You Cannot Avoid it, E-Closing Will Be the New Normal
Electronic or online closing has existed for about 15 years. While most mortgage companies swear by its advantages, they all agree on one thing—the resources available is limited and time is not on their side. Consumer Financial Protection Bureau (CFPB) also advocates e-closing, but only in compliance with the TILA-RESPA Integrated Disclosures (TRID) Act. Although consumers aren’t particular about choosing lenders with the e-closing facility, it is likely to soon be the new normal.
Customers are looking for clarity and reliability from banks before signing agreements. While sales teams in the financial sector bear the burden, compliance has to be made something simpler. It is necessary to ensure customized information flow and instill confidence in your communication. Customers will only choose your offer if everything related to it develops a sense of trust. Customized mobile communication seems to have made things simpler and further technological developments will ensure an even playing turf.
Competitive banking is all about closing. However, to make the process less burdensome for banks—and less complicated for customers—making the whole process electronic may be the only way. The latest technology developers are exploring new avenues of reducing human intervention every day.
Here’s why e-closing is a favorable option for many.
- If customers come first, e-closing is the way to go
In companies that specialize in consumer lending, most of the emphasis is laid on easing the customer’s role. E-closing and other online processes such as e-verification meet that business objective. As mortgage origination goes online, borrowers can apply without having to visit banks or spend hours trying to understand what the loan involves. Every bit of information can be personalized and delivered via the web.
- E-closure is more accurate and effective
A study conducted by CFPB showed how consumers reacted differently to electronic and paper-based closing. The survey considered obstacles such as time lag and incomplete documentation and the results suggested that e-closing was more popular, with a score 17% higher than for paper documents.
- It prevents consumers from feeling uncertain
With mortgage functions conducted online, borrowers are able to comprehend the processes better. They get clearer understanding of loan fees and repayment terms before closing. While electronic lending gives consumers the power to zero in on a specific lender without its influence, closing takes place according to strict guidelines and stipulated timelines. That shortens the application procedure and favors consumers by adding to their confidence.
- The regulatory perspective
It is essential that lenders keep themselves updated on regulatory changes and modify their mortgage processes accordingly. When they use e-closing, compliance with regulations such as TRID becomes easier to achieve. That is one of the main reasons why CFPB insists on e-closing.
- E-closing is more credible, say investors
When a loan application transits several desks, there are high chances of documents being tampered with. Online procedures, including e-closing, prevent that and mitigate the risk of errors. That makes mortgage software technology solutions that facilitate electronic closing more reliable and it draws a large number of investors interested in the sector.
The mortgage industry is yet to wholeheartedly accept e-closing as an inevitable part of consumer lending. However, with more and more companies opting to go paperless, there is no doubt that it will soon be the norm.