Mortgages in a Digital Age

A Perspective Blog from Fannie Mae, authored by Henry Cason, SVP and Head of Digital Products, said the reliance on digital closing options have become essential for lenders and borrowers working remotely. 

Cason said the demand for digital has driven growth in eMortgages. In October 2018, nearly 17,000 eNotes were registered. That number rose by more than 500% to more than 95,000 in 2019. 

That number continues to rise, as it hit a record high in February 2020 with 19,240 eNotes registered. 

“Why? Because eMortgages can be faster, more secure, and less expensive than traditional paper-based mortgages. They help speed the completion and delivery of loans. Loan documents (including the promissory note) are created, signed, stored, and transmitted electronically, eliminating the risk of lost or missing documents and enabling automated data verification,” Cason said in the blog. 

He added that both consumers and lenders are looking for a simple, quicker, and more reliable process that provides convenient and secure digital experiences. 

“With the recent shift many people have experienced to remote work, digital closing options are top of mind for lenders and other stakeholders. The speed and ease of eClosings allows borrowers to review and even sign documents in advance, which dramatically changes the closing experience,” he said. 

Cason added that title agents benefit from the ability to leverage a remote online notarization, which eliminates meeting in-person and enables the borrower to close anywhere. 

“In today's mortgage market, eClosings allow lenders to offer an expedited experience that some borrowers expect and prefer. Lenders can also be more efficient because they are not bogged down with managing and validating paperwork, have greater certainty about the quality of the loan, and receive funds faster,” he said. 

In a new Aspen Grove Solutions white paper, “Digital Borrower Engagement….A Critical Tool for the Post-Forbearance Tidal Wave,” the authors model the impact of COVID-19 on default servicing volumes over the next 18 months or more and discuss how digital, user-friendly engagement with the borrower can help ameliorate the three major challenges servicers will face, including cost control, volume of loans, and compliance & risk. The paper considers how the crisis is a catalyst to digitize Life of Loan services, which will help build loyalty, not just through this crisis, but into the future, enabling a better outcome for all stakeholders.

As Aspen Grove notes, everything in this crisis will happen in a much more compressed time period than the 2008 crisis. According to the white paper, "digital, user-friendly engagement with the borrower offers the only solution that can help manage the forbearance resolution and loss mitigation processes with a high level of quality and consistency, help keep borrowers informed of options, frequently communicate with worried borrowers to reassure them, and feed into backend technology solutions that are designed to move the volume through the pipe all at once without letting borrowers fall through the cracks."