Oct. 2015 - Diversified We Stand, Divided We Fall

TheMReport — News and strategies for the evolving mortgage marketplace.

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34 | TH E M R EP O RT FEATURE understanding and actual knowledge, and the relationship was even more pronounced in measures of perceived empow- erment. » » On average, consumers experi- encing an eClosing in the pilot received the documents more quickly after the documents were cleared to close and con- sumers had longer periods of time to review documents than consumers who did a paper closing. » » eClosing meetings in the pilot, on average, were reported to be much shorter than paper clos- ings, particularly for purchases. » » Borrower perceptions of effi- ciency were higher for eClosing borrowers than for borrowers in the paper closing group, particularly in reference to purchase transactions. Even though the pilot was conducted on a smaller scale, the results speak for themselves. Using technology to deliver, review, sign, and submit documents had a measurable, positive impact on the borrower's experience, and that is the result the CFPB wants to see. Therefore, one could reasonably assume that adopting digital strate - gies in order to enhance the closing process is one way to gain some brownie points with the CFPB. Furthermore, from a business development standpoint, a satis- fied borrower is one that will 1) recommend their lender to others and 2) be more likely to work with that lender again on future transactions. With volumes being as volatile as they've been, any- thing lenders can do to encourage repeat and/or referral business is a worthy endeavor that will con- tinue to pay dividends long after the initial investment. As the report notes, some of the transactions in the pilot were con- ducted in a hybrid environment. However, once you start the clos- ing process digitally via electronic document delivery, there is really no reason, other than a specific investor's requirement, to pull those documents out into a paper environment. eSignature and eNo- tary technology is as advanced as it has ever been, and with investor buy-in and the proper security measures in place, there's really no reason not to sign the documents electronically. The next logical step for the industry on the path to the true eMortgage is to begin recording these transactions via eNotes. While promissory notes can be signed electronically today, very rarely, if at all, are those notes created, executed, transferred, and stored electronically, which, according to the CFPB, would be the requirements to complete a true eMortgage. MERSCORP has been fight - ing the good fight with recording offices in various states over the digital transfer of notes within its system and has, thus far, remained unbeaten. Those rulings will be key in not only building the case for transitioning county recording offices to eNotes versus hard copy files, but also in the long-awaited arrival of the true eMortgage. Digital Revitalization D igitizing the mortgage pro- cess has long been viewed as a way to reinvigorate the mortgage industry and to im- prove the borrower experience. It may also be a way to attract fresh blood in terms of both borrowers and personnel. According to a 2015 National Association of Realtors' (NAR) report titled "Home Buyer and Seller Generation Trends," mil - lennials currently make up the largest share of homebuyers at 32 percent. This group also rep- resents 68 percent of first-time homebuyers. Consider that statis- tic in conjunction with this tidbit: according to a July survey by TD Bank, 67 percent of millennial- aged, potential first time home - buyers think they will purchase a home in the next two years. It's no surprise, given these numbers, that lenders are trip- ping over themselves to court this demographic. Of course, the key to any good sales pitch is to understand your target audience, and nothing has more clearly defined the millennial generation than technology. As customer service consultant Micah Solomon points out in his article "2015 is the Year of the Millennial Customer," a key trait of millennial consumers is their comfort in the digital realm. "[Millennials have] grown up with digital devices that bundle com - munication, entertainment, shop- ping, mapping, and education all in one … Naturally, then, millenni- als embrace and align themselves with technology. Because of this identification with technology, millennials tend to adopt new technology more quickly com- pared with the more skeptical approach of previous generations." Though there is very little data available on millennials' view of conducting a mortgage transaction electronically, their overall bank - ing/financial habits can provide some clues. According to a March 2014 survey from TD Bank on millennials' banking habits, 90 percent of respondents reported using online banking to conduct everyday financial transactions. In addition, one other item of note in NAR's report on gen - erational trends is the means by which homebuyers move through the home-buying process. While homebuyers of all ages begin the process by searching for proper- ties online, younger generations of buyers report finding the home they ultimately purchased online, whereas older buyers found their home through their Realtor. If borrowers are beginning their home-buying process digitally, and are pre-disposed to conduct - ing transactions via technology, why not keep the process in an electronic environment for the duration of the transaction? Many vendors have enhanced their systems to be compatible with mobile devices. However, THE NEXT LOGICAL STEP FOR THE INDUSTRY ON THE PATH TO THE TRUE EMORTGAGE IS TO BEGIN RECORDING THESE TRANSACTIONS VIA ENOTES.

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