So much is evolving with digital mortgages and electronic closings, or eClosings, that it can be difficult to determine which eClosing strategy works best for you. Speaking with an eClosing expert is always the best route, but it’s also helpful to understand your options first.
In the simplest terms, an eClosing is closing a mortgage loan electronically. This usually takes place within a secure digital environment in which some or all closing documents are electronically signed and stored.
eClosings have many benefits, including eliminating paper and shipping fees, reducing the likelihood of closing errors, and providing a faster and easier signing experience for borrowers. But not all eClosings are the same. We’ve listed the three basic options below.
A hybrid eClosing is one in which some documents are signed electronically while others are signed in ink in the presence of a notary. Hybrid eClosings are popular in states that require some documents to be signed in ink or notarized in person. In most hybrid eClosings, all closing documents that require a notary, such as the promissory note, are signed in ink, while all other documents that don’t have to be notarized are signed digitally, or eSigned.
While a hybrid eClosing is not a completely digital eClosing, it still reduces the number of documents that must be “wet-signed,” which shortens the closing process. For example, with eClosePlus’s hybrid eClosing product, eClosePlusExpress, borrowers can sign all their non-critical loan documents before going to the closing table, which typically results in a closing that takes just 15 minutes.
A full eClosing happens when all the closing documents are in a digital format and have been eSigned. That includes the lender’s promissory note—which results in an “eNote,” a tamper-proof SMART Doc—as well as documents that do not have to be notarized. When the borrower signs closing documents in front of a notary, the eClosing is referred to as an “In-Person eNotarization,” or IPEN.
A full eClosing takes even less time and effort than a hybrid eClosing and provides other benefits, such as shorter funding times and the ability for the borrower to review documents ahead of time so they can ask questions. Because everything is digital, eClosings also offer better control over the process and usually produce higher-quality loans. Our eClosePlusComplete product, for example, lets lenders have fully digital loan files, including a SMART Note, eVault and automatic MERS registration.
Remote Online Notary (RON) eClosings
A RON eClosing is a full eClosing in which the borrower eSigns documents that require notarization remotely over the Internet. Typically, this involves a video conference between the notary and the borrower, during which the notary witnesses the borrower’s signing. Afterwards, the notary eNotarizes the documents with a digital notary seal and their eSignature.
RON eClosings are not yet available everywhere. As of this writing, about half of all U.S. states have legalized RONs, although more are expected to follow. In states where they are allowed, our eClosePlusRON product lets borrowers execute all their closing documents from the comfort of their home.
The most important factor involved in successfully implementing eClosings is choosing the right eClose partner. The best eClosing providers have years of experience in mortgage lending and settlement agent processes and are able to implement solutions quickly and easily.
That’s why eClosePlus has become such a trusted eClosing partner for residential and commercial lenders nationwide. With our intuitive eClosing technology, which simplifies the closing process for lenders, referral partners, settlement agents and borrowers, we can take any document from any system and auto-tag it in seconds. And we’re great at making sure borrowers sign documents electronically, so our clients receive the full benefits of eClosing, regardless of which option they choose.
If you’d like to learn more about our eClosing products, just ask for a demo by clicking here. And if you have any questions, feel free to contact us at [email protected]. We’re always happy to help!