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Explaining ‘Digital’ Closings to Borrowers

This piece originally appeared in the August edition of MReport, out now.

“Brand” means many things, but it’s mostly about customer perception. Your brand—that is, your customers’ perception of your company—is affected by every interaction, which means you must think about how each one builds or erodes trust.

Mortgage lenders must comply with complex regulations while delivering a wonderful customer experience, even during the toughest parts of the mortgage process, like closings.

Since the start of the pandemic, there’s been a push in Washington, D.C., to change closing regulations to improve the process and customer experience. Here, I’ll dive into customer perceptions of closings, how COVID19 is affecting eClosing policy, and what lenders can do to ensure closings remain a trust builder, regardless of policy.

Be Aware of What “Digital” Closings Feel Like to Customers

The typical customer hears a lot of messaging and advertising about a simple digital mortgage. And remember: they don’t know mortgage law, so “digital mortgage” sounds like an entirely online process that’s as easy as ordering on Amazon or watching Netflix.

The reality, as we all know, isn’t that simple.

Some customers prefer to submit documentation through old-fashioned channels. Some documentation doesn’t neatly fit into the digital systems we’ve built. The result is that most mortgages today are, in reality, hybrid digital-human processes.

This is particularly true of the closing process, where, because of regulations, borrowers may have to sign a huge pile of actual paper, even when everything else is digital.

The result, for a customer who hasn’t been prepared, is a real trust-eroding experience—aka one that can hurt your brand.

The good news is that the brand-saving, trust-building solution is straightforward: communicate throughout the process. Set expectations. Educate customers about why you’re doing things the way you are. And use tools to automate personalization of this communication and education—this is how you superpower your human advisors. Now let’s look at how to make the closing process better.

Advocate for Universal eClosings

First, some quick definitions:

  • eClosings are those carried out via remote online notary (RON). Borrowers can e-sign documents with a notary via webcam. Where RON is legal, loans can close entirely digitally.
  • Hybrid closings happen when borrowers remote sign all documents that don’t require notarization, then on the same day, sign in person any documents that require notarization.

Pre–COVID-19, RONs were legal in 23 states. Since the pandemic struck, a few others have made emergency allowances. But, as most lenders know, that’s not the whole story.

Some warehouse lenders or investors won’t fund or buy loans that don’t have wet signatures. Some title companies can’t insure RON loans. So even in states where RONs are legal, they may not be feasible.

This, of course, prevents lenders from offering the best possible experience, which can hurt their brand.

Here’s some good news for solving this: the SECURE Act, introduced March 18, 2020, would make RONs legal in all 50 states. While it didn’t end up in the CARES Act, it does have bipartisan support, making its odds decent.

By advocating for its passage, lenders and other industry pros can improve the borrowing experience for all customers by enabling a true digital close today’s customers increasingly expect. We at Total Expert are actively pushing for this in Washington.

Keep Trust High in the Era of Hybrid Closings

Until the SECURE Act passes, though, most closings will remain hybrids.

To ensure these hybrid closings are a trust- and brand-building experience, lenders must be diligent about preparing borrowers (especially first-timers and those who haven’t bought in a while) for what to expect. Key messaging to convey:

  • They may have to sign some documents twice, both electronically and in-person.
  • You realize that it’s frustrating—and you’re advocating for a better system (great opportunity to point them toward information on the SECURE Act).
  • You’re worrying about the details so they don’t have to—and if they have questions, they can reach out to the originator
    they’ve been working with throughout.

Build Trust & Protect Your Brand Before and After SECURE Act

The customer experience will drastically improve when the SECURE Act enables a truly digital closing for mortgages and other loan types.

To ensure that experience translates to increased customer trust and improved brand perception, you must start educating your teams on how this will play out. It’ll make them smarter advisors now and help your organization move faster when the transition comes

About Author: Joe Welu

Joe Welu is the Founder and CEO of Total Expert, the creator of the only Marketing Operating System built to meet the unique needs of the mortgage industry. Welu founded Total Expert in 2012 to empower lenders to take their marketing and sales efforts to the next level.
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