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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 42 June 2023 F E A T U R E NAVIGATING THE WILD, WILD WEST OF DIGITAL CLOSING PROVIDERS Mortgage lenders are moving quickly to adopt digital closings, but Aaron Davis of AMD Enterprises and Florida Agency Network explains the challenge to determining an optimal partner. B y A A R O N DAV I S I t took longer than expected to gain trac- tion, but there is little doubt that digital closings are on the way to becoming the preferred form of settlement for the majority of mortgage lenders. Although many felt the pandemic-fueled boost to the remote online notarization (RON) element of digital closings would drive an even faster adoption rate, a combination of barriers, regulatory and market driven, has moderately tempered expectations of a rapid, full adoption. That being said, at a time when mortgage businesses are seeking improved cost efficiencies across the board, the digital closing has become a priority. The Numbers Don't Lie T here are a number of convincing reasons for lenders to make the leap to some level of digital closing. A recent Notarize survey, conducted through MarketWise Advisors, indicated that lenders can save up to $444 per loan, and title agents up to $100 per loan utilizing RON. So, it is no surprise to learn that an increas- ing number of mortgage lenders are making digital closings a priority in their expenditures, in spite of unfavorable market conditions. In fact, 87% of those surveyed by Notarize indicated that they believe eClosings may help close more loans with the same or fewer staff. A SimpleNexus survey conducted through Celent in 2022 reported that one in seven lend- ers perform some sort of eClosing, and that in the next year, 41% of those surveyed plan to implement digital eClosing technology. The time savings are also undeniable. A MarketWise survey reported that lenders using a hybrid eClosing processing realized a 99-min- ute reduction per loan. Lenders utilizing a full eClosing, including online notarization, saved an average of 157 minutes per transaction. Overall, the same lenders indicated that digital closings had saved them up to seven days in the processing and funding cycle, as well as decreasing their cost per loan by a total of $174. It is clear to see that mortgage lenders have gotten the message … there is a stronger movement toward some level of digital clos- ings. However, not everyone evolves at the same pace during periods of rapid adoption of new technology. In many ways, it's still the wild, wild West out there when it comes to determining which potential RON and eClos- ing partners can get the job done well, which can do a satisfactory job, and who out there have no business at all promoting themselves as digital closing or RON partners. The Next Big Challenge for Lenders B ecause digital closings don't have a tremendously lengthy history in terms of actual performance, lenders need to be thorough in their vetting process. There is no service provider who can claim to have been doing RON or digital closings for 30 years, for example. If anything, more than a few title and closing firms will claim an expertise in services they simply outsource or partner to produce. When it comes to closings and other settle- ment services, that's usually a reliable path. But there isn't nearly the number of digital closing technology providers or electronic notariza- tion platforms available that there are for more established, traditional services. The lender needs to be aware of this, and the vetting pro- cess should be a comprehensive one. It starts with the title agency. Title agents already understand that digital closings and RONs are the wave of the future, and that future begins now. Some have already invested a great deal of time and effort to understand the nuances of RON and the digital closing, and have performed a substantial number of digital transactions. It's also all-too-easy for an owner who may be scrambling for new lines of revenue, to quickly onboard a RON A A R O N D A V I S is CEO of AMD Enterprises, a conglomerate of title, technology and eClosing ventures which includes Florida Agency Network, ClosingSuite.com, Premier Data Services, and Network Transaction Solutions. Davis is also a frequent speaker at title and mortgage industry conferences and seminars and serves as a contributing author or expert source to numerous trade publications on issues pertinent to title and mortgage executives. He may be reached by email at aaron@amd-1.com.