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.)

1. About what percentage of mortgage closings were 100% paperless before the pandemic compared to now?

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.

“Why are we launching this new award you might ask? Because we live in unusual times,” the association stated. “The impact of COVID-19 shows us that it’s time to think outside of the box so we can move forward as a country and a world. … We need thought leaders that are not afraid to step forward and blaze a new trail. We need creativity. We need bold new ideas.”

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.

Lenders “need solutions that are not only complete but also flexible enough to meet the needs of their partners. eClosing solution providers must push innovation forward so that they can adapt to their lender loan requirements on a per-transaction basis. The onset of alternative notary solutions (e.g. in-person electronic notarization, remote online notarization, remote ink-signed notarization, drop-off notarization, drive-by notarization, etc.), eSign offerings (e.g. power of attorney) and being able to electronically record documents at the county level, require solutions providers who can do it all,” he continued.

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)

eClosing just got a lot easier because DocMagic’s new AutoPrep technology can convert ANY document from ANY lender into a compliant e-enabled document that’s ready for electronic signature inside our eClosing platform.

One of the drivers behind the development of AutoPrep was a 2019 independent technology survey of the mortgage industry conducted by STRATMOR. It ranked DocMagic’s Total eClose™ solution as the No. 1 eClosing platform for market share, overall satisfaction, and Lender Loyalty Score®. 

We felt that it was critical for us to be able to work with any lender to ingest any document—and that’s exactly what AutoPrep does, allowing our Total eClose™ platform to accept documents, even non-e-enabled documents, from any source.

How does AutoPrep work?

This technology can transform any standard document or PDF, even partially e-enabled ones, into a fully e-enabled document in seconds. It uses artificial intelligence, OCR, and machine learning technologies to scan and parse documents, locate all signature and notary regions, and then electronically tag them for eClosing. As a result, lenders can use loan documents produced by virtually any document provider with our Total eClose™ platform.

AutoPrep can also:

• Learn the nuances of specific documents and adjust accordingly going forward.
• Identify whether signatures are improperly placed or missing.
• Find e-tags placed by other providers.
• Read documents that have been partially, but not fully, converted into e-enabled documents.

In addition, AutoPrep can identify situations that are outside the norm and flag documents for personnel, saving them the time and trouble of having to comb over every page of a document package.

While eClosings are known to be more efficient and compliant, they aren’t nearly as common in the mortgage industry as they should be. One reason is because some lenders are tied to systems that don’t produce e-enabled documents. With AutoPrep, we’re pleased to say that roadblock is removed.

Docmagic

 

Providing borrowers with a simple, streamlined eClosing process is critical in today’s competitive mortgage industry. From a borrower standpoint, eClosings can add convenience and improve the overall customer experience. For lenders themselves, they equal faster funding, greater flexibility, and better loan quality. Additionally, they also allow for quicker delivery to the secondary market.

Brian Pannell on the keys to successful digital implementation

Providing borrowers with a simple, streamlined eClosing process is critical in today’s competitive mortgage industry. From a borrower standpoint, eClosings can add convenience and improve the overall customer experience. For lenders themselves, they equal faster funding, greater flexibility, and better loan quality. Additionally, they also allow for quicker delivery to the secondary market.

Still, enabling eClosing is complex, and it takes the right partners — both up-front and downstream — if you’re going to do it right. HousingWire's Sarah Wheeler sat down with Brian Pannell, senior implementation executive at DocMagic, to find out how lenders are navigating these complexities and how DocMagic can help.

Q: What do lenders need to get started?

Brian: The first step is to have a clear picture of your loan lifecycle. To understand this, you need to know who will be funding your loans, who will service them, and who you’ll eventually sell them to.

If you’re planning to outsource any of these steps in the loan process, then you’ll need to know up-front and early on who those partners will be, as well as what technologies and capabilities they have at their disposal. Ultimately, they’ll need to be an integrated part of your loan system, with the ability to communicate securely, share and access borrower documents, and transfer eNotes securely.

Q: What technologies will I need to begin eClosings?

Brian: The most important technology you’ll need is a comprehensive, start-to-finish eClosing platform. The platform needs to take a loan from initial application, allowing you to upload or digitize existing documents for signature, all the way through the closing process, final notarization, and eventually, storing the loan, registering it with MERS, and delivering it to your secondary investor.

It sounds like a lot, but there are platforms out there can do it. It’s just a matter of finding the right platform, as well as a title company that’s accustomed to working within that platform on a daily basis. Your title company and your technology provider are your all-stars when it comes to your eClosing team. Choose them wisely.

Your eClosing platform should allow for:

Digital delivery of documents - You should be able to upload or integrate your existing documents, as well as auto-recognize and enable e-signature fields on them.
Pre-closing collaboration - The platform should allow consumers to view and sign initial documents and collaborate with their title company, the lender, and their attorney, if necessary.
Fully online closing procedures - Borrowers should be able to eSign their documents and have their closing paperwork notarized in a fully digital landscape. You should also have the ability to scan and digitize wet-signed papers, as well as register the eNote on MERS.
Post-closing wrap-up - Once closing is over, borrowers should be able to access their closing documents remotely. The platform should also allow for storing the loan via eVault and transferring the loan to the secondary market.

Q: What is one of the common hurdles many lenders encounter when implementing eClosing?

Brian: Once you have the technology in place, there are still a few hurdles that can hold up your eClosing efforts. One of these is that eNotary and eRecording services may not be an option, depending on where your borrower is located.

Nearly 2,000 U.S. counties currently support eRecording, covering about 85 percent of the population, but still, there are pockets where this process is not allowed. There are also 15 states that don’t currently allow eNotary services. Keep this in mind as you move to implement your eClosing efforts and as you communicate with borrowers about their digital expectations.

Despite this, we expect the eNote movement to continue growing across the country. Just this year, the industry has originated nearly 40,000 eNote-based loans, accounting for more than $8 billion borrowed. That marks a 200-percent jump in just the last few years. With more counties, states, and lenders entering the space at breakneck speeds, those numbers are poised to grow exponentially in the years to come.

Q. What are some critical implementation requirements organizations often underestimate?

Brian: What is oftentimes overlooked is the unwavering commitment lenders need to have to eClosing adoption. The directive to provide eClosings should come from the C-suite and trickle down to the operational level. When it does, executives, operations and loan officers are all kept on the same page. The motivations for each party may differ but the main goal remains the same.

During successful digital implementations, every key player involved realizes that this is transforming the business process, not just a sales cycle event. Management should also understand that going through the change in processes comes with possible bumps in the road but shifting to new vendor partners will ultimately provide a more efficient and better workflow — resulting in a better borrower experience.

Learn more about DocMagic's seamless and compliant digital platforms for completely paperless eClosings.

TORRANCE, Calif., March 29, 2019— DocMagic, Inc., the premier provider of dynamic loan document preparation, automated regulatory compliance and comprehensive eMortgage solutions, announced that HousingWire has honored the company with the HW TECH100™ award for the sixth year in a row.

Since launching the Tech 100 awards in 2014, HousingWire has been recognizing the companies that continue to push the edge of innovation and move markets forward. From startups to technology giants, the award focuses on a wide range of organizations in the U.S. housing economy, spanning real estate, mortgage lending, mortgage servicing and investments.

HousingWire named DocMagic an early winner, crediting the company’s suite of interconnected digital solutions with streamlining communication, collaboration and the compliant exchange of data in real-time throughout the lending process. DocMagic’s solutions benefit entities across the digital mortgage ecosystem, enabling seamless connectivity between borrowers, originators, lenders, warehouse lenders, custodians, settlement providers, investors, servicers, GSEs and other relevant parties.

“Innovation is a core pillar across our organization. It’s important to us that we consistently deliver proven technology solutions that move the mortgage industry towards a paperless digital mortgage process,” says Jonathan Kearns, SVP of technology solutions at DocMagic.

“At the same time, we will always provide our customers with tools to keep them compliant. We believe our proven, single-source, end-to-end digital mortgage solution offer some of the most innovative and impactful technology within the housing industry and we’re thrilled that DocMagic’s ongoing efforts were recognized by HousingWire with a 2019 HW TECH100 award.”

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About DocMagic:

DocMagic, Inc. is the leading provider of fully-compliant loan document preparation, compliance, eSign, eDelivery and eMortgage solutions for the mortgage industry. Founded in 1987 and headquartered in Torrance, Calif., DocMagic, Inc. develops software, mobile apps, processes and web-based systems for the production and delivery of compliant loan document packages. The company’s compliance experts and in-house legal staff consistently monitor legal and regulatory changes at both the federal and state levels to ensure accuracy. For more information on DocMagic, visit https://www.docmagic.com/.

About HousingWire:
HousingWire is the nation’s most influential industry news source covering the U.S. housing economy, spanning residential mortgage lending, servicing, investments, and real estate operations. The company’s news, commentary, magazine content, industry directories, and events give more than one million industry professionals each year the insight they need to make better, more informed business decisions. Winner of numerous awards, including a 2012 Eddie Award for national editorial excellence in the B2B Banking/Business/Finance category, HousingWire has been recognized for excellence in journalism by the Society of Business Editors and Writers, the American Society of Business Press Editors, the National Association of Real Estate Editors, and Trade Association Business Publications International. Learn more at https://www.housingwire.com/.

 

TORRANCE, Calif., Aug. 15, 2019—DocMagic, Inc., the premier provider of fully-compliant loan document preparation, regulatory compliance and comprehensive eMortgage services, announced that INTEGRA Software Systems (INTEGRA) will offer the company’s document preparation solution to their client base via an integration with INTEGRA’s new LOS, EPIC.

Recently, some of INTEGRA’s clients began transitioning from its legacy LOS version, converting to its new multi-browser based LOS, EPIC. New INTEGRA clients have been implementing EPIC, integrated with DocMagic’s solutions, with great success.

The partnership gives lenders the ability to leverage DocMagic’s end-to-end document production, preparation, delivery and automated compliance service as a fully embedded integration within EPIC. This includes the ability for borrowers to conveniently and compliantly eSign all documents required to meet state and TRID-based disclosures, eliminating paper and optimizing the document process from initial disclosures through closing.

“INTEGRA is a long-time, trusted integration partner of DocMagic and we are pleased that they are introducing our end-to-end document preparation solution to their lenders utilizing the EPIC LOS,” commented Steve Ribultan, director of business development at DocMagic. “In a margin compressed business environment, this is of particular importance as lenders are better able to manage their costs using an all-in-one solution.”

“We are pleased to make available DocMagic’s services with this robust end-to-end integration to an influx of new clients purchasing EPIC,” stated Michael Picker, senior vice president of sales and marketing at INTEGRA. “Through our LOS, we are able to efficiently provide borrowers with the Loan Estimate (LE), ability to eSign every document, produce an accurate Closing Disclosure (CD), service transfer packages, and offer DocMagic’s Compliance Edge updates.

Interested parties can learn more about the integration and single solution offering by contacting a representative at INTEGRA:  (877) 253-7779, sales@integra-online.com, or by visiting www.integraloantech.com.

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About DocMagic:

DocMagic, Inc. is the leading provider of fully-compliant loan document preparation, compliance, eSign and eDelivery solutions for the mortgage industry. Founded in 1987 and headquartered in Torrance, Calif., DocMagic, Inc. develops software, mobile apps, processes and web-based systems for the production and delivery of compliant loan document packages. The company’s compliance experts and in-house legal staff consistently monitor legal and regulatory changes at both the federal and state levels to ensure accuracy. For more information on DocMagic, visit https://www.docmagic.com/.

 

About INTEGRA Software Systems:

Established in 1996 and headquartered in Franklin, Tennessee, INTEGRA Software offers a powerful, web-based loan origination solution, EPIC, to address challenges within Mortgage Lending for retail, wholesale and correspondent lenders. EPIC spans point-of-sale to post-closing and secondary market for lenders interested in efficiencies gained by automating every step of the mortgage loan workflow. For more information about INTEGRA Software Contact:  (877) 253-7779, sales@integra-online.com or by visiting www.integraloantech.com.

 

Media Contact:
Joe Bowerbank
Profundity Communications, Inc.
949-378-9685
jbowerbank@profunditymarketing.com

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Featured in HousingWire's eClose Solutions Special Report

[HousingWire] The industry shift to eMortgages and eClosings are no longer a future vision for mortgage companies, options are available now and home buyers want access to them.

Although implementation is easier than one would think, lenders need the right tools, partnerships and trusted advisors to help accelerate them into a fully digital mortgage — all while maintaining compliance, operational efficiency and exceptional customer service. Lenders One, a leading cooperative for 220+ mortgage bankers nationwide, delivers a complete eClosing solution for borrowers, lenders and investors.

“Our eClosing technology is at the center of a growing eMortgage evolution,” said Lenders One President Brian Simon. “Our seamless connectivity to e-ready partners can accelerate your move into eMortgage.”

Lenders One platform, L1 eClosing by DocMagic, is a true all-in-one, end-to-end eClosing solution that helps enable first generation data to be recorded and delivered in a fully electronic environment.

Learn more about our suite of eSolutions

This eClosing solution also helps keep pace with the ever-changing legal and regulatory requirements.

In addition, Lenders One advisors help users design and deploy a rollout strategy inclusive of testing, training and settlement and referral partner alignment, extending support far beyond implementation.

Lenders One members receive a number of exclusive L1 eClosing benefits:

• Negotiated pricing and single-price bundles
• White-glove service at implementation and beyond
• Managed relationships across a network of eMortgage-ready investors, warehouse lenders, title companies and servicers
• Dedicated user groups for best-practice sharing with peers
• Lenders One has an eClosing industry expert leading members’ eClose journey with consultation that is unique to the industry and free with the L1 eClosing solution

L1 eClosing integrates with all major LOS platforms for loan document creation in minutes, with zero re-keying. Users can get started with a hybrid or full eClosing solution that supports Remote Online Notarization (RON), where legally permitted. The solution also leverages an extensive library of state-specific documents enabled with eSign technology.

For eNotes, the solution provides Lenders One eNotary Technology, available for all 50 states and a support team monitoring eNotarization legislative changes to help keep users compliant at all times.

In addition, it generates a MISMO SMARTDoc eNote and offers direct connectivity with the MERS eRegistry.

Lastly, L1 eClosing provides a secure, certified eVault for long-term storage and eDelivery to warehouse banks and investors. The platform contains a date and time-stamped audit trail to help demonstrate compliance and tamper-evident seals to help ensure data integrity.

“L1 is your eClosing partner from idea to implementation to rollout and beyond. We’ll provide the support and counsel from Lenders One at every step of your eClose journey,” Simon said.

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Featured in HousingWire's eClose Solutions Special Report

[HousingWire] A growing wave of digital adoption is quickly transforming into the new standard, motivating more companies to take the leap and invest in robust technology solutions. As customers experience innovative technology in other industries, they’re starting to demand that from the mortgage industry. While ease of use and convenience are helping to fuel this growth, increased efficiency, reduced costs and enhanced compliance are also major contributing factors, supporting both consumers and businesses.

As this digital shift sweeps through the mortgage industry, DocMagic, which provides some of the most powerful and widely used solutions in the mortgage space, continues to deliver new forward-thinking innovations, including Total eClose, an end-to-end eClosing system that provides everything a company needs for a 100% paperless eClosing.

The seamless digital workflow includes all hybrid eClosing options and is comprised of DocMagic’s comprehensive suite of eSolutions, leveraging SMARTDoc eNotes, in-person and remote online eNotary options, Certified eVault and Investor eDelivery technology.

Learn more about our suite of eSolutions

“We’re positioning our customers for an inflow of new business that will be conducted digitally,” DocMagic CEO and President Dominic Iannitti said. “Once customers understand the true value and savings to be found in aligning with our single-source platform, they realize that offering an incomplete or cobbled-together digital process may leave them hitting the restart button within 12 to 18 months... and searching for a new solution.”

Borrowers can preview loan documents and disclosures prior to closing and electronically sign documents, putting the power in their hands. Total eClose is also intuitively designed to consume data and documents from any source, allowing the system to e-enable and auto-prepare third-party documents not produced by DocMagic.

“Our Total eClose system helps companies provide unparalleled customer service in the new tech-driven world, reducing borrower time at the closing table to as little as 15 minutes,” said Brian Pannell, Senior Implementation Executive.

DocMagic partners with companies to develop a strategic technology plan, so they are best equipped to go to market, easing the user adoption process and providing invaluable eMortgage expertise. Businesses can then close loans faster, compliantly and at a lower cost, with more control and accountability, removing the risk of potential surprises that can create delays at the closing table.

“Total eClose offers a true eClosing solution that involves no paper whatsoever, ensuring accuracy and delivering newfound efficiencies for borrowers, notaries and settlement providers.

“The system allows lenders to focus on increasing market share, making the loan process easier and helping create a superb overall experience,” said DocMagic’s Director of Product Development Michael Morford.

Learn more about DocMagic's seamless and compliant digital platforms for completely paperless eClosings

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Dominic Iannitti, President and CEO
As DocMagic’s visionary leader, Dominic Iannitti influences an empowered environment where the entrepreneurial spirit is cultivated. Iannitti founded DocMagic with a commitment to provide the mortgage industry with superior solutions and services that would reduce and eventually eliminate the use of paper. More than 30 years later, that vision continues to inspire the work behind DocMagic’s full enterprise technology stack.

Brian Pannell, Senior Implementation Executive DocMagic’s Senior Implementation Executive Brian Pannell is responsible for all post-sales activities for customers who are adding eMortgage (eSign, eNotary and eVault) as well as post-closing (MERS eRegistry) technologies and efficiencies to their business models. Pannell has initiated industry-leading implementation processes for DocMagic’s entire suite of eSolutions.

Michael Morford, Director of Product Development DocMagic’s Director of Product Development Michael Morford is responsible for the development and implementation of technology solutions. He oversees software development, server management with overall responsibility for the development of interfaces with third-party Loan Origination Systems, Electronic Document Management platforms, and other mortgage service technology providers.

 

Subscribers to our Compliance Newsletter already know that more and more states continue to pass laws that support electronic notarization which the mortgage industry now relies on to perform electronic loan closings. But considering those laws, and thinking about how a lender can begin to add electronic closings to their portfolio of services, it is helpful to think about the various types of electronic closings that can be done. These range from a fully electronic closing to various forms of ‘hybrid’ electronic closings (also “hybrid e-closing”).

So, what are these types of closings?

Hybrid E-Closings

A hybrid electronic closing simply means that part of the closing is performed electronically while other parts remain paper-based. What part is performed electronically may vary based on the state law’s support of electronic notaries, or simply the technology available to the lender.  

The easiest hybrid e-closing to complete is one where the documents requiring a notary are still paper-based and other documents not requiring a notary are signed electronically using a standard eSign platform such as those used for initial disclosures. In this case, the security instrument and other notarized documents are printed on paper as in a standard closing while other disclosures, and possibly the Note are sent to the borrower via an eSign platform and signed in the closing agent’s office either right before or right after signing the notarized documents on paper. 

Another form of hybrid e-closing is where the note is signed on paper, but all notarized documents and all other documents are signed electronically. This may be helpful for a situation where the loan will be sold to an investor who does not accept an electronic note.

Fully Electronic

Of course, the fully electronic closing, without any use of paper, is the ultimate goal of any move to support e-closings, but even here, there are still options. Some states have passed laws supporting simple electronic notarizations. These allow a notary to use an electronic platform to apply their signature and seal, after verifying the borrower’s identity and signatures in person.  

Many states have passed laws allowing for remote notarizations which take electronic notarizations a step further.  In a remote notary situation, the notary and the borrower need not be in the same physical location but can use two-way audio-video communication to satisfy identity and signature verification requirements. States are striving to make remote notarization safe and reliable by establishing strict requirements for ID verification, tamper proofing and document retention. Remote notarization has been available since 2012 under Virginia law, and is now also available in Montana, Texas, Nevada, and Minnesota.

Regardless of the flavor, borrowers and lenders can save time and make the closing process a more enjoyable experience.

Learn more about DocMagic's seamless and compliant digital platforms for completely paperless eClosings