We live in a modern world where many operations, from communication to purchases, are digitized. The benefits of implementing a digital strategy are tremendous, as evident in the digital lending scenarios that emerged during the pandemic. Industries across all sectors continue to embrace and adopt digitization, and the mortgage industry is no exception. A digitized mortgage process that includes eClosings and eNotes gives customers a faster, easier and more transparent borrowing experience. All these translate to a better perception of your brand.
The adoption of eNotes across the mortgage industry continues to accelerate. Those that lag will find themselves at a distinct disadvantage to their competitors, putting them at risk of losing customers and market share. Before exploring the advantages of eNotes, let’s take a close look at what they are.
What are eNotes?
An eNote is a digital replacement of a promissory note – an irreplaceable piece of paper that proves the borrower agrees to pay the lender a certain amount based on specific terms. During an eClosing, an eNote becomes the cornerstone of the process and replaces the traditional note. The paper promissory note is no longer relevant in today’s world for various reasons. One, the odds of something happening to a traditional promissory note are high over the life of a 15-year or 30-year mortgage. The paper could easily get misplaced or destroyed by natural disasters. Not to mention the cost of transporting and storing the promissory note in a safe location. Below are reasons why you should use eNotes for your mortgage closings.
Lenders that use eNotes use funds for a shorter period, save on warehouse lending and turn credit lines more frequently. If you originate hundreds or tens of thousands of units per year, even a small average cost reduction from a digital mortgage can result in significant savings. With eNotes, you significantly lower the costs for acquiring and organizing loan documents and promote post-closing quality control.
eNotes also allow lenders to ensure that the necessary documents are in place and signed in the required locations. This reduces the chance of missing documents and inaccurate signatures. It then becomes easier for originators to move loans into the secondary market, freeing up dollars on the balance sheet for any extra lending.
Better customer experience
Many people turn to online options throughout their home-buying process and expect more aspects of the transaction to be done digitally. Additionally, a lot of young home buyers are entering the mortgage marketplace. They are more likely to gravitate to lenders that meet their high expectations of always-on and instant responses.
eNotes are an important part of a digital mortgage closing process; they allow borrowers to complete a mortgage closing regardless of location. As such, customers and settlement agents can avoid in-person contact on the closing day since the process can take place from their homes. Additionally, borrowers and lenders from different countries can work together without location being a hindrance.
Besides the comfort of closing from anywhere, the borrower also benefits from an accelerated, simplified, accurate and reliable mortgage process. Using eNotes, lenders can now complete mortgages quickly, cost-effectively and securely, providing higher customer service and satisfaction.
More transparent and secure
eNotes allow you to store and manage documents in a digital vault, which all stakeholders can view at any time. This allows the involved parties to see where the eNote is in the closing process. Since the documents are stored in a digital vault, it is easier to service the mortgage and move the asset to the secondary market with greater transparency. Furthermore, the electronic closing process provides lenders, borrowers and settlement agents with a more cyber-secure process. Examples of systems that ensure greater security include encrypted communication, ID verification, and an audit trail with stronger safeguards than in-person notarial transactions.
An end-to-end digitized process enabled by eNotes allows lenders to deliver fast and more convenient mortgage processes to customers. Initially, closing a home mortgage took about 43 days. But since eNotes facilitate a digitized mortgage process, lenders and borrowers can now close mortgages in 21 days.
In the coming years, eNotes will become a competitive differentiator since the modern-day consumer values speed and convenience. Now is the time to adopt eNotes to avoid the risk of falling behind competitively due to failure to meet customer demand.