With millennials becoming a larger share of the purchase market, most industry insiders say the adoption of eClosings is inevitable. Even so, some in the industry have taken a “wait and see” attitude while others have grabbed the bull by the horns. Like other technology advances, the danger of adopting the former approach is waiting too long to adopt the latest technology and watching helplessly as competitors whisk away your business.
At the 2017 National Settlement Services Summit (NS3) in San Antonio, lenders from across the country discussed what has worked, resistance to the process and how title agents should be working with lenders and their state legislators to speed the adoption of eClosings.
Panelists at “Lenders: Postcards from the eWorld” were Jeffrey Bode, chairman, president and CEO, Mid America Mortgage; Penny Reed, senior vice president strategy and financial reform, Wells Fargo Home Lending; and Ken Sykes, president, North State Bank Mortgage.
Back in May, North State conducted North Carolina’s first eClosing with the refinance of a home in Winston Salem. The eMortgage was insured by Investors Title Insurance Co. of Chapel Hill. DocMagic and World Wide Notary were the electronic solution providers.
The Tar Heel state is aggressively trying to modernize its mortgage process. It has been conducting an increasing amount of paper-free electronic recordings of government-required filings and land records, and developed the standards and curriculum for eNotary.
Sykes said those involved in the North Carolina process have received Some resistance from attorneys, real estate agents and others.
“Some of the attorneys, being unsure what it would look like, [wondering] would it be in the best interest of the consumer, were skeptical,” he said. “[Also], there was some concern about the training and software required…It wasn’t received as openly as we hoped, but we are confident that time and success will certainly change that.”
He said Realtors were reluctant because they’re used to driving the process. “Real estate agents want to tell you what attorney to use. ‘When my mom died, he handled the estate. Make sure he handles the real estate closing.’ We’ve had some resistance from the real estate community so far.”
Bode said 100 percent of Mid America’s retail loans and 80 percent of its wholesale loans are closed electronically, although there still are some paper documents involved. “The biggest resistance that we felt was from employees,” Bode said. “All kinds of artificial barriers that weren’t there, they threw out and we had to knock those down.”
Bode said as employees performed more and more electronic closings, they come to prefer the new process.
Reed pointed out that millennials are more technology-driven than older generations and that will change how business is conducted. “They want to do everything on their phone or iPad or from their laptop, they don’t necessarily see that as a barrier,” Reed said. “In fact, not being able to do that is seen by them as a barrier. It’s time for us to accept that that’s where the business is going.”
“One thing about change that you have to know is that you don’t have to like it. And if you waste a lot of energy trying to like it, it really wears you out,” Reed said.
Sykes said the eClosing his bank completed went relatively smoothly because all of the bank’s partners were on board and were driving the process. After the state selected his bank to perform the eClosing, it set a goal of completing the first eClosing within two years. It was accomplished in less time.
“It’s more of a lender-driven thing. As well as a process that we think will be driven by attorneys and real estate agents. Those are the markets that we need to get involved,” Sykes said. “We need to get their confidence. Our role is to make sure that the people understand that it can work and that consumers want it.”
Sykes said the eClosing allowed the borrowers to get their documents and review them sooner than usual, and that the actual closing was “anti—climactic” and took a little more than 20 minutes.
Reed urged industry participants to learn if their state has updated its notary laws, and to learn what is driving resistance. She said resistance sometimes is caused by a lack of proper technology or training. Learning what is driving the resistance, when it’s present, can help legislators focus on which areas need to address.
“It’s time for us to accept that that’s where the business is going. And everybody has to figure out what their concerns and issues are,” Reed said. “[Legislators need to understand that] their constituents are the ones who are going to want this. So it isn’t necessarily just lenders pushing for this, or investors pushing for it, this is something that their own constituents are going to want because of the way the population is changing relative to technology.”
Bode said consumers will eventually demand an electronic process. “The borrowers greatly appreciate it. I think they love the opportunity to review things, everything in advance,” Bode said. “Sometimes, they’ll just sign [documents] on their phones.”