Picture this: a loan is electronically delivered to an investor and is then certified and funded within 24 hours of closing. The manual, post-closing quality control (QC) process in this scenario is eliminated through the use of machine learning. Meanwhile, trailing documents are collected automatically once the file is eRecorded within a matter of days. This is the promise of eClosings.
While eClosings are growing in acceptance and adoption, the universality of fully-digital closings is still not a reality, and most transactions still involve paper processing. This is why mortgage lenders must continue to adopt technology solutions for the manual and paper-intensive trailing document collection process.
The road to 100% digital closings
This year, the mortgage industry took meaningful strides toward implementing fully-digital closings. According to MERS eRegistry data, eNote registration spiked to more than 407,000 through the end of November 2020 (a 264% increase from 2019), and the number of companies transacting on the MERS eRegistry increased by 121%.
These 2020 figures are promising and indicate an accelerated path toward the ubiquity of eNotes; however, most lenders are still closing the vast majority of their loans with paper documents. There are multiple factors that currently impede the universality of digital closings.
Factor 1: eNote acceptance on the secondary mortgage market
Widespread adoption of eNotes requires acceptance among government-sponsored enterprises (GSEs), Ginnie Mae, commercial warehouse lenders, the Federal Home Loan Banks (FHLBank System), and private capital markets funders.
During the course of the COVID-19 pandemic, the GSEs (Fannie Mae and Freddie Mac) announced their acceptance of remote online notarization (RON). Meanwhile, in December 2020, Rocket Mortgage became the first lender to use eNotes in closing a Ginnie-Mae-backed loan as part of Ginnie Mae’s pilot program. While these are encouraging advancements, many others on the secondary mortgage market are still slow to accept eNotes.
Factor 2: state acceptance of remote online notarization (RON)
Performing a fully-digital closing requires the acceptance of remote online notarization (RON) at a state level. While legislators worked diligently in 2020 to pass RON legislation, many states still do not accept RON or have permanent RON legislation in place. Currently, only 29 states have permanent RON legislation enacted.
Factor 3: county recording offices with eRecording capabilities
According to MERS, 2,190 of 3,006 counties have eRecording capabilities—this equates to 88% of the population living within eRecording counties. Among counties without eRecording, a fully-digital closing would eventually require paper documents when filed at the county recording office.
eClosing technology will (eventually) solve post-closing challenges
Today, due to the external factors outlined above, there are still headwinds limiting mortgage lenders from offering a fully-digital experience for every transaction. In a future paperless world, post-closing challenges will be virtually eliminated. The post-closing QC process will be automated so that post-closers don’t have to spend time chasing down trailing documents from their title partners—the documents are electronically delivered within a matter of days after recording.
Until lenders can use eClosings for the majority of their mortgage loans, there will still be a need for solutions that reduce the time-intensive and manual activities inherent during post-closing operations. Lenders are wise to invest in solutions like Qualia Post, which automate post-closing activities and essentially simulate the post-closing benefits of eClosings.
How Qualia Post Works
With Qualia Post, once funding is complete and the signed closing documents are ready, the system automatically requests trailing documents from title companies. Title companies log into a simple, secure interface to share documents, which automatically flow back into the documents section of the lender’s LOS. Post then notifies the post-closing team that trailing documents are ready for review. As an added service component, Qualia representatives will follow up with title companies on behalf of the lenders that experience delays to help ensure a seamless experience.
By automating the post-closing process, document requests take place without delay, and are exchanged the same way each time—through a secure, cloud-based portal.
Why lenders are choosing Qualia Post
When it comes to streamlining operations with title partners, Qualia is the best technology partner for the job.
- Our core product started in the title industry. We work with a sizable portion of the title industry. Qualia is the leading digital closing platform on the market. Recently, Qualia announced the acquisition of Resware, a complementary title & escrow production software. With our combined ecosystem of customers, Qualia is now powering an even greater portion of the title & escrow market. Since Qualia is likely your title company’s core software, you’ll be integrating directly with your title partners’ core workflows for greater efficiency. Our solution also enables you to work seamlessly with title companies that are not on Qualia’s platform.
- Qualia’s flexible technology infrastructure. Qualia isn’t building point solutions to solve narrow business challenges; we’re building a platform to enable the entire real estate ecosystem to work together through a single system of record. We’re actively building plans for new mortgage lending products that will remove the technological barriers to creating the home purchase experience of the future.
