conducted near the end of 2019, the contrasts to today are stark. Lenders’ pre-COVID attitudes toward digital readiness have shifted dramatically compared with what we know now, after 10 months of a deeply shifted post-pandemic mindset.

Here are some paradigm shifts I witnessed in the mortgage industry from last year to now:

#1: Lenders had been hesitant to overhaul their existing systems, preferring to cobble together a solution that fit into their current infrastructure. They no longer have that mindset.

In 2019: The reason you saw lenders using so many disparate software applications was because they’d been leery of upsetting their existing workflow. The mentality was, “I’d rather stick with what works than worry about trying to improve it.” So instead of upending legacy systems—loan origination systems, in particular—to create a more streamlined process with a single software provider, many lenders simply cobbled together solutions that fit into their existing infrastructure, despite the fact that multiple integrations like this are far costlier than using a single-source provider.

Today: A company’s long-term product strategy may have been developed over years of experience—but can it be expanded in months? Some of the ways that lenders have been operating are now being challenged. So, how quickly can you pivot to something else? Because if lenders can’t pivot, they may find themselves left behind.

Analysis: In 2019 we asked lenders to name their biggest challenge to adopting a digital mortgage strategy; survey respondents’ top answer was system integration (48%). When it came to updating their mortgage processes, many lenders had been content to move slowly, believing they could take their time to modernize their systems. However, as borrowers’ pandemic-driven preferences have shifted toward demanding more options for remote closings and notarizations, and as more lenders recognize the benefits of going digital—among them increased accuracy and speed, enhanced compliance, and a higher return on investment—lenders are realizing that they need paperless processes sooner rather than later.

#2: For many lenders, investor interest in fully digital mortgages was still low enough that it wasn’t worth the cost to install new systems. That’s no longer the case.

In 2019: The upfront cost of upgrading systems didn’t make sense if you didn’t have the volume. Organizations interested in implementing a digital mortgage process would raise a lot of questions with regards to, how do I get paid, how do I get funded, who am I going to sell my loans to? There was often a concern about generating the savings per loan to pay for the cost to install these systems.

Today: We've heard for a long time that Ginnie Mae and the 11-member Federal Home Loan Banks were on the cusp of accepting eNotes; they both began doing so in 2020. The fact that both are now accepting eNotes is crucial because it introduced a whole new level of participants to the eNote world. Between the FHL Banks and Ginnie Mae, there are a lot of advancements in the ability to make those eNotes saleable. 2020 was the year of the eNote.

Analysis: The foundation of a 100% paperless mortgage is the electronic promissory note (eNote). While eNote registrations were steadily on the rise before the pandemic, in 2020 they reached their tipping point, boasting almost 463,000 registrations—a 264% increase over the previous year. One key reason for this jump is the fact that, after years of planning, Ginnie Mae and the FHL Banks system finally joined Fannie Mae and Freddie Mac and began accepting eNotes as collateral. The impact on the mortgage industry can’t be overstated: With these two major players on board, the pool of investors willing to buy digitized mortgages has vastly increased.

Additionally, along with this greater acceptance of eNotes, there has been a corresponding increase in eWarehouse lenders—which has also been critical to increased adoption of digital mortgages.

#3: Prior to COVID-19, many lenders’ primary focus, as it related to digital mortgage decisions, was to improve the customer experience. Now, lenders are focused on meeting borrowers’ vastly changed risk tolerance.

In 2019: As far as what moves lenders to go digital, of the organizations we surveyed, the prime motivator was to improve the customer experience, with 86% of respondents citing this as a reason for adopting new software. This was followed closely by the desire to reduce errors (85%) and improve security (83%).

Today: As we continue to find ourselves within a pandemic-operating environment, borrowers’ risk tolerance must increasingly be taken into consideration. The borrower has a new risk tolerance for in-person contact nowadays, and lenders need to be able to execute on that from borrower to borrower. A lot of people have a very low tolerance, especially folks who are high-risk. They’re not going to tolerate putting themselves and their families in a situation where they need to leave the house and go to another location to execute an in-person closing. As an industry, we need to reduce the amount of in-person contact that’s occurring.

Analysis: Before the pandemic, lenders’ primary reason for offering eClosings was to improve the customer experience. That’s still true, but whereas before COVID-19 lenders provided electronic mortgages as an optional convenience, now they have become a necessity. Borrowers want more eClosing options, whether hybrid or 100% paperless, both for their safety and because pandemic restrictions have made people less mobile. If an eClosing is the only process borrowers will accept, lenders don’t have any choice but to give borrowers the experience they demand.

#4: Some states were still on the fence about remote notarization a year ago, but the overwhelming majority are now allowing it—in some form.

In 2019: When I went to North Carolina and spoke to closing attorneys, they told me there would never be remote online notarization (RON) in N.C. The reason? They wouldn’t know who the notary was at that point and they wanted to have the notary there. It also made sense because they didn’t want their business to come from outside the state.

Today: As the pandemic hit and as jurisdictions were making adjustments to allow for and minimize in-person contact, they had to come up with new ideas for notarization. In response, concepts like remote ink-signed notarization (RIN), or online in-person eNotarization (IPEN) were introduced. The advent and the necessity of coming up with unique ways to execute on any notarization came into play because there simply wasn't enough time to push through all of the regulatory concerns and considerations associated with RON and to make it more mainstream. Some states were able to accomplish it, but others had to make accommodations in order to support it. Looking ahead, if 2020 was the year of the eNote, 2021 could very well be the year of RON.

Analysis: Due to the pandemic and social distancing guidelines, states have welcomed all forms of remote notarization, including RON. Almost every state now allows some form of remote notarization, mostly via temporary emergency orders passed in response to COVID-19. These methods include RON or lower-tech alternatives such as RIN, online IPEN, or PRON (paper remote online notarization).

In addition to the spate of temporary orders, permanent RON laws also saw an increase in 2020, with an additional seven states jumping on board to bring the nationwide total to 29 by year's end. North Carolina also made remote notarization legal—albeit via a temporary law that’s set to expire on March 1, 2021. Still, it’s a once-unthinkable turnaround for a state where closing attorneys swore only a year ago that RON would never be allowed.

Leading up to this point a lot of lenders had been trying to convince themselves to make the switch to eMortgages, but there was no definitive tipping point. Now you have a pandemic. There's your tipping point.

Related Content:

• Relive some key mortgage industry milestones in 2020 (12/29/2020)
• The current state of eClosings: A Q&A with DocMagic's compliance chief (12/17/2020)
• Brian D. Pannell honored with HousingWire's 2020 Tech Trendsetters Award (12/4/2020)

At the start of the pandemic, companies across America were abruptly forced to send their employees home and quickly scramble to adjust to remote work. But even though new lender MortgageCountry had just begun operations, its president, Ira Brownstein, wasn’t worried.

Download the MortgageCountry case study

“You can be much more connected on a virtual basis and be much more productive, and we’re living proof—not by force, but by foresight,” Brownstein said.

The new company began accepting loan applications as most of the country was shutting down. And yet, with the help of DocMagic’s Total eClose and dynamic document generation solutions, MortgageCountry was able to implement an electronic workflow from start to finish in less than 30 days. 

MortgageCountry’s success has only continued since then:

• In its first month of accepting applications, it closed loans in an average of 13 days.
• It has partnered with the four largest financial institutions in the mortgage space—even though these institutions rarely partner with startups.
• It secured $35 million of mortgage credit facilities during an economic calamity, providing a runway to originate more than $700 million in annual mortgage originations.

How did MortgageCountry do it? In addition to their business model, they chose the right technology partners: DocMagic for document generation and eClosing, and LendingQB for its loan origination system (LOS) and point-of-sale system (POS).

This was key because MortgageCountry set up ambitious goals for onboarding and digital closings. A week before launch, they requested that all documents be digitally enabled and wanted their first closings to be hybrid and to close on a digital platform. DocMagic made it happen.

In retrospect, Brownstein admits he was taking a risk with such ambitious goals. “It was all new. I didn't come from an environment where we were closing loans digitally. We were closing loans the way most lenders close, with outdated wet signatures,” he said. “But I'm a big believer that you make a decision, do your due diligence, test your decision, and ensure that you mitigate risk, and we did that.”

To learn more about how MortgageCountry found success amid challenging economic conditions, download the free case study.

Related Content:

• The current state of eClosings: A Q&A with DocMagic's compliance chief (12/17/2020)
• Survey: Homebuyers adapt to eSignings, remote closings during pandemic (10/29/2020)
• Remote online notarization (RON) has several benefits beyond safety (10/22/2020)

The mortgage industry is undergoing unprecedented change, and lenders are weighing the move to eClosings—because in the current environment, it’s no longer a question of if, but when. Gavin Ales, DocMagic’s Chief Compliance Officer, shares his insights about the compliance issues these lenders are facing.

What is still needed to make eClosings—including eNotes—more mainstream?

eNotes and eClosings need to be more readily accepted by investors. Lenders need all or most of their investors to be willing to purchase the loans; otherwise, they’ll be forced to arrange specific transactions with specific investors. Lenders will be able to close a much larger number of loans electronically when they don’t have to do all the extra leg work of checking in with their investors to confirm that they’ll accept an eClosing.

Both eNotes—which are faster and more secure than paper notes—and eClosings require more global acceptance at county recorders’ offices. For example, a particular state’s law may allow an electronic notary on a mortgage, but if the recorder’s office won’t accept it electronically then that still presents a barrier. Lenders aren’t able to realize the full benefit of an eClosing if they still have to print it out and record a paper document.

The country is moving in the direction of digital mortgages; several states already allow electronic notarizations and more will be allowing the practice, but despite that, there is still the practical problem that not all county recorders have a process to electronically record a document. The laws have passed but the processes needed to carry them out are still not in place, so lenders may face a situation that even if a state allows eNotarizations, there may be recording offices that can’t process them.

What is one impediment to eClosing that is often overlooked?

One critical issue facing lenders is the availability of notaries who are able to conduct eClosings. In some cases, both the state and county recorder may be on board, but the difficulty may become finding an electronic notary. That’s something lenders aren’t thinking about. Having a ready and reliable supply of e-ready notaries would help lenders turn out eClosings just like any other loan. Even if a lender and investor are on board, an electronic notary still must be available. In a lot of states, electronic notaries must be specially registered, and the number of electronic notaries in those states are naturally lower.

What guidelines and regulations should lenders be aware of as they start to implement eClosings?

Lenders should first be aware of their own state laws as to what’s allowed and not allowed when it comes to notarizations. Some states require that lenders use a specific system or limit provider options to an approved list. Lenders also need to pay attention to investor guidelines, as to whether or not they accept electronic documents. Then the user must ensure that they have the full workflow covered, including setting up an eSign system, getting eVault access, and becoming a MERS member with access to the MERS eRegistry. Lenders also have to ensure their documents comply with Fannie Mae and Freddie Mac’s guidelines, such as having tamper-evident seals. Vendors such as DocMagic can ensure these requirements are met as part of our document generation solution.

From a compliance standpoint, how is RON an improvement over in-person notarizations?

Remote online notarization (RON) is a huge improvement over in-person notarization. Right now, there’s the obvious reason—in the middle of a pandemic, RON is far safer for people than being forced to meet in person to notarize loan documents. But even without a pandemic, RON would be the better choice, particularly when it comes to security. RON employs high-tech methods such as knowledge-based authentication and credential analysis to validate identification. In addition, the electronic document files must contain tamper-evident seals and the video of the signing session usually has to be stored for 10 years, both of which help to make the notarization process safer and more secure.

RON also makes it easier for borrowers to review loan documents ahead of the closing and for lenders to spot mistakes, such as missing signatures, sooner. RON is the culmination of a truly paperless eClosing.

Where is the state of eClosings headed next year?

eClosings will only grow in popularity. One look at eNote registrations is an indicator—they were already on the upswing, but the numbers have exploded compared with just last year. So far this year more than 400,000 eNotes have been registered, a 264% increase over last year, and the pace shows little sign of slowing.

The pandemic—and social distancing guidelines—have forced everyone’s hand. More companies are conducting business remotely and remote transactions have become more mainstream. Now that so many people are working from home, society is also moving away from the idea that everyone has to be in the same place when they’re working together. That mindset has also affected the mortgage industry, with more states allowing remote notarization and more borrowers wanting to conduct closings remotely. eClosings are just going to increase from here. The industry isn’t going backwards.

Related Content:

• DocMagic offers clients automatic audit of NMLS identification numbers (12/8/2020)
• IRS releases new form 4506-C (11/16/2020)
• CFPB's 5-year TRID assessment produces mixed results (10/15/2020)

Community State Bank, which has seven locations across southeast Wisconsin, has implemented DocMagic’s full suite of eClosing solutions and is now offering their customers a 100% digital mortgage process—something that’s key in the middle of a pandemic.

“During these times of uncertainty, it is extremely important that our team be able to adjust quickly in order to continue serving our customers safely,” said Scott Huedepohl, Community State Bank President and CEO. “We’re very honored to be able to provide both a high-tech experience, while still offering personalized service to guide our customers along the way.”

Community State Bank, founded in 1898, partnered with DocMagic to implement technology and help ensure the highest levels of customer safety during the pandemic. But in addition to safety, the bank also sought to offer borrowers a faster and more efficient loan process.

“By utilizing DocMagic, our mortgage team can now offer customers the option of signing mortgage documents electronically, from the moment they apply through closing,” said Community State Bank Vice President of Mortgage Operations Shakil Haider. 

Using the Total eClose platform, Community State Bank is also now offering remote online notarizations (RON), eNote generation, secure eVault storing capabilities, and direct connectivity to the MERS® eRegistry. Recently, MERS featured Community State Bank in its monthly newsletter, congratulating the lender for completing its integration. Community State Bank is, as of late November, one of just 74 originators integrated with the MERS eRegistry—nationwide.

“Community State Bank has put their customers’ needs at the forefront by implementing our automated, end-to-end lending platform,” said Dominic Iannitti, President and CEO at DocMagic. “We provide our clients with an agile and technology-forward mortgage process that ensures they can sustain and scale critical business processes.”

Customers have praised the new digital process. Gary Strand, who recently closed a mortgage with Community State Bank, noted, “Our experience was very simple from start to finish. Having the option to close our loan online shows they are willing to accommodate their customers’ needs and busy schedules while also keeping safety in mind during the pandemic.”

Related Content:

• DocMagic, VirPack integrate platforms (10/1/2020)
• DocMagic teams up with Simplifile to facilitate eClosing adoption (7/27/2020)
• MortgageCountry closing loans in 13 days using DocMagic solutions (7/21/2020)

Homeowners have adapted well to eSignings and remote closings and are very satisfied with their overall closing experience, according to a new national survey of people who bought and refinanced homes during the COVID-19 pandemic.

“As we’ve seen throughout 2020, this crisis is accelerating adoption and acceptance of e-transactions, and when things return to normal, eSigning and eClosings will be the new normal,” said Bob Jennings, CEO of ClosingCorp, a residential real estate closing cost data and technology firm, which sponsored the survey.

The survey comprised phone interviews with 691 borrowers nationwide who had conducted a mortgage transaction between March 15 and Aug. 31. Among the respondents, 15% were homebuyers, 79% were refinance customers, and 6% were both. About 35% were first-time homebuyers.

The findings included:

• 95% of borrowers said their closings were efficient and 90% said they were satisfied with their closings. Most of the transactions involved eSigning and remote closings.
• 89% of homebuyers and 84% of refinance customers eSigned either their disclosure, closing documents, or both.
• 55% of the surveyed borrowers said their closings were conducted remotely and not in traditional locations, such as a title company or lender’s office.

The borrowers who were less comfortable with remote closings were older (age 55 and up).

The results bode well for the mortgage industry’s trend toward digitization. More than two-thirds of survey participants say that for future transactions they’d prefer remote closings to in-person closings, and 82% reported that they prefer eSigning documents prior to closing.

DocMagic's Director of Enterprise Solutions Chris Lewis said the survey results are a positive sign for the industry: “It’s unfortunate that it took a pandemic to move the adoption curve in the right direction, but ultimately, it’s going to serve the mortgage industry well by further automating the paper-based processes of yesteryear that were hampering business-to-business as well as business-to-consumer efficiency."

DocMagic provides a full suite of digital mortgage solutions, including eSignatures and Total eClose, a comprehensive solution that enables a 100% paperless eClosing process from start to finish.

The study was jointly designed by STRATMOR Group.

“Despite the disruption caused by the pandemic and the workarounds that the lending and title companies have had to quickly put in place, borrowers continue to be satisfied with the mortgage closing process,” said Jim Cameron, Senior Partner at STRATMOR Group. “It suggests that the more electronic—or ‘e’—each step in the process becomes, the higher the satisfaction.”

Related Content:

• Benefits of remote online notarization (RON) can't be overstated (10/22/2020) 
• CFPB's 5-year TRID assessment produces mixed results (10/15/2020) 
• Ginnie Mae, 3 FHLBanks start accepting eNotes (8/5/2020) 

Remote online notarization (RON) eClosings have been on the rise during the age of COVID-19, as they’re seen as the safest closing option during a time when social distancing is paramount.

“It’s the nirvana of every stakeholder’s closing experience because the borrower can join the eClosing from the comfort and, more importantly, the safety of their home,” said DocMagic Senior Account Executive Leah Sommerville.

However, RON eClosings include several other benefits which make them an increasingly popular choice in the mortgage industry, regardless of whether there’s a pandemic taking place.

1. It’s easier for borrowers to review closing documents.

With RON and other forms of eClosings, borrowers typically receive all documents before the closing, giving them plenty of time to review the entire closing document package and raise any issues.

“If you’re a first-time homebuyer, it can be intimidating to show up and be expected to sign a stack of documents that you’ve never seen before,” Sommerville said. “Even seasoned borrowers can be intimidated by the in-person closing session. eClosing provides borrowers the opportunity to review all of their closing documents in advance and contact their lender, settlement agent, attorney, or even parents if they have any questions."

2. Lenders can spot mistakes sooner.

In the paper world, lenders often email their loan documents to their business partners (e.g. the title agency, settlement agent, or attorney for review) and then wait for the closing package to be mailed back with title documents added—which the lender unfortunately won’t see until they get the closing documents back with all the signatures.

“Often, lenders receive returned closing packages with signatures or documents missing,” Sommerville said. “No one wants to send a mobile notary to revisit the borrower because the original notary’s signature is missing or the notary stamp is smudged. These issues are eliminated with any version of eNotarization and eClosing.”

Such mistakes also compound the negative effects, Sommerville noted, with more fees incurred as the lender continues to hold the note, unable to sell it to the secondary market until these issues can be resolved.

3. Settlement agents stay involved.

A common misconception about RON is that it takes control of the closing out of the settlement agent’s hands. With RON, the settlement agent can still be involved in the eClosing and signing session.

Some RON providers will allow the settlement agent to join the session as an observer. Additionally, both the settlement agent and the lender, who aren’t required to be present for the closing, can log into the eNotary platform and see when the closing is scheduled, which increases transparency for all stakeholders.

4. There’s built-in protection and compliance.

RON laws have a variety of requirements to protect stakeholders. For example, the eNotary must have a record of the ID validation (most commonly knowledge-based authentication and credential analysis), which confirms that the borrowers’ identity is valid and not fraudulent. DocMagic and our electronic notary partners can conduct these ID validation requirements with the borrower on behalf of the lender.

Most states also require that video of the RON closing session is stored, usually for 10 years. Florida even requires the video to be stored in two locations.

Additionally, the documents must contain tamper-evident seals. DocMagic’s eSignature platform applies a time- and date-stamp as soon as the borrower eSigns, with a tamper-evident seal on each document. If a document is modified post-closing then the signatures are voided, according to Sommerville.

“RON is the greatly needed improvement to the current in-person, paper notary closing process because of the enhanced borrower experience, reduction of errors, increased transparency, and confirmation of compliance,” Sommerville said.

Related Content:

• 5 key questions about ID validation during RON (8/12/2020)
• RON update: Lots of forward momentum—but also a setback (6/26/2020)
• RON vs. RIN (remote ink-signed notarization): What's the difference? (6/10/2020)

The pandemic has forced a lot of change in a short amount of time in the mortgage industry. DocMagic's Director of Enterprise Solutions, Chris Lewis, shares his insight about eClosings in the age of COVID-19. (Note: This interview has been adapted from in the August edition of The MORTGAGE BANKER magazine.)

Things are moving so fast with the uptick in lender rush to perform eClosings that we’ve never been busier here at DocMagic. Whereas over the years eClosings were slowly but surely moving toward greater marketplace adoption, the rapid onslaught of COVID-19 absolutely sped things up virtually overnight. Add unprecedentedly low rates into the equation—sparking a refi boom—and things have hit a level of adoption that is on turbo with eClosing and dynamic document generation usage.

2. During the pandemic, has DocMagic had to make any adjustments to the way it handles eClosings and remote online notarization (RON)?

DocMagic has been doing eClosings for years—long before the term became a catchy buzzword. Furthermore, before the term “digital mortgage” caught on, we were busy automating eMortgage processes, which was the same thing. With respect to where we were at during the pandemic, the main adjustment we made didn’t have anything to do with the technology; we mastered the solution long ago. We just had to start implementing and training lenders on our Total eClose platform remotely, as the country was and still largely is under work-from-home orders depending on the state the lenders operate in.

Chris Lewis: Don't rush to implement RON; take these 3 steps instead

We worked diligently to arrive at a remote onboarding model that effectively supports distance-based implementations involving multiple teams and parties—all performed remotely. We quickly perfected implementing, training, and fully onboarding new clients remotely, to the point that once implemented, the lenders were off to the races and performing eClosings with ease and efficiency.

It’s tough enough for companies to turn on a dime and establish a work-from-home infrastructure due to a rapidly spreading pandemic. From an operations management perspective, our client services team did an amazing job transitioning to functioning virtually while simultaneously coordinating an influx of new client implementations—also done virtually.

3. What are the less-obvious advantages to using eSignatures and RON to close a mortgage loan?

The use of eSigning gives both lenders and borrowers greater transparency and control of the overall process. Borrowers can easily access and sign documents within a secure digital environment. It’s fast, easy, and completely trackable. The detailed traceability of eSignings enables lenders to more effectively manage the workflow from anywhere and store signed documents securely with an encrypted, tamper-proof seal. This helps in two key areas, as paper-based wet signatures are much tougher to track and access, especially as loans exchange hands on the secondary market and are then serviced.

First, it helps tremendously with ensuring compliance and that the data on every single document is accurate and consistent; it’s also easy to demonstrate proof of compliance in the event of an audit. Second, it helps prevent instances of fraud, especially when the loan file, data, and documents are all stored in a GSE-certified eVault.

When it comes to remote online notarizations, the convenience and enhanced speed gained in signing documents requiring notarizations are immeasurable. What’s more, use of RON technology fills the final void in establishing a 100% paperless closing process. The hybrid model has almost become mainstream. Borrowers are now expecting that option. Moving forward, lenders should always be focused on offering a fully paperless option for borrowers to take advantage of in the states that permit it.

4. In the pandemic environment, is compliance tougher or the same where eSignatures and RON are concerned?

A lot of states have different rules behind the acceptance of RON technology. For example, some require an attorney to be present and some do not. Some states didn’t offer RON at all but were considering it. So it has always been something that vendors need to stay on top of.

The pandemic resulted in a huge spike in the need for RON technology due to social distancing requirements and borrowers’ fears of contracting the virus. Consequently, many states started implementing emergency measures to help notaries do their jobs safely and effectively. However, some states haven’t implemented RON guidelines, or had stopgap measures which prevented fully leveraging RON technology, or offered some lower-tech alternatives to RON such as remote ink-signed notarization (RIN).

Like with RON, RIN permits notaries to use videoconferencing technology to legally notarize documents remotely. However, it requires actually wet-signing paper documents as opposed to utilizing eSign and eNotary technology. So the RON vs. RIN difference adds a bit more confusion to the already constantly changing and complicated state regulations. Some states allow RON, some allow RIN, and others allow both. In that regard, it just requires more attention to what the states are doing. But that’s the technology provider’s job to worry about, not the lender.

5. Are eSignatures and RON the new norm for the mortgage industry?

Yes. Like work-from-home orders essentially serving as a giant case study that proved the telecommute model actually works, the same goes for eSignings, RON, and eClosing technology. It works, and it works very well. It’s just unfortunate that it took a pandemic to move the adoption curve in the right direction. But ultimately, it’s going to serve the mortgage industry well by further automating the paper-based processes of yesteryear that was hampering business-to-business as well as business-to-consumer efficiency.

Related Content:

• Ginnie Mae, 3 FHLBanks start accepting eNotes (8/5/2020)
• MortgageCountry closing loans in 13 days using DocMagic solutions (7/21/2020)
• RON update: Lots of forward momentum—but also a setback (6/26/2020)

Brian D. Pannell, DocMagic’s Chief eServices Executive, has been named one of the inaugural winners of the Thought Leader Award by the PROGRESS in Lending Association. Only 30 people across the entire mortgage industry received this honor.

One reason Pannell received the honor was due to his forward thinking on eClosings. He has long been a proponent of the digital solutions in the mortgage industry.

Pannell points out that many key barriers to eClosings appear to be coming down. In the past the most restrictive barrier to adoption has been the limited amount of investors and financial support of the eMortgage as a tradeable commodity, but Ginnie Mae and FHL Banks have announced that they’re opening up the market to lenders who didn’t have anyone to sell their eNotes to and will fund them in the secondary market.

Additionally, Pannell notes, there has been groundbreaking movement at the federal and state levels to accept eNotarizations, which is a game changer when it comes to being able to complete the entire eClosing package electronically.

Related Content:

• DocMagic offers free version of its eSign technology for non-mortgage uses (6/1/2020)
• Pandemic leads to growing acceptance of eClosings: News source (5/21/2020)
• New AutoPrep tech accepts docs from ANY provider for paperless eClosings (4/3/2020)

The coronavirus pandemic has led to wide-ranging industry acceptance of eMortgages, eNotes, and digital closings, according to a recent article in National Mortgage News (subscription required).

Even before the pandemic, eMortgage transactions were on the rise. In April 2019, the MERS eRegistry saw 8,338 eNotes registered; by March 2020, that number had shot up to 24,519, an all-time high.

To learn road-tested eClosing strategies you can implement now, join our free webinar on May 27.

Since then the momentum has swung even more toward eClosings. Since March at least 20 states have taken emergency action to allow temporary remote online notarization (RON)—considered crucial in the age of social distancing—joining 23 states with permanent RON laws on the books. At the same time lenders are rushing to implement systems that utilize RON and electronic documents. 

DocMagic Chief eServices Executive Brian Pannell noted that DocMagic can have clients set up for hybrid eClosings (including eSign and ancillary documents) in as little as 24 to 48 hours.

“Key to implementing a smooth e-close process is ensuring the lender's workflow is well thought out ... which we hold our clients' hands in doing," he told National Mortgage News. "That includes ensuring all docs are e-enabled and leverages a single-source platform with both hybrid and RON capability. We can implement a completely digital and fully paperless total e-close in 17 days, and e-enabled dynamic docs is critical to that."

To learn more, read the article (subscription required).

Related Content:

• Improving the Loan Process With eNotes
• New support for power of attorney (POA) transactions amid COVID-19 (5/7/2020) 
• Amid pandemic, states boost access to remote online notarization (RON) (4/17/2020)