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Th e M Rep o RT | 13 cover story M ore than a decade ago, a quiet movement set afoot in lending, as financial institutions brainstormed the idea of streamlining the closing process using technology that allows borrowers to close on home loans with the push of a few computer keys. Even then, it was clear the eMortgage and eClosing con- cept would take some time, but lenders, tech officials, and policy makers in the industry remained surprisingly unaware of just how long it would take. The same industry is now heading into an era where a bank is foolish if it fails to embrace the idea of closing mortgages online or offering eMortgages sometime in the future. Failing to plan for this business practice equates to a bank sacrificing its future for a lack of competitiveness and transparency. But the big push for eClosings and mortgages follows a period of acquiescence on the industry's part. As practical as it seems to offer e-solutions for generations raised on computer technol- ogy, eClosings took some time to emerge as a fully integrated concept. From Slow Starts to Industry-Wide Integration T he technology for eClosing has been around for a decade or more," Bill Anderson, VP of Legislative Affairs for the National Notary Association, said. But getting this technology fully developed and the necessary regula- tions implemented took time. A few pit stops along the way didn't help either, Anderson explained. "The industry began meeting on the eMortgage back in 2000," Anderson noted. "There was a lot of momentum for eMortgages and closings, then the recession hit in 2008 and that stalled." Dan Green, a marketing lead for loan originations technology vendor Accenture Mortgage Cadence, re- members this uncertain time well. Today, Accenture Mortgage Cadence has the luxury of know- ing it's one of a few tech vendors picked by the Consumer Financial Protection Bureau (CFPB) to participate in the agency's three- month eClosing pilot program (other vendors include DocMagic, Inc.; eLynx, Pavaso, Inc.; and Pierson Patterson, LLP). During the pilot program (which just came to a close at the end of March), the CFPB in partnership with several chosen vendors and creditors examined how technology can improve and streamline the closing process. These developments are great for the industry, but a long time coming and maybe a bit too late considering the decade-long brain- storm that preceded them. It all started with discussions about the legal ramifications of closing home loans online. "There were a lot of questions about whether an electronically signed mortgage was a legal docu- ment," Green noted. "That has very well been put to rest." In addition, the high foreclosure rate and delinquencies of the late oughts-decade put a damper on the emerging concept of eMort- gages and closings. "There was a great deal of inter- est going into 2008," Green remem- bers when discussing the industry's view on eClosings and what is now referred to as the digital mortgage. "After the recession and what came with it, I would have thought lenders would have progressed much more quickly," Green added. Unfortunately, some lenders pro- gressed and others became lost in the uncertainty of the market and a wait-and-see type of philosophy that caused them to drag their feet. "Having been very close to a lender or two who have done this, it takes focus," Green ex- plained. "It's not something that you decide to do today and then you do tomorrow. It takes 12 to 18 months to work through. It is technology, process, and people– each of these three factors have to play together and work together to make it happen." Lenders effectively using eMort- gages and eClosing technology have one thing in common: persistence throughout market cycles. When the industry took a turn for the worse in 2008, those who succeeded in the digital mortgage space refused to buckle under the pressure and abandon ship. Even though there was great temptation to delay future tech- nology projects when borrower activity slowed, lenders who have experience in eClosings today are the ones who kept going. For those who survived, "it was clear even seven or eight years before they did this that they were going to do this," Green explained. "If they stay focused on it through the natural cycles of the mortgage business—higher refi periods and then higher purchase periods—they got it done." Setting the Bar—The CFPB e-Closing Pilot A nd getting it done is what should be on the minds of lenders since eClosings are not going away—they are instead becoming more common. Blanco National Bank is one of the creditors chosen by the CFPB to participate in the three-month eClosing pilot program and study. Neal Brodbeck, SVP of mortgage banking at Blanco National Bank, agrees consumers are now more prone to expect digital solutions at closing. "Consumers are generally not aware of the technology, but after they experience the eMortgage closing process, they love the ease, speed, and paper-saving technol- ogy," Brodbeck explained. Green with Accenture Mortgage Cadence agrees consumer demand will drive lenders into this digital mortgage generation—whether they want to be there or not. "We have a new type of borrower—a new generation of bor- rowers with the millennial market," Paper "There were a lot of questions about whether an electronically signed mortgage was a legal document. That has been put to rest." —Dan Green, Marketing Lead, Accenture Mortgage Cadence

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