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14 | Th e M Rep o RT cover story he said. "They have grown up with technology; they have grown up online. They expect to do business electronically, and they don't expect to fill out paper forms." Even with the final results of the CFPB study on eClosings not yet complete, the industry expects the final report will reflect on how eClosings improve the over- all borrower experience. "We expect the CFPB to con- clude that eClosings are good for the consumer," Anderson with the National Notary Association said. But eMortgages are not just about attracting computer-savvy consum- ers. Green with Accenture Mortgage Cadence says the movement is also driven by demand for transparency, efficiency, and cost savings. "It is not just that I can interact with my mortgage electronically," he explained. "It provides greater transparency in the process. I can check my documents when I want to check, rather than mak- ing a phone call or asking a lender to call me back." And this transparency is key in accomplishing what the industry aims to do in the wake of the 2008 financial crisis—a period defined by a high rate of default- ing mortgages. There is a general feeling bor- rowers who took on some of the troubled loans that defined this era lacked understanding of the exact loan terms and of their own ability-to-repay the debt. The CFPB itself noted in an announcement that the eClosing pilot program is about ensuring borrowers "better understand how educational materials like document summaries, term defini- tions, or process explanations can enhance borrower understanding during the process." Another benefit is the efficien- cies eClosings and mortgages inherently drive. "When you stop using paper, just the cost of paper alone is a fairly significant savings," Green explained. "The cost of pro- ducing a loan has risen rather substantially over the last several years," Green added. "It is just not sustainable, and this is one way of bringing the cost down." Brodbeck with Blanco National Bank says the tools not only save banks on costs, but on time as well. "The paperless closing process takes 15 to 20 minutes," he explained. "Afterwards, we hand the borrower a flash drive containing the signed docu- ments. They leave with a sense of accomplishment without the stress of mounds of paper." Even after closing, banks using a paperless process are still saving money, Brodbeck adds. "First, the loan is purchased by our investor the same day of closing or the next, depending on the time of the closing. If we close a loan in the morning, it is common to receive the purchase wire before the end of the day. If you deal with warehouse lines, this could be a huge savings," the lender explained. "Second, because the file is fully vetted before closing and after all conditions have been cleared, post-closing conditions are eliminated. In the past four years of delivering eClosing loans to our investor, we have not received a single request to cure any post- closing conditions." The Challenge Ahead—Making Sure Emortgages Scale E ven with advancements made, the industry has noth- ing if the concept of providing eClosings and digital mortgages fails to scale. This means every market player from big lenders to small banks must have the capacity to partner with a tech vendor and other agencies to implement affordable solutions to offer eMortgages and closings. "It is one of the adoption issues the industry is going to have," notes Anderson with the National Notary Association. "eClosing cannot be for the top five big banks . . . to take off, everybody has to be able to do it." Blanco National Bank has been doing eClosings and eMortgages for the past four years. Brodbeck, who works on the lending side of the house, knows the challenges smaller banks—some of which are just now looking into this—face in getting started. "Lenders will need to retool their upfront processes before closing, which will include a fully completed, approved file before ordering the closing documents," Brodbeck explained. "This includes the survey, inspections, and the other last minute items generally sent to the title company the day of closing." While lenders who are behind on the implementation of eClos- ing programs need to catch up, there are plenty of solutions that make this concept scalable to all banks—no matter what size they come in, suggests Green with Accenture Mortgage Cadence. "Ultimately, this is going to have to scale to all sizes," Green noted. "If you want to be the lender of choice, you are going to have to offer the digital mortgage, because that is the way consumers and borrowers are going to have to interact with it. The technology to do that is easily accessible." A big game-changer for the in- dustry turned out to be the CFPB's decision to spend the first three months of 2015 studying eClosings and how technology can improve transparency and efficiencies during the closing process. "Up until this point, it was the industry that was being the evan- gelists for eClosings," Anderson with the National Notary Association asserted. "Now you have a major regulator coming in." Green with Accenture Mortgage Cadence expects the final survey released either in late spring or early summer to delve deeper into what efficiencies can be created. So far, he says "the borrower response to the survey has been good." Following the Letter of The Law T he CFPB is also interested in how errors can be pre- vented during the entire closing process. Having technology track each step creates a situa- tion where digital solutions lift some of the regulatory burdens lenders face when trying to remain in compliance with originations rules. There are now many rules governing originations, noted Green with Accenture Mortgage "[B]ecause the file is fully vetted before closing and after all conditions have been cleared, post-closing conditions are eliminated. In the past four years of delivering eClosing loans to our investor, we have not received a single request to cure any post-closing conditions." —Neal Brodbeck, SVP of mortgage banking at Blanco National Bank