Originally published in MBA NewsLink // July 15, 2020
Approximately two years ago, mortgage industry advisory firm STRATMOR Group published data illuminating just how important it is for loan officers to attend their closings. We live in a very different world than we did two years ago, and while the nature of closings may have changed in 2020, the impact of the closing on the overall borrower experience has not.
Additionally, loan origination volumes have been both high and steady during 2020, making it even harder for LOs to attend all of their closings, despite the importance they hold for the borrower and what is at stake for the LO.
Just how important is the LO?
In an April 2020 post published by STRATMOR, Rob Chrisman posited that in light of the COVID-19 pandemic, borrowers are relying on their experienced LO more than ever. Data from the 2020 MortgageSAT report, the nation’s largest borrower satisfaction benchmark, states that 36 percent of borrowers are going through the home buying process for the first time, and of those first-time homebuyers, 87 percent chose their lender based off a referral from a trusted source.
The inherent trust that already exists in the referral can be nurtured by the LO throughout the loan process. As the LO shepherds the borrower through the loan process, the information flow from LO to borrower can increase the borrower’s trust and confidence in the LO. The trust and relationship built during the loan process increase the likelihood that the borrower will recommend the LO in the future, thus completing the referral cycle.
This correlation is best reflected using Net Promoter Score (NPS) – a key metric that quantifies a consumer’s satisfaction level and referral potential based on their reported likelihood to recommend – in this case – their lender. According to STRATMOR Group’s 2018 MortgageSAT report NPS automatically dips by 11 points when the LO is absent from the closing ceremony, even if all else goes well. In instances where the LO does not attend and issues arise, NPS is impacted even further, dropping by 35 points. As a result, STRATMOR estimates LOs could lose as many as one-in-three potential business referrals simply by not be present at the closing ceremony.
RON on the rise
With the “why” for LOs attending more closings made clear, the question that now must be addressed is, “How?” Prior to the COVID-19 pandemic, a majority of states required participants in a mortgage closing ceremony to be in the same location to complete the transaction. Even in an eClosing scenario, all participants would meet in a central location to gather around the computer. With the increase in Remote Online Notarization (RON) legislation, there is no need for transaction participants – LOs included – to meet in-person for the closing ceremony.
In recent months, awareness of RON has dramatically increased amongst consumers, settlement agents and legislators as these stakeholders sought to address the challenges of executing mortgage closings in light of social distancing and stay-at-home orders issued to slow the spread of COVID-19.
Before the pandemic, 23 states had passed RON legislation, and nearly all states without RON legislation passed temporary measures allowing for RON during the pandemic. Additionally, the Securing and Enabling Commerce Using Remote and Electronic Notarization Act of 2020 (the “SECURE Act”), was introduced in the Senate as bipartisan legislation to authorize and establish minimum standards for electronic and remote notarizations, and a substantially identical bill was introduced in the House on March 23, 2020. If the SECURE Act becomes law in its current form, every notary in the U.S. would be authorized to perform RON transactions using audio-visual communications and tamper-evident technology.
Using RON to attend more closings
Now that RON is being utilized on an increasing basis, borrowers, lenders and settlement agents are all experiencing first-hand the benefits of RON. For LOs, RON helps LOs attend more of their closings because it shortens the ceremony, cuts out travel time and can be scheduled 24/7/365. Using RON, all parties can meet online in a virtual signing room using the webcam functionality already present in their cell phone, tablet or computer to complete the closing ceremony remotely. This allows the transaction participants to have a personal, face-to-face yet socially distanced closing ceremony, while also enabling direct collaboration on loan documents while sparing all parties the time and expense of traveling to a central location.
As a proven path to more referrals, delivering a flawless closing experience is a no-brainer. By utilizing RON technology, LOs will be able to meet their borrower at the closing table at any time, from anywhere. As kitchen tables become closing tables, LOs should ensure they aren’t leaving their seat at the table empty.