I recently wrote an article advocating for an expanded closing process. Jaime Kosofsky, a friend and colleague of mine, shared his firm’s experience with eClosings, which connected the dots between the improved borrower experience argument I outlined in the piece and the “behind the scenes” benefits lenders derive from leveraging eClosings, so I thought I’d share that here.
Jaime’s firm, Brady and Kosofsky in Charlotte, N.C., has closed over 26,000 electronic transactions. In his experience, the time saved is not just at the closing table but in areas leading up to and following the closing ceremony.
With electronic documents and closing, the quality control events are part of the process itself and not a separate step that needs to occur after the fact. In an electronic closing, the closing ceremony cannot be completed and documents finalized if there are missing signatures or notary stamps.
“Each time we have to go back and make a correction to a missed signature, initial or stamp, it costs us $125 per instance. Eliminating that risk is a tremendous upside for our firm,” he noted.
In addition to savings related to the documentation quality, which is measurably higher with electronic closings, the turn time to finalize and fund that transaction is significantly reduced.
“We have cut the funding time by more than half with eClosings,” Jaime explained. “In N.C., funding can’t be completed until the transaction is recorded. In a paper transaction, if we don’t close by 1 p.m., our funding pushes to the next day, at best. With eClosing, we can immediately record and get to clear to fund in a matter of minutes, not hours or days.”
While Jaime pointed out several benefits to eClosings, the financial aspect related to closing and post-closing QC stood out to me. As we all know, getting a mortgage is one of the biggest financial decisions consumers make in their lifetime. While some borrowers have enough trust in their LO to come in and just sign everywhere indicated, some borrowers find themselves asking questions and confirming details AT the closing table. Accidentally shifting focus from the closing ceremony to the impromptu Q&A can easily and understandably lead to a missed signature or notary stamp, which can be very costly.
By expanding the closing process, borrowers have ample time to review their closing documents and ask all the questions they need to feel comfortable with the transaction. With all questions asked and answered beforehand, the focus remains on the signing process, thus eliminating the chances of a missing signature or notary stamp.
Despite the arguments in favor of eClosings and expanding the closing process, there are still lenders who aren’t convinced. In fact, a recent survey found that 17% of lenders are unsure what value digital solutions bring, and 21% don’t use any eClosing solutions (e.g., eSignatures, RON and eVaults). As someone who has seen the benefits of eClosings first-hand, to say this is baffling is an understatement.
If you have questions about the benefits of eClosings and expanding the closing process, you can email me at firstname.lastname@example.org.