eClose Demand: Where did it go?
Author: Joe Tyrrell, President, ICE Mortgage Technology
eClosing solutions are mission-critical for today’s market
The importance of digital solutions, specifically eClosing technology, was never more apparent than throughout the pandemic. In fact, according to a recent study by STRATMOR Group, more than 40% of lenders put hybrid eClosing technology in place by the end of 2020, which marks a huge milestone for the mortgage industry. And during the first half of this year, we saw demand for eClose remain high as many industry trends carried over from 2020.
Fast forward to today, and we find that the customer experience is largely unchanged, as the urgency among lenders to adopt eClose solutions seems to have dissipated. Further, lenders who did put eClose in place are not leveraging it, while others who are late to the party have not even begun their eClose journey. And yet, borrowers still desire digital experiences, and eClosing continues to be mission-critical for adapting to what lies ahead. So, where did all that demand go?
After recent conversations with many of our lender customers and industry leaders alike, we’ve been told that there could be considerations heading into 2022 that may shift the focus from managing volume, to maximizing margins and operational efficiency.
MBA Annual 21 was abuzz with talk of eClose
Two weeks ago, I had the pleasure of attending MBA Annual in San Diego, where I had the opportunity to participate in a panel discussion with leading industry experts. During our conversation, we talked about the accelerated innovation that took place across our industry during the pandemic. We discussed the advancements in eClosing technology and the fact that many mortgage companies today are actively looking for solutions to help them create the digital experience their borrowers expect. During the conversation, however, a particular point really stood out to me. It is becoming increasingly well-known that there are a lot of great solutions out there that can help these companies build the initial digital experience that borrowers want. But the question still being asked by many is, how do we keep processes digital and consistent throughout the entire lifecycle?
eClosing is a crucial part of the digital mortgage journey
At ICE Mortgage Technology, our approach to eClose is holistic. In order to achieve a successful eClose implementation, all of the parts, pieces, and players of the entire digital mortgage experience that you’re working to deliver have to come together. But the question is, are we there yet? The operational benefits and cost savings that can be achieved with digital closings are widely appreciated, but have not yet been widely implemented. For many mortgage companies who didn’t have eClose in place during the early stages of the pandemic, their focus was on meeting the historic demand in the industry versus adopting new capabilities. Now, as communities have reopened and those lenders are able to conduct business in-person again, many decided to put their eClose journey on hold until the critical mass of title companies, warehouse lenders, and investors are ready to accept electronically signed and closed mortgage loans.
For lenders who implemented eClose, many have since come to learn that, far too often, their own closers chose to move the process and experience back to being paper-based, regardless of the borrower preference. By avoiding the adoption of processes that support an eClose loan, they actually reduced their capacity and efficiency. What’s especially important to note is that eClosing can’t be done in isolation. It's essential that we embrace the entire supply chain and ecosystem, and work together with all partners to ensure that we’re all on the same plane of where we’re trying to go: a truly end-to-end digital experience.
Large eClosing strides are being made
From our analysis and data, we have seen that there are still huge benefits in taking the first steps towards adopting eClose technology now with a hybrid eClosing strategy. This improves the borrower experience, provides the lender a competitive advantage in winning business, boosts settlement agent collaboration, and streamlines the closing process; provided that eClose does not bifurcate any of the existing operational processes. In this way, you can increase your familiarity and momentum with digital mortgages in a current state that will ultimately and efficiently drive positive changes across your organization for the future.
Just over a year ago, we brought together Encompass®, Simplifile®, and MERS® within ICE, and connected the most extensive ecosystem and network in the industry. Since then, we’ve taken exciting steps in ICE Mortgage Technology’s journey to deliver a truly end-to-end digital mortgage. Encompass eClose is a definitive example of how bringing these best-of-breed solutions together contributes to a simplified, connected digital closing workflow, from document draw to investor delivery. We implemented eClose in Encompass with operational teams in mind, specifically document drawers, closers, and funders. Instead of introducing a new or different process, we designed eClose to work exactly the same way an ink (or paper-based) package works today. This means there is one workflow, which not only significantly reduces internal obstacles to adoption, but also dramatically increases the efficiencies and capacity of your teams.
We’re only beginning to scratch the eClosing surface
We also have more exciting eClose news to share. As a part of the Encompass 21.3 Major Release, we added an eNote option to the existing hybrid closing functionality that automatically imports the executed eNote (an electronic version of the loan note) into Encompass, registers it with the MERS® eRegistry, and stores it in the Encompass eVault. All of this functionality is accessible from within the Encompass loan. Additionally, MERS® is collaborating with key industry stakeholders to develop a cost-effective, scalable service for the secure, long-term storage of remote online notarization (RON) videos. Across the industry as a whole, we’re starting to see more and more organizations adopt eNotes, but this is just the tip of the iceberg of digital mortgage innovation, and it’s a thrilling place to be.
From my perspective, Q4 of 2021 is an important time to start leveraging eClose technology in a way that makes sense for your business now and also connects you into a broad ecosystem and network that is ready to propel your business forward when the time comes. To help with this, we’ve developed some special, limited-time incentive offerings for lenders who are on their journey and ready to start hybrid eClosing mortgages. For more information about these programs, click here.
As always, our focus remains on our customers and their business, and continuing to provide the expertise, technology, and access to data that creates a competitive advantage and delivers better ROI. Stay tuned for more updates as we continue to progress on our journey to delivering a true digital mortgage.