Many lenders are familiar with digital closings (eClosings), but they might not know just how
valuable they can be to their business. In a recent study, Marketwise and Notarize found that
digital closings shorten the time it takes to close, reduce errors and increase ROI — all while
improving customer experience.
Lenders don’t have to offer a full digital close to reap the benefits of eClosings. In fact, every
element of an eClosing — from online notarization to eNotes — delivers ROI.
For lenders looking to gain an edge in performance and appeal to a wider range of buyers, offering eClosings is a good place to start.
What is an eClosing?
An eClosing is an online or digital mortgage closing. A “full” eClosing is a complete electronic
closing of all loan documents, including online notarizations and eNotes. With full eClosings, all parties involved — including lenders, title agents and home buyers — can complete a mortgage closing from anywhere by using technology.
A full eClosing includes the following elements:
●Electronic documents – Documents in the loan package are sent digitally to the borrower
for their electronic signature
● Electronic signatures (eSignature) – An accepted online alternative to an “ink” or “wet”
paper signature
● Online/remote online notarization – An online session for loan closing participants to
validate identity, sign and notarize electronic documents
● eNote – An electronic version of the mortgage note completed as part of a transaction
● Electronic recording (eRecording) – The process of submitting documents for recording
online. Once reviewed and recorded by the county, they return the approved documents
to the submitter electronically
The number of eClosings has grown dramatically since the start of the pandemic. Lockdowns
caused the demand for remote business to skyrocket, and consumers have since become used to performing most transactions online. As a result, lenders are continuing to see an increased demand for eClosings. Elements of eClosings, such as eNote registration, have seen triple digit increases in 2021, and are still continuing to grow.
The good news for lenders is that they don’t have to perform a full eClose to reap benefits. Even a partial digital close saves time, reduces errors and improves the customer experience. A partially digital closing is commonly referred to as a “hybrid” eClosing. A hybrid eClosing is when the closing documents are sent to a borrower in advance for review and electronic signing. As opposed to a full eClose, a hybrid typically does not include the mortgage and loan note.
A hybrid eClosing is the first step towards a full eClose. While participants still have to physically meet to sign and notarize certain documents, the process will typically move more quickly and have fewer errors than in-person, paper closings.
Why should lenders offer eClosings?
Marketwise’s recent study shows that eClosings deliver a significant ROI for lenders. Lenders
that offer full eClosings save up to $444 per loan. Title agents also benefit from eClosings,
saving about $100 per loan.
According to the study, lenders that only offer hybrid eClosings still see significant ROI. For
example, lenders offering hybrid eClosings can save about $153 per loan, and $287 when
eNote capabilities are added. Online notarization provides savings of $231. However, when
added together, these various elements that make up a full eClosing provide the biggest ROI.
But there are more benefits to eClosings than just the ROI. eClosings can provide lenders with a variety of process improvements that increase efficiency, accuracy and profitability. They
enable:
• Faster speed to close: Fewer days from loan application to closing
• Direct cost savings: Shorter average transaction time per loan
• Increased flexibility: Less time spent reworking missing signatures and documents
• Improved accuracy: Reduction in error rates
These process-oriented upgrades are significant for borrowers and lenders alike. After two
years of the pandemic, consumers have embraced online transactions for their convenience
and flexibility. With a full eClosing, a homebuyer can close on a house from anywhere. The
same holds true for lenders who can close more loans by shortening the processing time and
minimizing the need to travel to in-person appointments.
How to get started with eClosings
An important step in enabling eClosings is implementing technology you can trust. The
implementation will require sourcing an online closing platform and staying up to speed with
how the new, digitized process works.
The best way for lenders to successfully introduce eClosings to their borrowers is with a partner. Platforms like Notarize supply the secure technology, best practices and support that help lenders (and their clients) to have a seamless, online closing experience.
Notarize’s platform enables lenders and their clients to securely complete mortgage closings
online, allowing borrowers to eSign and notarize the entire loan package on the platform. With no paper and no need for in-person signing, lenders can offer flexibility and convenience in the closing process — a competitive edge that appeals to today’s homebuyers.
Click here to get access to The ROI of eClosing in Real Estate, a study conducted by
Marketwise and Notarize.
