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Bridging the Settlement and Lender Divide in a Digital World

Republic Title’s Dennis Pospisil, Senior Vice President of Digital Settlement and Signing Services recently sat down with eOrignal to talk about bridging the lender and settlement divide in a digital world. Check out the conversation here:

eOriginal: What barriers do you see standing in the way of a completely digital real estate experience?

Teri:

I think engagement and adoption across the industry is crucial, but certain barriers may exist, like having the necessary equipment to support the adoption of digital mortgages. For example, consider escrow agents using a mobile notary. Are they prepared, willing and ready to take digital closings on the road with them? Has everyone (and I do mean everyone) involved in the closing had the required training? Are they setup in the system with logins, etc.?

The other thing that concerns me is the existence of multiple platforms. Is that scalable for settlement companies? Are settlement companies willing to receive transactions across multiple systems?

On a different side of the transaction, are loan officers willing to adopt and change what the closing experience and celebration will look like? Will they partner for the future by thinking about what they want the closing experience to look like in the years to come?

These are a few of the questions I believe the industry should consider as we move into this digital era.

Dennis:

Many people subscribe to the “if it’s not broken, don’t fix it” philosophy, but sometimes it is about making an existing way of doing things better. To continually be relevant in the market, you have to ask, “Can we make it better?  If so, how?” I don’t see enough mortgage professionals focusing on those questions.

There are other barriers directly related to finances. For example, some settlement companies are not setup properly for high speed internet nor, in some cases, do they possess technology like tablets, laptops, and/or other items that are necessary to conduct a completely digital closing.

Lastly, there are practical barriers unique to our industry, such as legislation and the county clerks’ offices in the areas we serve. Does your state have legislation in place supporting remote online notarization (RON)? Does your state have legislation in place supporting the papering out of eSigned recordable documents? What about the steps necessary to bridge the traditional method of recording with the non-traditional method of eSigning?

Unique barriers are going to exist outside of these thoughts, so those interested in supporting digital closings must identify and work through them one at time.

eOriginal: What do you think is on the horizon? How about 5 to 10 years from now?

Dennis:

First, I think we’ll see additional RON legislation in various states. We are still at the beginning of this new digital age and several states still don’t have legislation in place to allow remote online notarization. You also have some states with RON legislation in place but with a few key elements still missing or being worked on, like a “papering out” bill. As an example, Texas should expect a “papering out” bill to pass very soon, as early as September 2019.

On the seller side of real estate transactions, I see RON making a shift towards a new and more convenient experience. The borrower side is probably heading in that direction as well, but from a settlement agent’s perspective, we’ll have to see how each of our lending partners adopts the concept of digital settlement, since it isn’t something we can control.

Then we have AI, or artificial intelligence, and machine learning, which are big ticket items beginning to play a role in the life cycle of the real estate transaction. They are still some time away, but it’s fascinating to read about all the work and projects already underway.

To help the readers understand the interplay a bit better, consider AI as the broader concept of machines being able to carry out tasks in a way that we would consider “smart.” Machine learning is a subset or current application of AI based around the idea of providing machines access to data and letting them ‘learn’ for themselves. Within our space, we are already seeing some of the large-scale real estate sites using AI for home or rental recommendations.

Teri:

I agree with Dennis’s comments. At Fairway, the experience delivered to the consumer is critical, and we see settlement agents as a crucial component to ensuring that experience is positive, both now and into the future.

The mortgage industry is moving quite quickly. On the one hand, you have the proposed Uniform Residential Loan Application (URLA) changes that are happening, and on the other hand we see many different investors, programs, and products available, so it takes a lot of effort just to keep up with our market. Then factor in the Ginnie Mae offerings and the move toward digital transactions, and it’s clear that this is an exciting time to be in mortgage!

eOriginal: Where can others go to learn more about digital mortgages and lender and/or settlement agent best practices?

Teri:

They’ve already found one resource, this blog article. Others worth visiting include:

Dennis:

Adding to the list that Teri provided I’d say the following are good resources:

To view the full webinar, please visit http://info.eoriginal.com/W-JUL-MG-DC-19_On-Demand-LP.html?Digital_Source=Website

Source:  https://www.eoriginal.com/blog/voice-from-the-industry-settlement-and-lenders-answer-key-questions-about-digital-closings/

 

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Voice from the Industry: Leading the Digital Charge in Settlement

Republic Title’s Dennis Pospisil, Senior Vice President of Digital Settlement and Signing Services recently sat down with eOrignal to talk about digital trends from a settlement industry perspective. Check out the full conversation here:

eOriginal: Dennis, would you mind giving our readers an overview of your background?

Dennis: I originally received a degree in Information and Operations Management (or MIS), which focused on the intersection between technology and business. But my work history centers on real estate, having started my career as a real estate agent and then working across all aspects of a settlement company, eventually finding myself leading the charge for technology at Republic Title of Texas, Inc.

eOriginal: Why is Republic Title of Texas supporting the move toward digital mortgages? What is in it for you?

Dennis: At Republic, we take an “outside-in” approach, meaning that we first consider what is best for our customers, along with their wants and needs. We are starting to see the persona of the consumer change. Gone are the Baby Boomers and in are the Generation Xers and Millennials, who tend to be more comfortable with and have a preference for digital technologies.

Secondly, we consider decisions from a strategic company perspective, ensuring we meet the needs of the market. The market desires a digital buying experience, and frankly, closing is the last piece of the buying process that hasn’t gone digital. There is a lot of pent-up value waiting to be tapped just by digitizing that last element.

eOriginal: You’ve had a lot of experience with digital technologies. Would you mind talking about your early experiences with digital mortgages?

Dennis: I’ve done a number of hybrid closings on smaller platforms that died over the years. In those early days, the promise of digital closings sounded great from a settlement agent’s perspective, but the settlement community did not have the right technology to make it a convenient and positive experience for the consumer.

To paint a picture, consider what a closing with both electronically and wet-signed documents was like 10 years ago. The first part of the closing would go smoothly, but just when the borrower thinks they are finished, they would need to step into another room to complete the eSigning portion with a desktop computer and a large monitor. That’s not just inconvenient for the borrower, it’s also confusing.

But today, with mobile devices and tablets as well as existing wireless technologies, the supporting technology is in place to ensure a smooth digital closing experience.  We can offer concierge closing services that match the busy lives of today’s consumers.

eOriginal: You’ve used several digital solutions. What is some advice you can give to mortgage professionals and, more specifically, settlement agents about what to look for in a solution?

Dennis: I’d suggest they first consider what role the technology plays in their day-to-day activities. Is it an entire production system or is it an ancillary supporting system?

I’d also encourage mortgage professionals to consider the steps required to do basic operations in the product. Are there too many manual or redundant steps? Remember – these systems are supposed to make your lives easier.

Finally, I’ve been exposed to vendors in the past who didn’t have a vision for the future. They might have come out with the innovative and exciting capability that was in the news at the time, but they didn’t consider how those capabilities could provide value at scale, or how to augment and grow them in the future. I suggest others in the industry partner with providers that have a solid roadmap, a pulse on the market, and are seeking to find a different and better way.

eOriginal: What barriers do you see to settlement agents supporting digital mortgages?

Dennis: Many people subscribe to the “if it’s not broken, don’t fix it,” philosophy, but sometimes it is about making an existing way of doing things better. To continually be relevant in the market, you have to ask, “Can we make it better? If so, how?” I don’t see enough mortgage professionals focusing on those questions.

There are other barriers directly related to finances. For example, some settlement companies are not set up for high-speed internet, tablets, or laptops. And, finally, there are practical barriers unique to our industry, like legislation and the county clerks’ offices in the areas we serve. For example, we are still waiting on a “papering out” bill in Texas, but once that is in place, many of the existing hurdles to digital closings will begin to disappear.

eOriginal: One thing we hear about in the market is the potential for cost savings with digital. But we often hear about that in reference to lenders and other sectors of the mortgage ecosystem, not the settlement community. Are there potential cost savings for settlement agents? 

Dennis: Yes, but I prefer to look beyond cost savings and consider revenue potential. Depending on the size of the operation, there are obvious hard cost savings in the form of paper, toner, and devices for printing. There are also softer savings like operational efficiency. At Republic Title of Texas, the efficiencies gained from adopting digital allow us to free our talented employees to drive growth for our business through new services and new markets. It allows us to access our business’s untapped potential.

eOriginal: We’ve talked about costs and revenue opportunities, but what about broader headaches? Can digital technology help there as well?

Dennis: Lost or misplaced files is certainly one headache that digital addresses. When you are using a digital system, your files and data are in one place, easily accessible. Another headache is in the talent management realm. There are talented people that settlement companies cannot hire because they don’t live near any of their brick-and-mortar locations. Supporting a digital process may open more avenues for finding top talent.

eOriginal: Do you feel the adoption and commitment toward digital mortgage is different now than in times past? If so, how?

Dennis: Thinking back to the early 2000s, we saw interest develop and then, just as quickly, disappear. The feeling is substantially different today. For one, we’ve seen many more digital closings this year than in years past. In fact, MERSCORP Holdings, Inc. recently announced that there were more eNotes registered in the first quarter of 2019 than in all of 2018. A second point to consider is that the ecosystem required to support and sustain the digital mortgage movement is taking shape, certainly much more than it did in those early years.

eOriginal: As we close, do you have any suggestions for settlement agencies considering support for digital mortgages?

Dennis: Be sure to approach moving to digital as a strategic initiative, rather than a one-off project. Think about your overall business strategy and then factor where digital can provide a sustainable impact. Be prepared to fully support and build on digital capabilities, rather than making a one-time investment in the latest technology. A commitment to digital requires more than just technology, it requires building a team of positive, digitally ready employees along with a strong ecosystem of digitally enabled partners.

Source: https://www.eoriginal.com/blog/a-voice-from-the-industry-leading-the-digital-charge-in-settlement/

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The Promise of Digital Mortgage is a Reality

MBA Tech 2019: The Promise of Digital Mortgage is a Reality

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Last week, the eOriginal team was out in force at MBA Tech 2019. We enjoyed seeing old friends, making new friends, discussing digital best practices and learning what is top of mind when it comes to mortgage technology adoption.

The conference opened with a riveting discussion on the biggest tech innovators and disruptors, featuring George Blankenship, a former executive at Apple Computer, Tesla Motors and Gap, Inc. In his entertaining speech, Blankenship noted, “Do something that is going to impact your industry forever.”

Do something that is going to impact your industry forever.

This resonated with me as it largely aligns with the current state of the industry. Digital mortgage technology is not just about gaining one benefit. It’s about the myriad of benefits that come with an end-to-end digital mortgage process. Fortunately, the ongoing adoption of digital processes that is taking place today will have a lasting impact on the mortgage ecosystem.

Tech Talks: Digital without the Disruption

Shifting gears, a highlight of the conference was eOriginal’s demo in the Tech Showcase. Last year at MBA Tech 2018 in Detroit, we demonstrated what we were bringing to the market. This year, we highlighted the evolution of the market and proved that the promise of digital mortgage is in fact a reality. To do this, we focused on a real-life scenario that recently took place—a digital closing in Texas.

Dennis Pospisil is Senior Vice President at Republic Title of Texas, the settlement agent that conducted the digital closing. He joined eOriginal’s Chief Product Officer, Simon Moir, and Senior Product Manager, Alex Tepe, on stage for a six-minute Q&A-style presentation. Moir and Tepe asked Pospisil about his experience with the digital closing as well as what he had to do to prepare for a paperless settlement.

Believe it or not, Pospisil found out that the closing would be digital just 24-hours ahead of time. Throughout the conversation, he emphasized how easy the process was—it required no training, no contract, and no fees. An iPad was used for the closing, but any type of connected device with a browser and sufficient screen capacity could have been utilized. DocsDirect, the document prep provider, delivered the lender docs, as well as a one-page training document for Republic Title of Texas. A bonus highlighted by Pospisil was the borrower’s excitement over the ease and convenience of a digital closing. Clearly, all parties involved were more than satisfied with the experience.

eNote Volumes on the Rise

So why are electronic notes important to digital adoption? An eNote is an electronic version of what has traditionally been a paper document. Since it is electronic, it needs to be created, signed, and managed in a specific way to ensure that it has the same legal enforceability as paper. This is the most critical document for all parties in the mortgage ecosystem, including lenders, originators, warehouse lenders, custodians, investors, and servicers, as its validity is essential for the downstream life of the loan on the secondary market. eNotes allow tech-forward lenders to maintain agile operations and achieve greater liquidity than they can achieve through traditional paper processes. As of April 1, 2019, 376,618 unique eNotes have been registered on the MERS® eRegistry.  The mortgage industry can continue to expect exponential growth of eNote production in 2019.

Until Next Year, MBA Tech

As the Dallas skyline faded into the distance, I spent some time on the flight reflecting on my experience at the conference. The acceleration of the mortgage industry’s digital transformation comes from all sides. Adoption by originators, custodians, settlement and title agents, doc prep providers, warehouse lenders, servicers, the government-sponsored enterprises (GSEs), and MERS is crucial for its success.

During MBA Tech 2019, it became abundantly clear that digital mortgage isn’t just a promise for the future. It’s a reality today.

Source: https://www.eoriginal.com/blog/mba-tech-2019-the-promise-of-digital-mortgage-is-a-reality/

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Four Imperatives as Lenders Evaluate eClosing Options

Shifting consumer expectations, increasing market pressures and momentum for regulatory changes may make 2019 the year the mortgage and title industries accelerate the adoption of eClosing.

It’s no secret that consumers demand a more digital, more efficient real estate closing process. At the same time, mortgage lender profits are under pressure amid a cooling housing market and rising mortgage rates. And, across the U.S., state legislation is maturing in areas of eNotarization and Remote Online Notarization. These factors, along with widely available eSignature standards, are poised to accelerate broader acceptance of fully digital eClosings in real estate transactions in 2019.

Consider also that 65 percent of lenders who expect profit margins to increase in the next three months believed technology would be the most important reason for the expected increase, according to Fannie Mae’s fourth quarter 2018 Mortgage Lender Sentiment Survey (http://www.fanniemae.com/resources/file/research/mlss/pdf/mortgage-lender-sentiment-survey-findings-q42018.pdf).

Settlement providers are adapting as well. First American Chief Economist Mark Fleming recently surveyed title agents and real estate professionals and found 65 percent of respondents anticipate needing software support for Remote Online Notarization and eClosing, and secure collaboration and communication portals, in the next 12 months (https://blog.firstam.com/economics/will-fintech-adoption-among-real-estate-professionals-accelerate-in-2019).

It appears that in 2019 the industry may make significant strides toward delivering a real estate transaction closing experience that aligns with the digital home search and loan application experience that has become commonplace. As with most opportunities, there are real challenges to overcome. Lenders are wise to thoroughly evaluate how to best offer eClosing options to consumers, as there are many important considerations to study and some of the industry hype around eClosings can be misleading.

Settlement providers have a unique perspective on many of these challenges given their role in closing real estate transactions. First American recently launched an eClosing solution and is engaged with multiple customers on pilot tests. In the process, we’ve gained significant experience and uncovered some important findings that, if handled appropriately, may have the ability to enhance the progress towards adoption of eClosings (https://www.firstam.com/news/2018/eclosing-solution-launch-20181015.html).

1. The Workflow Matters
Switching from a traditional paper-based signing event to an eClosing with a digital signing event requires more than the ability to eSign documents on a portal. Coordination, communication and document preparation are paramount regardless of whether the consumer signs with a pen or the click of a mouse.

In order to scale, the workflow must be more efficient than today’s paper process for both the lender and the title and settlement provider to accelerate adoption. Minimizing any additional work needed by loan processors or title and settlement agents to prepare for an eClosing versus a paper closing can facilitate greater adoption, which will help lenders more quickly reap the potential benefits of eClosings–enhanced efficiency and reduced cost to close transactions. Understanding the full signing process, including scheduling, communication, coordination, lender and title document preparation and final execution, is critical to creating an improved, digital version of the paper process.

2. Recordability is in the Eye of the County Recorder
There are thousands of county recorders in the U.S. and their views on the recordability of eSigned and native digital documents, which are used in RON and in-person eClosing transactions, can vary greatly. We’ve interviewed dozens of staff at county recorders in states that recently passed legislation supporting RON eClosings, and found varying degrees of readiness for eSigned and native digital documents. That’s important because, if documents do not adhere to state and local laws, eSigned debt obligations can be reversed in bankruptcy court, for example.

3. Build it vs. Buy it
Mortgage lenders have a variety of options on how to approach eClosing, including building their own proprietary technology, purchasing an eClosing platform from a technology vendor or working with an established settlement provider to handle digital settlement. Each mortgage lender will choose the path that best serves their customers and operations. However, for lenders who choose to bring some settlement processes in-house, it’s important to remember that doing so entails assuming the risk, control and coordination of the signing event and signing process, which many lenders and lender staff do not traditionally coordinate.

Similarly, most lenders work with many different settlement providers. So, lenders that choose to purchase or build their own eClosing platform will need to train their settlement providers on how to use the lender’s platform, including how to incorporate the title documents into the eClosing package. In a purchase market, and with typical industry turnover rates, this training process becomes an ongoing effort and expense.

4. Settlement-Driven eClosing
Some lenders may prefer their title and settlement provider handle eClosing and thus maintain the coordination and management of the signing event, along with the responsibility and risk associated with it. Each individual lender’s approach to eClosing will differ somewhat and title and settlement providers need flexibility to accommodate nuances between various approaches. This would, however, eliminate the need for lenders to own, pay for and manage the process and platforms used.

While the changes that come with bringing eClosing to the market are new, lenders and settlement providers have a long history of working in concert to complete real estate transactions with high quality. Open communication and collaboration will continue to deliver the best results for lenders, settlement providers and consumers as the real estate industry marches toward the secure, scalable adoption of eClosings.

Disclaimer: This article is intended for educational and informational purposes only. The views and opinions expressed in this article are solely those of this author, and do not necessarily reflect the views, opinions, or policies of this author’s employer, First American Mortgage Solutions.

(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA Insights welcomes your submissions. Inquiries can be sent to Mike Sorohan, editor, at msorohan@mba.org; or Michael Tucker, editorial manager, at mtucker@mba.org.)

Source: https://www.mba.org/publications/insights/archive/mba-insights-archive/2019/four-imperatives-as-lenders-evaluate-eclosing-options

 

Close-up Of A Person's Hand Stamping With Approved Stamp On Document At Desk

MISMO Unveils Remote Online Notarization Standards

Close-up Of A Person's Hand Stamping With Approved Stamp On Document At Desk

MISMO has announced the release of its Remote Online Notarization (RON) standards, which will enable the use of audio-visual communication devices to notarize documents in a virtual online environment. 

MISMO’s RON standards were updated to include language to preclude the storage of personally identifiable information. The standards support model legislation that was developed by the Mortgage Bankers Association (MBA) and the American Land Title Association (ALTA), which multiple U.S. states are now using to enact RON laws in their jurisdictions. MISMO noted that some states with RON legislation have already utilized draft versions of the MISMO RON standards to implement their state law. 

MISMO released the standards for a public comment period that runs through Aug. 12, at which point the standards will be moved to Candidate Recommendation status if substantive comments are received in the comment period. The Candidate Recommendation status means the RON standards are ready for broad use across the entire residential mortgage industry. 

“With states across the country enacting remote online notarization laws, MISMO’s standards will support greater consistency as the volume of remote online notarial transactions increases,” said Eddie Oddo, Vice President of Corporate Business Solutions at First American Title Insurance Company, and co-chair of MISMO’s Remote Online Notarization Workgroup. “We’re excited about this next stage in the standards process and look forward to seeing lenders, title companies, software vendors, and notaries leverage RON standards to offer borrowers a more secure and efficient closing process.” 

MISMO’s announcement was also welcomed by David Burner, Strategic Planning and Partnership Manager at Notarize, a Boston-based platform for legal online notarization. 

“We are really excited that MISMO put together the standards for the industry,” said Burner. “There is so much talk about online notarization that sometimes it can be confusing. This was a collaborative effort among different stakeholders, and without MISMO this would not have happened.”

Source: https://nationalmortgageprofessional.com/news/71822/mismo-unveils-remote-online-notarization-standards

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