Lenders are finding there are a host of upsides to eClosings — and their post-closing departments are reaping some of the main benefits.  

In a series of recent webinars, DocMagic clients reveal three key reasons that their post-closing departments prefer digital closings, and especially eNotes (electronic promissory notes):

1. No more time wasted hunting down missing signatures or initials.

This is actually a benefit with any eClosing, including basic eSign Hybrids that produce paper promissory notes.

“The post-closing department, previous to eClosings, had to scrub every document for accurate signatures. For some reason, borrowers just simply could not find the exact same name on every document,” said Chrissy Brown, COO at Atlantic Bay Mortgage Group, which has branches in nine states. “Did they miss a date? Do we have to go back and get something re-dated? Anytime you replace that human element with an electronic or technological advancement, you definitely increase your accuracy.”

Watch the webinar: True Stories: Hybrid, eNote and RON implementation

Beth Eller, the vice president of mortgage services at North Carolina-based Truliant Federal Credit Union, agrees. “The efficacy of it from an operational standpoint is tremendous. There is no missed signature. There is no missed initial. You can't move forward in an electronic closing without hitting every single one,” she said. “So that post-closing follow-up becomes really a non-event as far as the closing package itself goes.”

2. Speed and simplicity: It’s faster and easier to deliver eNotes where they need to go.

A common refrain among the clients was how quick and simple it is after the closing to transfer the eNote. With the click of a few buttons, the eNote is immediately registered with the MERS eRegistry and then sent via instantaneous eDelivery to the eVaults of various participants (whether the lender’s own or downstream to investors and servicers).

Once the eNote is signed, said Stephanie Zinsmeister, senior vice president of operations at AnnieMac Home Mortgage, “Boom, it's in MERS and it's ready to be sold instantaneously without having to transfer it [among] five or six different hands and risk losing that note.”

Jeff Reeves, co-founder and CTO of Canopy Mortgage, which operates in more than half the states, agrees: “It’s this simple: literally when that package is signed and you have an eNote, I go to DocMagic’s console, I hit the button to transfer Control and Location to the warehouse bank, and then they go into their system and they hit the button to send it to Fannie or to PennyMac or to whoever’s going to buy that loan from us.”

Watch the webinar: Managing a successful eClosing initiative

Truliant’s Eller noted that the immediate delivery of the eNote easily shaves six to eight days off the servicing and backend process. Loans can be sold immediately. “It is a better delivery method than paper, any way you cut it,” she said.

Additionally, there’s less of the traditional back-and-forth that happens with a paper note.

“You have one place that you go to grab that package,” Zinsmeister said. “You don't have to wait for paper to come in. You don't have to wait for a title company to email it to you. Post-close, I can just go in there and grab that closed loan package.”

This speed and ease of delivery is why Atlantic Bay’s Brown wasn’t too concerned when in August 2020, Fannie Mae and Freddie Mac suddenly instituted a new Adverse Market Refinance Fee that added 50 basis points to most mortgage refinances.

“Luckily, that [fee] got extended, but in that moment, it was amazing to have that eNote capability … we were able to deliver a lot longer into the process than some of our competitors that didn’t have that [eNote] process, because we’re able to sell instantaneously,” she said.

3. Paper notes can be lost, while eNotes are impossible to lose or destroy.

Let’s be honest: Sometimes FedEx or UPS mess up.

As the lenders noted, with just a few clicks, eNotes are instantly sent where they need to go. With paper notes, however, lenders have to rely on a shipping company such as FedEx or UPS to deliver the note to the correct custodian. But this leaves room for human error, and many, many lenders know what it’s like to have the delivery service lose a note.

In April, UPS lost one of Canopy Mortgage’s paper notes. Usually in such a scenario, the borrower is willing to re-sign the note. Not in this case.

“This person was a real estate attorney and made a huge stink about the fact that he didn’t want to sign another note because it’d be a duplicate, and somehow, we were going to shaft him because we have two notes. ‘What if we found the other one?’ and on and on,” Reeves said. The borrower forced Canopy to draw up an indemnity document with their attorneys.

Despite that, the borrower still refused to re-sign the note. “So here I have this $400,000 note that, really, I can’t do anything with, because UPS lost it,” Reeves said. “If that shouldn’t scare you into wanting to do eNotes, then I don’t know what will.”

Related Content:

• Atlantic Bay surpasses 10,000 eClosings using DocMagic's Total eClose (5/25/2021)
• DocMagic client Truliant transfers FHLBank Atlanta's first eNote (4/15/2021)
• Ask the eClosing Team: What do lenders need to get set up for eNotes? (3/4/2021)

Welcome to Ask the eClosing Team, an ongoing series where DocMagic’s eClosing pros tackle real questions that we’re hearing from lenders. Today’s responses are supplied by eClosing Team member Ron Carrillo, who is also DocMagic’s Business Development Manager.

Why are eNotes better than paper notes?

An eNote is the electronic counterpart to the traditional paper promissory note, so it contains the same information (e.g. home address, loan amount, interest rate, etc.), though eNotes are electronically signed instead of wet-ink signed. On the screen, eNotes look like regular paper notes except that they contain language stating that they require electronic signatures, as well as language referencing eNotes.

“If you peel back the layer of what you are viewing, it is actually MISMO-compliant XML data,” Carrillo said. “This gives eNotes several advantages over paper notes.”

Ask the eClosing Team: What do lenders need to get set up for eNotes?

Here are some factors that give eNotes the edge over paper: 

• Unlike a paper note, it’s impossible to lose an eNote.

When Carrillo asks lenders if they’ve ever lost a paper note, he often gets this response: “Oh yeah. Oh my goodness, yes.”

Simply put, paper isn’t the safest or most secure option. When lenders want to sell a paper note, they have to send the original note via courier to an aggregator, the GSEs, or perhaps an end investor. “And they put hands on that package and pray, ‘Dear, God, don't let this one get lost,’” Carrillo said. “But it happens, and when it happens it's disastrous, because that note is the loan. It's the original, and now that you’ve lost the original, what do you do?”

“The security of an eNote is that you don't put an eNote into a package to be mailed off,” he continued. “It's an electronic document. It goes into the eVault and it can be transferred to the eVault of an aggregator or investor without sending it via courier.”

• The eNote process is simpler, saving time and labor.

After investors receive a paper note, someone has to manually run it through an optical character recognition (OCR) machine to scan it and copy the data. After that, someone also has to eyeball the data that's being copied off the note to confirm it's accurate. “That's a manual task and all of that takes time, right? And they can still make an error,” Carrillo said.

These manual processes, plus the fact that the paper note needs to be physically mailed, could increase investor acceptance time to as much as two weeks. With an eNote, which doesn’t need to be scanned because it is MISMO-compliant XML data, acceptance times are reduced to three to four days.

• Post-closing, paper notes can’t hold a candle to eNotes.

Don’t just take our word for it; you can hear from the lenders themselves why their post-closing departments love eNotes so much.

“There are lots and lots of reasons why an organization should really look at digitizing their mortgage process,” Carrillo said. “It will build efficiency, it will build a better borrower experience, and it will build greater security for their documents and their loans.”

Here are some other common questions about eNotes:

What exactly is an eNote?

Obviously, a paper note is made of paper. An eNote may look like a digital version of a paper note on screen, but it’s not just a scanned PDF version of a paper note.

eNotes are created in a specific file format: XML data. XML (Extensible Markup Language) is made up of text-based code and is one of the most common formats used to store and transport content online. XML stores data in a way that can be easily read by and shared between software applications.

What is a SMART Doc® eNote and why do I need one?

So an eNote is made up of XML data — but how do lenders know exactly what information that XML data should contain, or what format it should take?

Enter MISMO, or the Mortgage Industry Standards Maintenance Organization, a subsidiary of the Mortgage Bankers Association. As its name suggests, MISMO is the mortgage industry’s standards-developing body, and the SMART Doc is MISMO’s technical framework for electronic documents. “MISMO says, ‘This is the way your XML data should look and this is the format it should be in,’ and that's the standard that everyone in the industry has to work toward,” Carrillo said.

While MISMO’s standards are technically voluntary, the major investors — including GSEs Fannie Mae and Freddie Mac — will only purchase eNotes that adhere to the SMART Doc format. To conduct a full eClosing or to use DocMagic’s Total eClose solution, lenders need to be able to generate a SMART Doc eNote, Carrillo noted.

What’s a tamper-evident seal?

Once the eNote has been electronically signed, a tamper-evident seal is applied to certify its integrity.

What that means: It’s impossible for someone to secretly make changes to the eNote. Even if they attempt to make a small change, such as deleting a space and fixing a typo, it will leave evidence that a change happened. Once that seal has been applied, “No one can fiddle with the numbers and fudge something later on down the road. Whatever you see on that document electronically is what it is,” Carrillo said. “If someone were to break that tamper-evident seal, it would indicate that the documents are not fully represented the way they were when they were signed.”

But in the paper world, Carrillo noted, “You can take a note, put some white out on it, and make a change.”

Since there’s no original paper note, how do we know who owns the eNote?

With paper, it’s clear who owns the note: whoever physically possesses the tangible, original paper note (as opposed to a photocopy).

But since no physical form of an eNote exists, how is its owner determined? Especially since each time eNotes are transferred from one stakeholder to the next, a new digital copy is created.

The answer: While several copies of the same eNote may exist, only one is deemed the “authoritative copy” — and whoever has the authoritative copy is the current owner of the eNote.

After the borrower signs the eNote, it is placed in the lender’s eVault, which includes a notation that this version is the authoritative copy. In official parlance, the lender has “retention of the authoritative copy,” Carrillo said.

When the lender wants to transfer the eNote to an investor, they have to initiate a digital transfer of the control and location of the eNote. There are many investors currently using DocMagic's eVault to accept eNotes from DocMagic customers. After the investor accepts the digital transfer, the investor’s eVault will indicate that its eNote copy is now the authoritative copy. While the lender’s eVault may still contain a copy of the same eNote, it will state that it’s not the authoritative copy.

The MERS® eRegistry also notes whenever the control and location of the authoritative copy changes.

What’s the MERS eRegistry?

The MERS eRegistry is the system of record for eNotes; if lenders plan to sell their eNotes, then they need to be registered with MERS.

When the eNote is registered, MERS assigns it a hash — a digital “fingerprint” made up of a string of letters and numbers that uniquely identifies a computer file, or in this case, the eNote — to track an eMortgage throughout its life. The eRegistry identifies the controller (owner/holder) and location (custodian) of the authoritative copy and will also note whenever that changes.

The eClosing Team can be reached at eClosingTeam@docmagic.com.

Related Content:

• Did You Know: You can get all your eClosing needs met by one vendor? (6/16/2021)
• Ask the eClosing Team: What steps should lenders take to get set up for eClosing? (6/2/2021)
• Ask the eClosing Team: What do lenders need to get set up for eNotes? (3/4/2021)

Atlantic Bay Mortgage Group has processed more than 10,000 eClosings — including thousands of eNotes — with the help of DocMagic’s Total eClose solution.

A long-time DocMagic client, Atlantic Bay processed its first hybrid eClosing in 2018 and executed its first eNote in January 2020; by year’s end, the lender had registered more than 7,000 eNotes. As of May 2021, Atlantic Bay has surpassed 10,000 eClosings, representing more than 20% of all loans originated as paperless closings.

“More than anything, our success has been predicated on being early adopters of RON (remote online notarization) and eNotes, helping settlement agents become comfortable with DocMagic’s software, working closely with our warehouse lenders and investors to accept eNotes, and having a ‘just do it’ attitude toward eClosings with eNotes,” said Christina Brown, Atlantic Bay’s Chief Operations Officer. “All of the legwork that we performed before and in the early days of the pandemic helped us gain a lot of experience and we were able to execute thousands of eClosings. It’s now become a competitive advantage for us.”

This recent success makes Atlantic Bay a leader in the lending space.

“Atlantic Bay exemplifies an incredibly efficient lender that has made all the right moves to fully embrace digital lending and completely remove paper from the closing process with our Total eClose platform,” said Dominic Iannitti, DocMagic’s president and CEO. “When you put the necessary pillars in place like Atlantic Bay has, it paves the way to more scalable operations with paper-free eClosings at the heart of the workflow. … We’re excited to showcase them as a client that’s perfected the eClosing process.”

Total eClose allows lenders to implement every type of hybrid eClosing — including eNote and eNotarization options — as well as a 100% full eClosing. It offers an end-to-end paperless workflow that seamlessly connects every component of the closing process.

Brown said eNotes have been a boon for her company.

“From origination through closing, warehouse lending and onto secondary marketing, we’ve seen a tremendous upside to producing eNotes that has benefited us as a company, our staff and our customers,” she said.

Atlantic Bay has already been conducting eClosings with RON, but plans to increase its volume of RON closings. The lender reports that it has experienced increased accuracy; quicker turn times; strict compliance adherence; better secondary marketing sell-side efficiencies; more warehouse line liquidity; and a straightforward, speedy and pleasant closing experience for borrowers.

Related Content:

• DocMagic client Truliant transfers FHLBank Atlanta's first eNote (4/15/2021)
• DocMagic, Secure Insight partner to create national eNotary training program (3/18/2021)
• Community State Bank now offering paperless eClosings via Total eClose (11/23/2020)

North Carolina-based Truliant Federal Credit Union has become the first lender to transfer an eNote, or electronic promissory note, to FHLBank Atlanta. The move marks one of the first successful eNote transfers within the 11-member Federal Home Loan Bank system.

“This is the culmination of years of work by the state of North Carolina, FHLBank Atlanta and a dedicated team at Truliant,” said Todd Hall, Truliant’s president and CEO. “This final digital step makes the whole homebuying experience quicker, more accurate and secure.”

The transfer was conducted as part of FHLBank Atlanta’s eNote pilot program, meant to test the bank’s infrastructure and ensure that more lenders can report eNotes as collateral. Truliant, which serves more than 270,000 members at over 30 locations across the Carolinas and Virginia, was invited to participate in the pilot.

Learn why eNotes are a game changer for the mortgage industry

“Interest in the ability to pledge eNotes as collateral continues to grow among our members and this initial transfer demonstrates that we now have the ability to meet this growing demand,” said Rob Kovach, FHLBank Atlanta’s Chief Credit Officer.

Truliant completed the eNote transfer on March 26 using the MERS eDelivery system and DocMagic’s eVault — almost exactly a year after they completed their first end-to-end eClosing on March 27, 2020, via DocMagic’s 100% paperless Total eClose solution.

To conduct the transfer Truliant had to meet a series of standards set by the FHLBank system relating to eSignatures, eNote documentation, eRegistry requirements, eVaults and more. For example, the standards covered what processes Truliant has in place if the eNote should need to be modified or papered out, or if a loan goes into foreclosure, said Beth Eller, Truliant’s vice president of mortgage services.

“We had eNotes in our portfolio so we had the ability to collateralize a note with them,” Eller said. “FHLBank Atlanta is a great institution. We were just really honored to be asked to participate.”

eNote usage is skyrocketing. In 2020, there were 462,671 eNotes registered on the MERS eRegistry, which shattered the 2019 record of 127,178 eNotes. 

The individual members of the FHLBanks, the majority of which selected DocMagic’s eVault technology, are in disparate stages of accepting eNotes as collateral. FHLB Des Moines is the only other member to have completed an eNote transfer, while Chicago and Dallas announced in mid-2020 that they would begin accepting eNotes. Other members are still in various planning stages.

In 2020, Truliant became the first credit union and second financial institution based in North Carolina to offer full eClosings. 

“DocMagic was critical to our success and in being able to do eClosings,” Eller said. “Without DocMagic’s help, we would have really struggled to get eNote adoption as quickly and efficiently as we did. It’s been a real plus to have a partner that is engaged in your success and that really has a vested interest in making sure that things go well.” 

Related Content:

• Ask the eClosing Team: What do lenders need to get set up for eNotes? (3/4/2021)
• Relive some key mortgage industry milestones in 2020 (12/29/2020)
• Ginnie Mae, 3 FHLBanks start accepting eNotes (8/5/2020)

Welcome to Ask the eClosing Team, a new series where DocMagic’s eClosing pros tackle real questions that we’re hearing from lenders. Today’s response is supplied by eClosing Team leader Dan McGrew, president and CEO of Elite Digital Advisors.

What do lenders need to do to get set up for eNotes?

When a lender wants to produce eNotes, Dan McGrew says one of their first steps should be to get integrated with the MERS eRegistry, which is where the closed eNote will be registered (and ultimately transferred, if it’s sold to an investor down the line). This step could take some time. Lenders should follow the steps on this checklist to prepare for integration. They will also need to sign a MERS eRegistry Addendum, which includes additional terms and conditions related to their use of the eRegistry. After that, a MERS representative will reach out to the lender to continue the integration process.

Free article: Everything you need to know about eNotes

Lenders will also need to set up an eVault to access, manage, and store electronic files such as eNotes, and which can connect to the MERS eRegistry. There are several technology vendors, including DocMagic, who offer such eVault technology.

After that things get a little more complex: Lenders need all of their secondary partners to also be set up for eNotes. “One of the biggest challenges is, do their secondary partners participate in either the funding, servicing, or purchasing of electronic notes?” McGrew said.

Each stakeholder in the chain — including warehouse lenders, sub-servicers, and investors — needs to become a MERS member and to have their own eVault (though they can use different technology vendors for their eVaults. For example, Freddie Mac and the Federal Home Loan Banks system use DocMagic’s eVault technology, but Fannie Mae doesn’t).

Depending on the partner’s willingness to go “e,” getting secondary partners on board can be one of the more difficult parts of the process. McGrew says he usually asks the lender to introduce him to their current partners, such as their warehouse lender. He then reaches out to the warehouse lender, gives them a demo, answers their questions, explains the compliance requirements, and more.

“Once we take the mystery out of it, that typically does the trick,” McGrew said. “But a lot of times they’ll say they’re still not ready. So, in that case I have to go back to the lender and ask them, would you like me to introduce you to some other warehouse lenders that will fund eNotes and have an eVault? And typically, they’ll say yes.”

McGrew may also help lenders find new sub-servicers, investors, or aggregators who are either ready to offer eNotes or willing to do what it takes to begin offering them.

“I can have a lender that's fully committed and fired up to do eNotes, but if their secondary partners don't participate, that’s a big roadblock,” he said.

How long does the eNote setup process take?

That depends entirely on how prepared the lender and their secondary partners are. If the lender’s partners already have eVaults — or are willing to get one — and the lender plans to sell to an investor who already accepts eNotes such as Fannie Mae or Freddie Mac, then the whole process can move fairly quickly. After the lender signs their agreement with MERS, they need to conduct grid testing (the process of testing any eNote being closed), register the eNote with MERS, and then deliver it to the next partner in the chain.

“In an ideal world, from day one we could set them up, do the grid testing in a week and a half, and get them live to producing eNotes in a couple of weeks,” McGrew said.

However, that's rare because the secondary partners usually aren’t already ready for eNotes; it may take everybody a few weeks just to get set up with MERS. “If all the parties in the chain still need an eVault, or if the lender needs to find new partners willing to play ball, then we're looking at 45 to 60 days, at least, to get them set up to produce eNotes,” McGrew said.

The time factor is one of the benefits of choosing DocMagic as a technology vendor — the process can go a lot quicker with the help of experienced eClosing experts. “Our eClosing Team is going to help them get there,” McGrew said. “At DocMagic, we hold your hand like a fishing guide, to walk you through every step of the process."

What’s the main issue stopping more lenders from offering eNotes?

The biggest obstacle — bigger even than recalcitrant secondary partners — is that lenders need to shift their mindset away from the idea that paper is the be-all, end-all in the mortgage industry.

“About 85 to 90 percent of lenders still rely heavily on paper. They’ve spent all their time and energy trying to make paper processes more efficient,” McGrew said. “We’re introducing them to a totally new way of doing things, so the biggest challenge for them is committing to that new mindset.”

McGrew recalled a recent meeting with an investor where the head of the compliance department admitted to having a hard time understanding eNote concepts such as the “controlling location,” “authoritative copy,” and the fact an eNote has multiple copies. The executive said, “We're just accustomed to getting a paper note and taking our thumb and smudging the ink to make sure we have the original.”

During the pandemic, McGrew has seen a sharp uptick in lenders wanting to offer eNotes; however, he’s noticed that many back off when they realize the amount of effort involved.

“They didn't realize what they had to do with MERS, or that their secondary partners had to have eVaults.” he said. “When they discover that, it causes many of them to stop and say, 'We'll figure out a different solution and come back to this at another time.'”

McGrew encourages lenders to bolster their commitment to eNotes because the benefits — which include greater efficiencies and fewer errors — are worth the effort. One lender he works with has been producing eNotes for several months now, but McGrew recalled that when they first started the process, some internal stakeholders were slow to embrace it. He recently asked his contact at that company: “If you went to the folks on your team that were previously hesitant and said, ‘We're going to go back to the old way, to the pure paper process,’ what would be their reaction?”

She laughed and answered, “They would shoot me.”

The eClosing Team can be reached at eClosingTeam@docmagic.com.

Related Content:

• Paradigm shift: 4 key mortgage industry changes over the last year (1/27/2021)
• 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)

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)

2020 has been a year unlike any other—and that includes for the mortgage industry, which faced some of the biggest changes the industry has ever seen.

DocMagic has been tracking these momentous changes on our blog. As we say good-bye to 2020, we highlight some of the biggest mortgage stories of the year:

#1: The rise of eNotes

In 2019, there were over 127,000 eNotes registered on the MERS eRegistry. In 2020, through November, the number skyrocketed to over 407,000—a 264% year-over-year increase. At the same time, the number of companies transacting on the eRegistry rose 121%. It’s official: 2020 was the year of the eNote.

Another major event took place in 2020 that also pushed eNotes forward: After years of planning, Ginnie Mae and three members of the 11-member FHL Banks system began accepting eNotes as collateral. The other members will eventually follow suit.

“The fact that both are now accepting eNotes is crucial because it just introduced a whole new level of participants to the eNote world,” said DocMagic’s Chief eServices Executive Brian D. Pannell. “So, between the FHL Banks and Ginnie Mae, there are a lot of advancements in the ability to make those eNotes saleable.”

#2: The rise of RON

At the beginning of the year, 22 states had a remote online notarization (RON) law on the books. In 2020 another seven states jumped on board—Hawaii and Pennsylvania were the latest to enact a law—bringing the total to 29 states.

On top of that, a Senate bill was introduced at the federal level that would have allowed RON use nationwide (though it didn't pass), and several other states permitted RON for the first time ever—albeit via temporary emergency orders that were passed at the height of the stay-at-home orders. Many of the emergency actions have been repeatedly extended as the pandemic drags on.

As a result, RON transactions have increased 547% in 2020, according to a new survey from the American Land Title Association of vendors working in the RON space.

RON had already been increasing—due to a host of reasons that have nothing to do with social distanced-based safety—but the events of 2020 have given the practice a huge boost.

#3: And don’t forget RIN

Even though the demand for remote notarization was high, several states weren’t yet ready to commit to RON. Enter remote ink-signed notarization, a lower-tech and less secure alternative in which borrowers use a videoconferencing program like Zoom or FaceTime to connect with a notary and wet sign a document that is then physically mailed to the notary for their stamp.

Several states passed emergency orders to allow RIN, even ones that already permit RON, like Michigan and Texas.

RIN has several drawbacks, however, and draws its legitimacy solely from emergency orders. In Michigan, some RIN closings were even at risk after the state Supreme Court ruled that the governor didn’t have authority to extend her emergency powers—which allowed RIN—without the legislature’s approval. The legislature had to later pass a law to ensure that RIN transactions were valid.

#4: The new URLA is coming—at last

Fannie Mae and Freddie Mac announced back in 2016 that they were unveiling a new Uniform Residential Loan Application (URLA) for all lenders who intend to sell their loans to the GSEs; the mandated use-by date was then pushed back twice, with the latest delay—from November 2020 to March 2021—taking place this year as a result of the pandemic.

It looks like the latest deadline will stick. If so, lenders need to be ready by March 1, 2021, but they can get started now—the new URLA’s earliest effective date is Jan. 1, 2021.

#5: DocMagic employees shine

It was a banner year for DocMagic employees, several of whom were honored with industry accolades. This included DocMagic CEO Dominic Iannitti’s Lending Luminary Award; Lori Johnson’s HousingWire Insiders Award; Leah Sommerville’s Top 40 Under 40 honor; Brian D. Pannell being named a Thought Leader and HousingWire Tech Trendsetter; David Garrett’s appointment to the MISMO Residential Standards Governance Committee; and Chris Lewis’s recent Trailblazer Award by PROGRESS in Lending.

Related Content:

• Survey: Homebuyers adapt to eSignings, remote closings during pandemic (10/29/2020)
• An eClosing Q&A with DocMagic's director of enterprise solutions (9/9/2020)  
• County recorders, eRecording, and RON—by the numbers (7/8/2020) 

eNotes are having a moment. Last month, Ginnie Mae formally kicked off its Digital Collateral Program to begin the process of accepting electronic promissory notes—or eNotes—and other digital loan documents as collateral.

A few weeks before that, on July 1, the Federal Home Loan Bank of Des Moines became the first of the 11-member FHLB system to announce it would accept residential mortgage eNotes as collateral. By mid-July, FHLB Dallas followed suit, while FHLB Chicago just announced two days ago that it was also on board.

On top of that, MERSCORP registered an all-time monthly high of 40,170 eNotes in July, while the number of eNotes registered in the first half of 2020 alone (just under 150,000) already outpaces the total registered in all of last year (127,358). It's clear that eNotes are the wave of the mortgage industry's future.

Compliance Alert: What lenders should know about Ginnie Mae's new program

With this move Ginnie Mae, a federal agency that guarantees bonds issued against pools of FHA and VA mortgages, follows in the footsteps of GSEs Fannie Mae and Freddie Mac, which have been accepting eNotes for a few years now and are to date the largest buyers of eNotes.

eNotes have been on an upward trajectory since early 2018, but this year the pandemic—due to social distancing mandates and a growing preference for closing loans remotely—has accelerated its adoption. Since July, eNote registrations have set a new monthly record in 10 of the last 12 months, MERSCORP has seen a 1,300% increase in companies starting the process to integrate their operations to eNotes, and 18 warehouse lenders are currently funding eNotes—up from one in 2015.

"It’s fair to say that 2020 has been the year of the eNote," said Chris Lewis, DocMagic's Director of Enterprise Solutions. "In my opinion, by the end of the year, any investor that doesn’t accept eNotes will be in the minority and will lose business opportunities as a result."

Related Content:

• Compliance Alert: GNMA Announces Launch of Digital Collateral Program
• MortgageCountry closing loans in 13 days using DocMagic solutions (7/21/2020)
• Improving the Loan Process With eNotes

For the mortgage industry, a lot has changed in a short amount of time—especially when it comes to remote online notarization (RON), according to the speakers at DocMagic’s May 27 webinar, “Road-Tested eClosing Strategies for Today.”

Click here to watch a free recording of the webinar.

Yet lenders shouldn’t just embark on a mad scramble to immediately implement RON, with its shifting landscape of changing legislation; instead, they should immediately begin doing hybrid closings, said Chris Lewis, DocMagic’s Senior Account Executive for Enterprise Solutions. Even if lenders can’t go 100% digital for awhile, they can still move in that direction by completely cutting paper out of the process except for the recordable documents: the note and deed of trust.

“This is easily scalable, it can be implemented in a very short period of time, and it puts you on the path to that fully digital transactional experience,” Lewis said.

The webinar’s other speakers included:

• Jason Nadeau, the chief digital officer at Fidelity National Financial. He noted that one of the key challenges is that RON technology, while legal in many places, is still risky for underwriters and settlement agents. “We’re talking about all new laws, all new practices, all new procedures—so they’re all untested in court,” he said. “It’s not about what’s legal, it’s about the risk profile.”
• Ben Sherman, president of Synrgo, who cited statistics and challenges for county recorders. “When it comes to the world of county recording there’s a lot of confusion and unknowns,” he said.
• Brian D. Pannell, DocMagic’s Chief eServices Executive, who explained why lenders should begin offering eNotes. Their popularity had been increasing even before the coronavirus crisis, Pannell said, displaying a graph showing that the number of eNotes registered with MERS® jumped from over 100,000 in all of 2019 to over 250,000 in the first quarter of 2020 alone.

Click here to watch a recording of the webinar, including more in-depth background information, recommendations, and the Q&A session.

Related Content:

• Pandemic leads to growing acceptance of eClosings: News source (5/21/2020)
• Improving the Loan Process With eNotes
• Amid pandemic, states boost access to remote online notarization (RON) (4/17/2020)

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)