By Rachel Witkowski
WASHINGTON - The Consumer Financial Protection Bureau has chosen a dozen firms involved in the mortgage industry for a pilot program looking at whether electronic fillings can improve the mortgage closing process.
The list released Thursday includes seven mortgage lenders and five vendors that provide support services, including software firms.
The CFPB said the three-month pilot program, which will begin later this year, will test whether so-called "eClosings" save time and money for consumers, lenders and other related parties.
"Mortgage closings can be stressful, confusing, and overwhelming," said CFPB Director Richard Cordray in a press release. "We believe that eClosings have the potential to create a better process for everyone involved. This eClosing pilot project will provide valuable insight as we work to improve the closing experience for consumers."
The pilot follows a report the CFPB released in April that identified difficulties in the closing process largely due to the massive amounts of physical paperwork required.
"The pilot project, a follow-up to the April report, will enable the CFPB to better understand the role that eClosings can play in addressing consumers' pain points," the agency said in the release.
The CFPB said the pilot program will address whether consumers would better understand the closing process if they received educational materials like document summaries and definitions of key terms prior to closing. The agency said it also plans to study how early consumers should be able see closing documents using various technology platforms, and whether eClosings can prevent "last-minute surprises and unnecessary bottlenecks caused by outdated processes."
The pilot program is not part of a rulemaking process, the CFPB said, but it "is designed to identify best practices in the marketplace."
Financial institutions involved in the study include Flagstar Bank in Columbia, Md.; Boeing Employees Credit Union in Tukwila, Wash.; Blanco National Bank in Texas; Franklin First Financial in Towson, Md. ; Mountain America Credit Union in West Jordan, Utah; Sierra Pacific Mortgage in Folsom, Calif.; and Universal American Mortgage Company in Chantilly, Va.
The vendors include Accenture Mortgage Cadence, DocMagic, eLynx, Pavaso and the law firm PeirsonPatterson, LLP.