With only a slight increase in new purchase originations coupled with anticipated continuing declines in refis predicted for 2019, the importance of reducing costs associated with loan originations and gaining a competitive edge to attract millennial borrowers is vital. As new technology innovations and key platform integrations continue to be unveiled and further solidified, the mortgage industry’s adoption of digital capabilities are increasing and in turn providing new benefits for lenders and the customers they serve.
With technology continuing to advance the mortgage industry, today’s lenders are striving to further optimize the loan origination process with a digitally driven borrower experience while simultaneously streamlining internal processes to accelerate cycle times, improve loan quality, and reduce costs. But how are they doing it? The key to making these goals a reality is to invest in the right tools to make each transaction as digital as possible. Simply put, it’s time to invest in eClose technologies.
As a result of lenders’ continued focus on driving down origination costs, reducing time to close and improving the overall mortgage experience for borrowers, implementing the latest technology innovations to advance from paper to digital processes has transitioned from an optional investment to a strategic imperative. With the popularity of eClose continuing to increase based on the operational benefits of leveraging a more efficient and secure process, there is an absolute need for integrated digital mortgage solutions that provide true end-to-end eClosing functionality within a single platform.
In the evolution towards adopting eClosing technologies, lenders are recognizing the importance of not letting perfect be the enemy of good. While nationwide acceptance of eNotarization is not yet a reality, eRecording is already mainstream with over 83% (1,800+ counties nationwide) accepting electronically recorded documents. Lenders now have access to eEligibility engines to analyze each closing package to “be as ’e’ as it can be” according to state, county, and investor variations. Leading lenders are taking action now, leveraging electronic processes for closing when and where they can.
Beyond eSignature capabilities, innovative eClosing platforms include Fannie Mae and Freddie Mac approved functionality for eClosing, eNotes and eVaulting. Lenders can leverage eVault solutions integrated with the MERS® eRegistry for all eNote management transactions such as transferring control to an investor, updating the servicer and location when needed and later flagging an eNote as being paid off, assumed, or modified, and other life-of-loan events.
Not only do eClosing solutions provide greater efficiency from an operations standpoint by no longer relying on cumbersome processes, they also offer significant cost savings and proven ROI for lenders making the transition. How much, you ask?
As an example, a non-warehouse lender originating 12,000 mortgages per year with an average loan value of $250,000 can save $155 per loan by transitioning to a hybrid eClose process, adding up to a whopping $1.8M in savings annually.
If the same lender were to move to a full eNote eClose offering, savings could increase to $224 per loan, resulting in more than $2.6M in annual savings. Lenders using a warehouse line can recognize additional benefits, reducing average days on the line from 15 to 5 or less, allowing them to turn their lines more quickly, reducing their cost of capital and liquidity requirements, and enabling them to do more volume with a given-sized warehouse line.In response to predicted trends in the mortgage origination market over the next 12 to 24 months, cost-optimization and efficiency coupled with delivering an experience the millennial buyers expect, now is absolutely the time to make the transition to a more digitized mortgage process. By investing in the right tools and solidifying the best methodology for managing the loan processes, lenders will not only enhance the mortgage experience for their borrowers but will also optimize profitability by reducing operational costs.
About The Author
Harry Gardner is executive vice president of eStrategies for Docutech, a leading provider of compliance and documentation technology. Founded in 1991, Idaho Falls, Idaho-based Docutech offers a wide range of solutions to institutions all over the world. From document generation and imaging support to eDelivery, digital signatures and print fulfillment, Docutech sets the standard in providing market-proven technology and unrivaled client service to you, your workforce and your clients.