RSSThe use of eClosing platforms may help customer comprehension and efficiency during mortgage closings, according to a report from the Consumer Financial Protection Bureau.
Customers who closed mortgages electronically scored higher on understanding, efficiency, and felt more in control of the process than borrowers who used only paper forms, the bureau said.
The participants who showed the greatest improvement across all three categories, however, were those who received and reviewed documents before the final meeting, regardless of whether they received them electronically or on paper.
The bureau believes eClosing can delivery documents to consumers more quickly, allowing more time for review, while also providing educational tools to help them through the closing process more successfully. While some eClosing is already taking place, the CFPB encouraged adoption of the platform to aid consumers, although the report is not part of a rulemaking process.
The CFPB suggested the use of electronic platforms as an improvement to the closing process after an April 2014 report showed that consumers felt overwhelmed by complex closing paperwork and complained that they did not have enough time to review documents.
Following the report, the CFPB launched an eClosing pilot project that took place over a four-month period and involved lenders, consumers and technology companies, as well as settlement agents and real estate professionals. Some consumers used traditional paper documents, others used an eClosing process and others used a hybrid of electronic and paper documents. Borrowers who completed mortgage transactions during the pilot were invited to complete a follow-up survey. About 1,200 follow-up surveys were completed, and the bureau also conducted one-on-one interviews.
“We … expect that this pilot project and its findings will spur further industry action and innovation. We will continue to engage in a dialogue on the benefits, opportunities, and risks of eClosings,” said CFPB Director Richard Cordray. “By increasing efficiency and accuracy, we can cut costs and gain new benefits on all sides. The mortgage and real estate markets involve many players who need to work together to bring about positive change. All of us can embrace the central idea that consumers should feel empowered by modernizing what has become an outmoded closing process.”
