This piece originally appeared in the March 2023 edition of MReport magazine, online now.
Real estate transactions still look, in many ways, the same way they have for generations, with homebuyers, real estate agents, lenders, attorneys, sellers, and title professionals physically sending and signing documents.
It’s monotonous, slow, error- prone, and simply not what customers typically choose when making monumental purchases.
While mortgage lending and the closing process have historically been manual, it’s increasingly clear that these methods are no longer efficient or effective. More than that, customers will seek out businesses that lean into the digital age.
The trend toward digitalization in the mortgage industry has been building for some time, but here’s how I expect it to accelerate in 2023.
Increased RON Adoption
Remote online notarization (RON) relieves the notary from having to be in the same physical space as the parties signing the documents they’re notarizing. Unfortunately, this tool hasn’t been utilized to its fullest potential yet, because laws haven’t kept up with the technology.
However, that is expected to change this year, as it appears that the SECURE Notarization Act will be signed into law in some form, and when it does, the industry will finally have clarity about the use of RON.
Another technology I expect to take off in 2023 is eNote technology. eNote allows for the digital signing of a promissory note by the lender and borrower. Already legal in all 50 states, eNote offers several advantages over paper notes, particularly when it comes to security. In addition, eNote offers mortgage originators the opportunity to have greater control over the entire process, which will become increasingly important as market conditions evolve. Other benefits include significant savings in terms of time and money, reduction in human error, and increased customer satisfaction.
The Customer Is King
We’re coming off a hot market, and forecasts are clear that overall loan volume will decrease. As a result, there will be fewer loans to compete over, and those borrowers, regardless of demographics, will look for the convenience, speed, and security that digital closings provide.
For most clients, though, the mostly-digital process will begin and end with an in-person experience.
This hybrid approach, which will employ eSign, RON, and eNote to varying degrees, will become the new norm as lenders seek more control over the process while also making transactions quick and secure for customers.
Change Is Imminent for Title and Settlement
The retraction in the mortgage market is a clear challenge for title and settlement businesses. However, new tools will enable them to do more with less. Those that make the quickest and best use of those tools—eSign and RON, particularly—will be positioned to expand their geographic footprint and close more deals faster, making them busier than before.
So many mortgage and underwriting tasks are robotic, and humans tend to make mistakes, particularly with tedious tasks.
When we’re talking about mortgage deals, mistakes can cost time, usually time from multiple professionals who didn’t plan on filling out that paperwork all over again.
The digital revolution, which has already started in the mortgage underwriting world, will eliminate the cost and environmental damage associated with paper and mail. It will save numerous hours and money by reducing errors. Perhaps most importantly, it will relieve these tedious, robotic tasks, allowing professionals to focus their energy on what they’re best at, building customer relationships and helping their clients.
This year will be won by those who fully embrace digitization’s potential for the entire mortgage ecosystem. Those who do will experience less frustration and loss due to errors, their team members will be empowered to do what they do best, and their customers will experience a process that is both safer and more modern than the competition.