This article is part of our educational series on the five key factors that determine how digital your mortgage closings can be, known as e-Eligibility.
For more information, download the full eBook or get your free e-Eligibility assessment to determine how digitized each loan in your portfolio can be.
Lenders that offer digital closings must account for e-Eligibility throughout their entire lending process. e-Eligibility—or the factors that impact whether a mortgage closing can be closed digitally—is critical for lenders to get right to ensure a positive borrower experience and avoid negative regulatory consequences.
This article covers settlement readiness, one of the five factors of e-Eligibility. Readiness is about whether the settlement agent is enabled to facilitate digital mortgage closings. Settlement agents typically follow instructions from the lender on how to facilitate the loan closing (as long as that guidance does not conflict with laws, title underwriters’ requirements, or borrowers’ preferences to eSign their closing documents).
Readiness primarily refers to whether the settlement agent is sufficiently enabled to facilitate the digital mortgage closing, through system access, training, and clear instructions from the lender.
The chart below gives lenders a detailed framework for what to consider when assessing eNote regulations.
Settlement Readiness at a Glance
Definition of Settlement Readiness:
- Whether the settlement agent is enabled to facilitate digital mortgage closings
Primary Stakeholders:
Objects:
Systems:
Mortgage Cycle:
- Before and after closing. The settlement agent facilitates the closing of the loan, which may include managing signing appointments, disbursing funds, and submitting documents for recording.
Decision Power:
- Moderate to High-Although the lender may not select the settlement agent (commonly the case with purchase transactions), settlement agents typically follow instructions from the lender on how to facilitate the loan closing (as long as that guidance does not conflict with laws, title underwriters’ requirements, or borrowers’ preferences to eSign their closing documents).
Boons:
- ++ The settlement agent is sufficiently enabled to facilitate the digital mortgage closing, through system access, training, and clear instructions from the lender
Drags:
- The settlement agent is not sufficiently enabled to facilitate the digital mortgage closing (e.g., inadequate system access, training, or instructions from the lender).
Sources of Variability:
- Settlement agent’s relationship with the lender, or its prior experience with digital mortgage closings.
Process:
- The lender provides the settlement agent with sufficient information to enable the settlement agent to facilitate the closing, including information about the borrower and the loan, the lender’s closing documents, and any corresponding closing instructions. For digital mortgage closings, this enablement may also take the form or access or training to support the lender’s digital mortgage closings.
Considerations:
- Since the settlement agent conducts the closing based on the lender’s guidance, this factor is generally within the lender’s control.
- Lenders can empower settlement agents to be a boon to their digital closing efforts by implementing solutions that are both readily accessible to settlement agents and also intuitive for them to use. Lenders should also ensure that they provide clear instructions to settlement agents on how to facilitate their digital mortgage closings.
Readiness is just one of the factors that lenders need to consider when digitizing mortgage closings. To understand all five factors involved, download our eBook, The 5 Rs of e-Eligibility for Mortgage Closings.
Check out our other blog posts in our e-Eligibility series here: