Ramping Up For E-Closings - National Lenders See The Light

Wachovia and E-Loan have both rolled out remote, electronic loan closings to their consumers using LSIs ClosingStream e-closing platform. E-Loan disclosed much of its e-closing strategy in exclusive interviews with Real Estate Technology News in February, but was not then ready to announce the vendor with whom it was working. Wachovia, on the other hand, has gone live with a consumer-oriented campaign spelling out the benefits of remote closings.

Rapid growth

According to LSI, more than 20,000 loan closings have been completed to date on the platform, which targets mortgage refinance and home equity lending transactions. Under the ClosingStream model, borrowers sign over power-of-attorney to LSI. At the closing, an LSI closing agent then wet-signs documents as the borrower reviews them online.

LSI said the swift adoption is interesting because it shows widescale interest in electronic closings even before an eNote is available for signing.

Al Verkuylen, chief strategy officer for LSI, noted that a relatively small number of full electronic mortgages have closed with an eNote. In October, for example, MERS announced the 1,000th note to be registered on its eRegistry.

All were really waiting for is a lender that wants to do the eNote piece, Verkuylen said.

Version 1.1 of ClosingStream has just been released. LSI has a lender partner that wants to work with eNotes, and the next version of the platform will likely let the borrower sign notes electronically (they would still have to sign over power-of-attorney for the other documents), according to Verkuylen.

We expect it to be there by end of summer, he said.

That would mean adding e-signing, electronic-vault and MERS registration components. Lenders will still send LSI documents in PDF format. LSI will prepare those documents so they can be electronically signed it will also handle the PDF-to-SMART Doc conversion, where needed.

The demographics of e-closings

Currently, about 30 percent of consumers are accepting the offer to close online through the system, according to LSI. Verkuylen conceded, however, that LSI tends to serve centralized fulfillment centers that originate loans online and direct to consumers. LSI believes consumers adopting the e-closing option are younger people who are comfortable on the Internet.

Are they the MySpace generation? They may be, but I think theyre also a large group of people 25-50, he said.

Lenders and borrowers benefit from ClosingStream because they dont have to work with third-party mobile notaries to conduct closings, Verkuylen said LSI controls the entire title and closing process. Borrowers can schedule closings as early as possible during the application process and participate in the closing from any location.

At the scheduled closing time, the borrower logs into the ClosingStream Web site and dials a toll-free number to connect with an LSI closing representative. Using an online meeting application, the representative covers each loan document to ensure the borrower understands the details.

During the closing representatives review of the documents, any necessary changes to those documents can be completed. If changes are required, the representative electronically coordinates those changes with the lender and reposts the corrected documents on the ClosingStream site.

With accurate documents in place, the borrower answers a series of online questions that are specific to the loan documents in review, acknowledging that he or she understands and agrees to the terms and conditions of those documents.

All of the audio and on-screen activity during this closing process are recorded and archived for future reference.

According to the company, version 1.1 of LSIs system brings better borrower authentication, borrower security, document delivery and document question-and-answer segments. It uses a multi-factor authentication process with layered security controls to ensure that the individual borrowers information is authenticated.

Matt Smith is the editor of Real Estate Technology News, the only full-time newsroom in the country devoted solely to mortgage technology and real estate data. Real Estate Technology News is the essential knowledge tool for professionals whose livelihood depends upon keeping pace with state-of-the-art mortgage technology and real estate data that powers these critical valuation and collateral risk systems. Real Estate Technology News is a publication of October Research Corp., the nations premier provider of real estate news and data