Freddie Mac Single-Family Expert Roundup: 3 Benefits of eMortgages as We Look to the Future
In the last few years, many companies have focused on digitizing their mortgage processes as much as possible and, as a result, have seen wins with efficiency, process and quality.
Driven by the unprecedented COVID-19 pandemic challenges, necessity may have kicked digital and virtual processes into higher gear. But the truth is that for many positive reasons, the housing industry was already headed in that direction, albeit in a slower way.
Now – despite the pandemic –not only have automated products and processes allowed lenders and housing professionals to operate faster and more efficiently, but also their quality is proving to be as reliable as more traditional ones. Perhaps most importantly, studies show that borrowers like the more digitized processes and have come to expect them.
For example, recent research findings demonstrate how the pandemic has been a powerful accelerant in terms of digitizing mortgage processes, according to a recent Forbes Insights survey. Consider:
- More than 90% of respondents agreed that customer expectations for a more robust digital mortgage experience are rising dramatically as a result of the COVID-19 crisis.
- 87% said that the pandemic is proving to be a powerful catalyst for digitization of their firm’s mortgage processes in critical areas such as prequalification, applications, processing, underwriting, servicing and loss mitigation.
Since automation can benefit lender, borrower and everyone involved in the home purchase or refinance, what’s in store for the future, especially when the COVID-19 pandemic impact lessens and things return to what many are calling our “new normal?”
Read on as Freddie Mac experts weigh in on eMortgage benefits from three key angles:
1. eMortgage Solutions Help Lenders and Housing Professionals Simplify Closing
I believe digital is the new norm in the mortgage lending process, as an increasing number of borrowers are demanding speed and convenience. eMortgages enable lenders to provide that experience to borrowers from a loan document review and signing standpoint.
From an operational efficiency standpoint, eMortgages reduce document processing and handling costs, as the borrower-signed closing documents are available in the eClosing room right after the closing and there is no shipping involved. Since there is no need to wait on receiving signed closing documents from closing agents, lenders can start their post-closing review sooner. Electronic closing systems prevent a closing process from being completed without all signatures and as a result, there is no need to follow up on missing documents or signatures, saving time for both lender and closing agent, all while significantly reducing customer satisfaction issues.
In addition, electronic documents reduce delays in locating loan documents for investor/regulator audits and offer potential for post-closing review automation. From an investor delivery and funding cycle time standpoint, electronic delivery of loan documents and automated certification can save at least two to four business days, reducing warehouse line interest costs. For servicers, eMortgages reduce lost note-related delays in servicing activities.
Based on my observation, there are few common themes followed by lenders that are successful in rolling out eMortgages:
- Phased implementation: Some lenders have limited their initial rollout to a few markets, while others limited their initial rollout to certain electronic docs. In either case, they tweaked the process based on the lessons learned from the initial rollout prior to expansion.
- Close and upfront collaboration with business partners: Prior to rolling out eMortgages, it’s a good move for lenders to reach out to their applicable business partners such as aggregators, servicing buyers, warehouse lenders, settlement agents etc. to determine if they are/will be ready to support.
- Focus on process mapping: it’s important for lenders to understand that eMortgage rollout is not just a technology rollout; it’s also a process change. Lenders succeed when they map out their current process to determine the process changes needed and the impacts to roles/functions within the organization.
- Internal associate readiness: Lenders benefit when they spend time to educate internal associates on the benefits of eMortgages and train them on the new process.
2. eMortgage Business Partners Can Complete the Picture and Complement What You Offer
Increasingly, lenders are leveraging business partners for each aspect of the eMortgage process. It’s critical for lenders to understand their goals and the capabilities of each business partner, and then find the most efficient match for their businesses. We offer a matrix of these capabilities to help lenders who work with us understand the types of questions they may want to ask during the planning and implementation process.
For example, it’s important for lenders to clearly understand the integrations with their current mortgage point of sale (POS) system, loan origination system (LOS), document providers, title companies, etc. to then understand the efficiencies that may be gained. It’s also key to find out whether potential business partners support various types of notarizations (e.g., remote, in-person), along with whether they support a flexible approach to adopting eMortgage (e.g., hybrid vs. full) in various locales.
For lenders looking for help, there are resources that have been through the eMortgage implementation process with lenders to listen and help resolve pain points in business partner selection as you move forward on your journey.
Once an organization adopts eMortgage, often the most complicated next step for lenders and housing professionals is not integrating the technology; it’s reworking internal processes to make them more digital and training teams to manage the technology. The quicker that happens and the more eMortgages an organization handles, the faster that organization will be then able to scale their operations to manage volume increases seamlessly.
3. eMortgages Have Revolutionized How We Do Business – Are They Here to Stay?
My vision for eMortgages is that they ultimately become the standard way that the mortgage industry operates. The mortgage industry has been evolving towards digital mortgage, with significant progress made recently. In the POS/loan application space, the disclosures to the borrower, and the underwriting process, it’s only natural to have digital mortgage at the closing table for borrowers.
The trend I’ve started to see over the last year or two is that, where lenders and technology partners had optimized the digital experience at specific parts of the origination value chain (e.g., POS/loan application), we are now starting to see lenders think about optimizing a true digital mortgage experience for the borrowers, including eMortgages as a part of the closing process.
With the advancements in technology, integrations across technology partners, acceptance of remote online notarization (RON), the experience gained by lenders and closing agents with electronic closings during the pandemic, and the steady demand from borrowers for a digital mortgage experience, eMortgages are here to stay.