Many lenders are thinking about digital closings in a way that’s preventing them from achieving the ROI they want. Many have been solely focused on Remote Online Notarization (RON), since RON is seen as the quickest solution to the immediate challenges that COVID-19 has created.
However, as lenders try to conduct business remotely and keep up with high loan volumes while switching from fully paper closings to completely digital RON closings, they experience firsthand how difficult this is. My goal here is to provide helpful guidance on how lenders can implement a successful digital closing strategy that goes beyond RON and addresses current pain points and long-term goals. You’ll be able to create a plan that works in any environment and scales digital closings quickly.
Lenders need to have a digital closing strategy that’s successful in any environment and in every state, regardless of the speed with which individual states and stakeholders adopt new technology or change their policies. After onboarding dozens of lenders, we’ve learned that there are two concepts that are fundamental to success.
The first is to choose a technology partner that can give you one process for managing all of your closing types, including wet closings. The second is building a foundation of hybrid closings first, on which you can layer eNote, RON, and other digital capabilities as their acceptance grows. By implementing digital closings with this pragmatic approach, you’ll digitize every closing, which drives large-scale operational efficiencies and more value than if you were to close only a portion of your loans with RON.
Digital mortgage closings should be viewed as a spectrum. It starts with digitizing the process around wet closings and introducing hybrid closings. You give your customers the ability to electronically preview their documents, interact with their closing online, and eSign the majority of their documents before the closing appointment. Once hybrids are running smoothly, it’s a small step to introduce eNote, RON and in-person electronic notarization.
When you engage with a platform that can provide a standardized process for managing all closing types, you can easily add on those capabilities without creating more workflows. The operational inefficiency introduced by trying to maintain separate workflows for wet closings, hybrids, RON, etc. is untenable.
Having one process for all closings is critical because no matter how aggressively you pursue full eClosings, every lender will be working with multiple closing types for years to come. Not only do all stakeholders need to get up to speed, but also consumers have different technical aptitudes and appetites. Instead of trying to close all your loans with RON, it’s more effective to standardize and automate as much of your workflows as you can, while also having the flexibility to close in the most digital way possible based on the participants in each transaction.
Historically, not all lenders have recognized the value of hybrids, but now, many do. Creating a foundation of hybrids is the most efficient way to adopt digital closings and drive value to all participants quickly. If you talk to lenders who have rolled out hybrid closings at scale, you’ll find that they have hybridized 99% of their closings in as little as four weeks. You’ll also discover that they’re doing more volume with the same amount of people, seeing a significant reduction in errors, and receiving incredibly positive customer feedback.
RON is an important component of eClosings, and it can be executed more widely right now due to temporary executive orders. However, it needs to be a subset of your digital closing strategy, rather than the center of it. If your digital closing strategy is built around RON, it overlooks the fact that there are other hurdles to eClosing adoption besides state legislation. Also, we don’t know what will happen after these temporary orders expire.
As lenders work on their digital closing initiatives, remember that there are many approaches to get to eClosings, but not all of them produce the same results.
By taking a pragmatic approach, you’ll be successful with digital closings today and in the future — no matter how fast or slow the industry moves.
Felicia Chen is a digital closing expert at Snapdocs, where she creates helpful, easy to understand and insightful content that empowers lenders to succeed with digital closings. Powering over 1,000,000 closings a year, Snapdocs is the industry’s leading digital closing platform.
