As a Turtle would say, “You bet your sweet …” it can! (Ancient and Honorable Order of Turtles) CFPB started a pilot program with several lenders about a year ago to explore the possibilities of a totally electronic closing. Not closing that uses static images of paper documents that are signed electronically but rather a process that is totally electronic; no paper.
According to our good friend, CFPB Director Richard Cordray, “Mortgage closings can be stressful, confusing and overwhelming. We believe that eClosings have the potential to create a better process for everyone involved. This eClosing Pilot project will provide valuable insight as we work to improve the closing experience for consumers”. Mr. Cordray, you said a mouthful.
Although this pilot program was to last for about 3 months, to date we have heard no reports on its progress. Maybe, some other things, like the delayed TRID project got in its way. Regardless, the CFPB and Mr. Cordray are pushing hard for a totally paperless eClosing. They believe this will help the consumer. It just might help lenders as well.
TRID may move this process along a little quicker. With the new requirements, come the new model disclosures. These new disclosures must be prepared and completed exactly as laid out by the CFPB, no exceptions.
This means that the documents are the same for all lenders. That’s a good start. Now, all that is needed is uniformity in the remaining documents utilized in a loan closing. That might be a bigger hill to climb.
The closing package now contains a myriad of documents emanating from lenders, agencies, and government entities. The challenge is to pare down these forms to create one base uniform closing document set.
We have a standard set of legal documents, i.e. Note, Mortgage, DOT, etc. What is needed is the capability to add in certain special documents as required by the loan program, insuring entity and state law. Technology and uniform mapping are the answer.
TRID may be leading the way to this change. In creating a set of uniform consumer disclosures, CFPB has taken its first steps toward the paperless, elusive eClosing. How long it takes to get there remains to be seen?
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Change can be good. A paperless eClosing can also benefit lenders through increased efficiencies, reduced costs and fewer closing delays. It could also expedite the post-closing and delivery process, speeding up loan funding and reducing warehouse expenses.
Change is in the wind. Are you getting ready?