Consumer demand for digital experiences during the pandemic spurred an unprecedented adoption of virtual mortgage closings throughout the industry. As mortgage lenders accelerate their digital timelines to accommodate consumer needs, it’s crucial that lenders and other stakeholders involved in the real estate transaction frame technology decisions through the right lens.
At the Digital Mortgage Conference, Qualia Co-founder and CTO, Joel Gottsegen, joined industry leaders to discuss effective strategies for implementing new technology and how to evaluate solutions for reliability, security, and regulatory compliance. Gottsegen was joined by Kimberley Smathers, Head of Information Security & Compliance at Snapdocs, and Austin Kilgore, Director of Digital Lending at Javelin Strategy & Research.
What’s driving technology adoption?
Digital closing technology has been around for several years; however, it wasn’t until recently, during the pandemic, that conversation and implementation became more urgent. “The main thing stopping the adoption [in the past] was not the borrower experience… but a question of how can this be implemented and what is the experience for lender and title employees,” Gottsegen said.
Kilgore agreed and added that digital conversations have, in recent years, focused on the front end of the real estate transaction experience. “Historically, lenders have implemented digital touchpoints in the front end, but the deeper and closer you get to the closing, the less sophisticated the process has been,” he said. He noted that it’s important for businesses to start thinking about creating stronger continuity from end-to-end to enhance the consumer experience. “We need to deepen the resolve among the workforce in the sense of this is the way business should be done on a go-forward basis,” he said.
Implementing secure technology
Consumer demand for digital closings is growing; however, there is still some hesitancy among borrowers regarding the protection of their personal data. Smathers pointed out that digital closing experiences are actually more secure when the right, coordinated systems are leveraged. “The entire funnel for a mortgage closing has really been left behind in terms of technology,” she said. “There are disparate organizations that don’t communicate well with a lot of paperwork… in a digital closing there is far more security.” Smathers pointed to the oversight large lending institutions face and the level of audits technology providers receive in return. “These audits are deep and invasive,” she said of the security standards third parties must meet.
Third-party technology providers are also going beyond regulator security standards to differentiate themselves from competitors. For example, platforms are implementing sophisticated technology to combat wire fraud through advanced signaling that flags when a common user (such as a lender or notary) is using a different operating system.
Overall, it’s important to do a thorough assessment of the platforms you’re considering. This assessment should consider both user experience and security. “Ask [the provider] for evidence of their security. Ask for reports, outputs, settings… a company that’s doing a good job will show you those things to give you the confidence to sign with them,” Smathers said.
Evaluating user-experience and technology
In addition to evaluating the security standards of third-party platforms, the panelists also discussed the value of user experience. Gottsegen pointed out that user experience should consider both the end consumer (the borrower) and the mortgage lender or settlement agent leveraging the platform in their day-to-day workflows.
“Our first products [at Qualia] were designed for title companies and we created their core systems of record. Our customers spent 8 to 9 hours a day on our platform,” Gottsegen said. “When we launched [our borrower platform to connect with title companies and lenders] we had to consider that the people logging in would spend less than 1 hour in the platform and would only log in a handful of times.” This meant that the product engineers needed to design a “foolproof” platform that both digital natives and less technologically savvy borrowers could navigate.
Qualia product engineers also needed to consider accessibility for both professionals and the end clients using the technology. “It always comes down to who is using these products and making sure everyone can access them,” Gottsegen said. “For example, on Qualia, if you have access to Google Chrome, you will be able to use our product. We’ve also made as much of our product as mobile-enabled as possible.”
Accessibility also comes down to making sure the digital experience closely replicates the in-person experience for a closing. “Any experience that you could have in-person should be replicable online,” Gottsegen said.
How will digital closings be leveraged now and in the future?
The panelists agreed that the future of digital closings will require standardization and coordination between stakeholders. The surest way to reap the benefits of eClosings is to understand where processes are currently streamlined for short-term execution, and where more coordination and standardization is needed for long-term execution.
According to Gottsegen, lender-title coordination is the key to successful fully-digital real estate closings. This coordination will require title companies and lenders to work within the same system for efficiencies and congruent operations. “That’s what we’re creating [at Qualia],” he said.
In the short-term, refinances and all-cash purchases require the least amount of handoff and coordination between lenders and title companies. These types of transactions may be the best candidates for fully-digital closings. “Refinances have streamlined coordination because the handoff is from the lender to the title agent so there is a relationship from the beginning,” he noted. “For purchases, there is no relationship up-front between the title company and the lender, and the handoffs take place between the realtor and title company.”
Overall, there are always opportunities for mortgage lenders and title businesses to create online transaction experiences that meet consumer needs for digital touchpoints. “There are many levels of eClosings,” Gottsegen noted. Businesses can incrementally deliver digital experiences through hybrid eClosings and eventually level up to remote online notarization (RON) when the right technology and processes are established for seamless coordination between lenders and settlement agents.
For more information on Qualia’s eClosing solutions, click below to schedule a demo with a Qualia Specialist.