8 Things Every Title Professional Should Know: #3 E-Closings: The Next Big Piece in the TRID Mortgag
The Next Big Piece in the TRID Mortgage Technology Puzzle
E-Closings, though fairly new to the industry on a mainstream basis, have been around for quite some time. As technology continues to impact and improve the efficiency of the real estate work flow, E-Closings have gone from a conversation piece to a now possible vital component of a TRID compliant company. Early last year, the CFPB enacted pilot program to monitor the functionality of using E-closing 100% of the time for 4 months. The results of the study have been published and earlier this week, CFPB’s Director, Richard Cordray prepared his findings. In it, he detailed several strategies, ideas and key priorities facing the industry as well as ways to handle E-Closings – one of the practices the CFPB hopes will make the closing process easier for consumers and more efficient for service providers.
According to the prepared remarks, the CFPB believes that there may be opportunities to “leverage technology more heavily in the mortgage closing process as well.” Furthermore, they seek to promote “a different vision of the mortgage closing process – one with an empowered, knowledgeable borrower who participates in a more efficient, consumer-friendly process.”
Some of the external drivers of this policy were (not surprisingly) the consumers. After conducting a private study, the CFPB concluded that the consumer needed more empowerment and control over what some consider a pretty intense financial investment. There was also a huge need to lower the cost on both ends – by reducing paperwork and by making more information available to the consumer. It also prioritizes the consumer over the banks, lenders and other financial parties involved with the sale. From the title side, e-closings are costly at the onset but eventually, well worth the investment. Unfortunately, for smaller firms with less capital to spend on technology, this could also be the final “straw” that forces them to either downsize or in worst cases, close. Investing in new technology for TRID is almost necessary and with the added benefit of e-closings, bigger title companies are much likelier to survive this transitional period.
The language on closing documents has long been a source of contention for the real estate industry. It made consumers feel disadvantaged and naive to the world of mortgages and property in general. Allowing customers to decide how they want their closing handled gives them control of their circumstances, based on their own experiences. There’s also the added bonus of giving consumers the ability to control their property buying experience.
By making documents accessible, understandable and now digital, consumers are able to actively participate in the business of the purchase instead of just blindly signing away.