TheMReport — News and strategies for the evolving mortgage marketplace.
Issue link: http://digital.themreport.com/i/1274675
26 | M R EP O RT FEATURE ing paperless closings, a good eClosing provider should be well-versed in how eNotes affect every partner that originators work with, especially investors. Typically, such a provider will have years of experience con- ducting eClosings as well as a document engine that runs on SMARTDocs. Such a document engine allows companies to create and deliver documents in all standard data formats. This last part is key. Instead of native XML SMARTDocs, many companies that market eClosing services use PDFs only, which is not ideal. PDFs are far more time-consuming and error-prone than SMARTDocs. Before anyone can electronically sign a PDF, for example, it must be tagged and inspected manually, which increases the risk of mistakes or missing data. SMARTDocs, on the other hand, do not require tagging and can be scanned and verified automatically for errors. Choosing the Right eClosing Partner H ow do you know if an eClosing provider is right for you? There are several questions you can ask to make sure. For example, do they have a complete library of MISMO Category One SMARTDocs? The reason this is so important is that many closing providers only enable the note to be a SMARTDoc, which severely limits the ability of lenders to create completely digital loan files. A full library of MISMO Category One SMARTDocs, by comparison, lets lenders choose whether they want to use XML or a PDF for the full range of loan documents they use. They can also change document formats depending on an individual inves- tor's preference. And because they can generate any document in a loan file digitally, lenders are able to review documents for due dili- gence and compliance electroni- cally, which saves a substantial amount of time and effort. Another trait a good eClos- ing partner should possess is the ability to offer other mortgage services, such as application, underwriting and due diligence support. Such partners tend to take a digital approach to these other services and do not simply focus on a digital closing. The best places to start looking for eClosing providers are Fannie Mae and Freddie Mac, each of which maintains a list of eMort- gage vendors that can create and submit electronic mortgages to them. To appear on these lists, a vendor must have completed tests of eNote deliveries with both the GSEs and MERS. But even many providers on these lists are not able to offer a completely paperless mortgage closing, which brings us back to RONs. Putting Together the Complete Package T o go completely paperless, lenders need a partner with an eClosing platform that can support RONs. Platforms that support RONs use audio and video technology combined with identity verification features that allow a certified notary to witness the borrower's signature over the internet, thus eliminating the need for face-to-face contact entirely. A key aspect to RON-enabled eClos- ing platforms is the ability for the borrower to review individual loan documents before the closing stage, so the borrower can ask questions before signing. When blended with a full library of SMARTDocs, a RON-enabled eClosing platform enables lenders to provide a digital mortgage process for bor- rowers that is truly end-to-end, with the borrower electronically signing all documents remotely. Platforms that support RONs can produce closing packages with notary language that is specific to remote notarizations and eNotes. Typically, they are also capable of producing closing packages that can be signed in paper and ink in areas where traditional signings are still required. This is where the power of eClosing alliances comes into play. For example, we have partnered with Pavaso, a provider of digital mortgage closing technology that supports both in-person and remote electronic notarizations. Pavaso has deep title industry expertise, which can help lenders with eClosing adoption, and pro- vides an online, paperless process both for signing initial disclosure documents and closing documents that can be used by lenders and title agents. It's often said that there are op- portunities within every crisis. As frightening as the current global pandemic has been, the opportu- nity our industry must accelerate remote closings to create a better borrower experience and keep deals moving is a tremendous silver lining. While the goal right now may be to help borrowers execute closing documents from the comfort and safety of their own homes, the push to make remote notarizations legal in a growing number of states will undoubtedly speed adoption and create lasting change long after the pandemic ends. It's incumbent upon lenders that seek to implement remote closings and create a completely paperless, digital mortgage process to think carefully about the best strategy for doing so. That means selecting the best possible partner to get them across the finish line, one with the knowledge, the expertise, and the track record to make remote closings safe and scalable. . PAUL ANSELMO is the CEO and Founder of Evolve Mortgage Services and SigniaDocuments, Inc., a top provider of outsourced mortgage solutions. He has more than 30 years of experience in the banking and mortgage industries. Previously he served as President, CEO, and Founder of Mortgage Resource Network (MRN), a business process outsourcer and technology provider to the mortgage industry. In 2019, Paul was honored as a "Lending Luminary" by the PROGRESS in Lending Association. He can be reached at paul.anselmo@ evolvemortgageservices.com. The reality is that the technologies necessary to facilitate RONs and eClosings aren't new at all.