Mortgage Industry Insights: The State of eClose Adoption

Transcript

Todd Maki

So let’s get started, today's webinar topic is Mortgage Industry Insights: The State of eClose Adoption. And we'll be discussing the degree of close adoption in 2023 as reported by 100 leading mortgage lenders. So before we get started, we can start off with some introductions. Since I'm already talking, I'll go first. My name is Todd Maki. I'm the Vice President of Customer Success at Snapdocs. And today we have two very special guests, Brey Stafford with FirstBank and Garth Graham with STRATMOR Group. So Brey and Garth, will you please introduce yourselves? Brey you go first.

Brey Stafford

Of course. Thank you, Todd. I'm Brey Stafford. I'm from FirstBank. I am the Vice President of Secondary and Servicing Operations. Basically, once the borrower executes those documents, my departments handle everything from that point through the servicing of the loan.

Garth Graham

Excellent. So my name is Garth Graham. I'm a senior partner with STRATMOR Group. We do a lot of consulting in the mortgage space, technology consulting, and otherwise, I would like to just give a lot of credit to Brey for having a factually accurate representation of herself on screen in the form of that picture. My picture was taken about 20 years ago. When that picture was taken it was the first time that there was an eNote pilot done by Fannie Mae and it didn't really get anywhere. So there's a little bit of history for you. But in my observation, there's been a lot of acceleration on eClose over the last few years and I should probably refresh my picture.

Todd Maki

We like it the way it is. Thanks, Garth. Thank you both so much for joining us. All right. So today we'll be covering the six key findings from recent eClose adoption research that we conducted. Headwinds and tailwinds impacting the adoption of digital closings. We'll hear a story from Brey about FirstBank's firsthand experience with scaling eClose.

And lastly, we'll hear some recommendations from the panelists and you'll get the opportunity to pick the panelists' brains on any questions you have. 

Research Findings: The Current eClosing Landscape

Todd Maki

So with that, I'll give a quick overview of why and how we conducted this research. So first digital closings were flung into the spotlight. Obviously, they've been around for what I won't say how many years but decades in the industry, and were flowing into the spotlight and became a major priority for many mortgage lenders in 2020. But given the significant change in the industry over the last couple of years and particularly the last year, we want to take a pulse of the industry to see how far we've come and also to get the industry/lender view as to where we're going from here.

So to conduct the survey, we partnered with National Mortgage News and Arizent Research to survey 100 leading mortgage lenders this summer. So we uncovered, some incredible insights we're looking forward to sharing with them with you today. Let’s dive into the findings. All right, our first finding that came out of the research is that nearly 75% of lenders currently offer some level of eClose today, which you can see on the chart on the screen.

And so in this question, lenders were asked whether they offer some form of digital closing to borrowers. And if so, to select all closing types they have available. They weren't limited to just one form of digital closing. The major takeaway that we see from the data is that digital closings have fully arrived in the industry. A vast majority of lenders are offering some form or forms of digital closing today.

Garth as you mentioned, you've watched eClose closely over the last several years, a couple of decades. What are your thoughts on this, on this, these results, and these statistics?

Garth Graham

We do what's referred to as a digital mortgage survey every year. It's a couple hundred lenders. It's a very similar population. We survey across about eight different sets of functionality starting at borrower engagement, price and product, the POS or application space, processing, appraisal, closing, and post-closing.

So the closing/post-closing is an element of this journey we looked at. I will tell you the number of features, of which there are 50 or 60 in our survey, all of them have higher adoption nearly every year. Although in the last year, it's begun to stagnate a bit because of the economic challenges in the industry, the eClose part as you pointed out, saw a meteoric rise in 2020.

So everybody has it in place and live, or they have it on their roadmap. But of those that have it live, we see wide ranges of adoption differences. So that's really what you see in the eClose space. I think three out of four is about right. What we just see is a lot of different levels of adoption of what they're doing in the eClose space.

Brey Stafford

I totally agree with that. From a lender perspective and talking to my counterparts, there's some form of eClosing or digital closing that they have available to them. It's just how far down the path of that full digital eClose are they right now?

Todd Maki

So let's go deeper into this data. As we saw on the prior slide, and just digging in a little bit more, we see that hybrids are the most common digital closing flavor being offered. I think is interesting. Remote Online Notarization (RON) is the least commonly offered. For as much talk as there is in the industry about RON and the promise of RON, it's still just the promise of RON, and many folks aren't actually offering it yet despite the huge interest. Many of us recognize that's where we're headed, but we are still much earlier in the journey, right? What are your thoughts on this? How do you see this mirroring your own journey?

Brey Stafford

I think you have to take each process of the eClosing as a baby step. Start with finding your platform and then moving to that hybrid eClosing, get that under your belt, and move to that hybrid with eNotes before you can really explore that full hybrid eNote or RON closing. At FirstBank, we found it best to take each step on its own instead of trying to roll the full thing out at one time.

Garth Graham

I think that's a great example of a change management piece. I think we're going to talk about that later in the session here, but I think what Brey really outlined is the fact that their change management discipline was trying to do this in pieces and maybe go a little bit at a time. And I think we're going to talk about some of the flavors of hybrid, but a little bit at a time, and sticking with it is the way to get towards some sort of adoption.

Like most technologies, you can't just implement the technology and not also focus on the people and process necessary to implement the change. So, as we share more and more of this data, there are a lot of insights we can get on Brey’s success.

Todd Maki

Yes, this resonates with what we see at Snapdocs as well. Our most successful lenders take a staged approach starting with digitized wet, then hybrid, and layering on eNotes, and then ultimately moving to RON. It allows them to scale into each form of closing and experience the unique benefits of each form of digital closing. And to your point, that curve represents the bulk of the industry that is still in the early stages, right? 

All right, our third finding contrasts with the first two, which were focused more on where lenders stand today in terms of what they offer. A key element of the survey was also to understand what lenders are focused on in the future. What you can see here is the research found that nearly 90% of lenders have goals related to hybrid, eNote, and RON, which strongly reinforces digital closing remains a broad priority across the industry as we think about the future ahead. What's interesting, corresponding to the prior results, the largest number of lenders that have goals are focused on scaling hybrid followed, by maximizing adoption of eNotes, and then ultimately offering RON. And so Brey going back to you again, in the midst of your own digital closing journey, how do you react to so many lenders reporting specific goals around eNotes and RON?  Does that resonate with you and your goals? 

Brey Stafford

Yes, I think that's the best way to approach it. We started from wet digital, to hybrid, to eNote from a Fannie/Freddie conventional perspective. Once you get comfortable with that, you're able to close those, sell those, look and see what that Ginnie Mae option for eNotes looks like to expand that eNote capability. And then allow the borrower to have a full electronic experience with RON. Now that there are so many more options for storing those videos, I think more RON adoption will take place. I think one of the largest concerns, from a lender's perspective, was where we would house all this information. Now that there are services out there to help store that information for you, I think it's something that more lenders are going to move toward.

Garth Graham

When we originally did our first eClose survey in 2019, it was pre-COVID. We actually asked the question about hybrids. And what we were really surveying is whether hybrid meant there was no eNote. You either had the hybrid with an eNote or you had a hybrid where a note ultimately was not an eNote and we had to adjust our survey because of some of the changes that occurred around the offering. So I think what a lot of people don't realize is you can have a hybrid close with an eNote. And I think a lot of people think you can't have an eNote without a full eClose, which is a RON eClose. Does that make sense? Todd? Did I get that right? Because I think that sometimes people miss that in the context of the options they have related to the eClose experience.

Todd Maki

Yes. We just had a situation this past week working with some of our customers on some of the FHA loans in the industry where state agencies are saying they don't accept hybrid—thinking it’s either what we would call a RON or hybrid with eNote. In fact—once we described what we meant by hybrid; digitizing noncritical docs, not the note, nothing with the notarization, being digitized—I think most, if not all of them, have acknowledged they can accept it. So to your point, there's an issue of semantics that we're still unlocking in the industry.

Brey Stafford

I agree with that. Working with investors on rolling this out, you really have to explain the difference between that hybrid and then hybrid plus eNote. Because almost all investors will take that hybrid. No problem. It's once you get that hybrid with eNote, then you have to have those additional approvals and make sure they're able to buy the loans and everything like that. So there is a different process depending on what type of eClosing you want to go for with that borrower.

Todd Maki

All right. So we covered a bit about what forms of eClose lenders have available. Where they're focused on the future in terms of going ahead. And I think perhaps the most important question, and Garth you've alluded to this a couple of times, is how much of their closing volume is actually digitized today. So that takes us to the next finding, and perhaps the most interesting result from my perspective, which is that the majority of lenders offer eClose and have goals to increase adoption. The survey found that only 28% of lenders have digitized more than 60% of their loan volume. That's across all forms of digital closing including digitized wets. From my perspective, this is a pretty eye-opening statistic. The way I describe it is similar to real estate where the most important consideration is location, location, location. When it comes to digital closings, the most important consideration is adoption, adoption, adoption. If you're not actually digitizing, you and your borrowers aren't actually realizing the benefit of the service either. You just have another technology on the shelf. 

From a Snapdocs perspective, in contrast to the industry, our eClose adoption figures are something we truly pride ourselves in. The vast majority of our lenders have achieved significantly greater adoption of digital closings across their portfolios. I'm not going to say much more on these results, but would prefer to hear from both of you on this. I’ve been going to Brey first on the other questions, Garth. What do you see, do you have similar findings with your results? Your work at STRATMOR Group?

Garth Graham

Absolutely. And we see wide ranges and levels of adoption between vendors and we see wide ranges of the levels of adoption within vendors. So it depends on the vendor, but it's not entirely dependent on the vendor. We saw the exact same thing four or five years ago when the point-of-sale systems took off. You'd have two lenders using the identical system and would have dramatically different adoptions on co-consumers opting in for asset verification. And I bring that up because it doesn't have anything to do with eClosing, but it has to do with the fact that the same technology, even ones we're very familiar with access to bank accounts can have wide adoption levels differ by lender mostly because of the process and the people involved in the process. So it's a people, process, and technology piece. I will say that the eNote percentage for Snapdocs customers is significantly higher than it is with some of the other platforms. So whatever you have within that platform is doing a good job, at least driving people through adoption up to and including eNotes And it's like 5 to 6 times higher. It's a pretty significant number. 

Todd Maki

Yes, this result consolidates all digital closing flavors, but that's awesome to hear those stats. Thanks for sharing that.

Brey Stafford

From FirstBank's perspective, the vendor was a large factor in making sure that we were successful in the eClosing space. We did choose a vendor for our first go around this, our second go around is where we found our success. But the first go around, we did choose a vendor that ultimately did not work for what we were looking for technology-wise. It increased the time to close and didn't provide the benefits that we were looking for. So, we had to take a step back, refresh, and try again to make sure we found the right partner or vendor. And I think it's important to point out Todd, when we talk about a wet digital eClosing, that wet packages, even though they're signed by the borrower, And your borrowers are able to view the docs early. There is still that option from an eClosing perspective to use that platform to make workflow consistent for your closing partners as a closing and post-closing tool. It makes sure that when your loans are closing, no matter which way it's going, whether it’s wet, hybrid, hybrid with eNote, or RON it is going the exact same way and it's coming back the exact same way.

So I think that's really important to make that distinction that just because it's a wet signing there are still eClose digitization options available for that type of package.

Todd Maki

That's great. I appreciate you flagging it. To your point about a prior vendor, there's a part of the survey that focused on the leading tailwinds or headwinds that lenders are facing today.  

We’d love your perspective as we think about some of the tailwinds that are driving successful eClose adoption across the industry:

1. Improved borrower experience & satisfaction,
2. Greater staff efficiency & closing speed
3. Increased margins & cost-savings
4. Competitive differentiation & market share

 Do these align with your experience, and what do you think about these?

Brey Stafford

Yes, they completely align with FirstBank's experience. I think first and foremost the borrower's experience has to be the best no matter how you're closing the loan. So that was what FirstBank took as our number one priority —how is it going to affect the borrower? And what does that impact look like? Then making sure that we had buy-in from our sales teams and that they understood this was a good experience for the borrower. It also will cut down the time that they're sitting at the closing table with that borrower and able to produce more outcomes from having these eClosing experiences. So for sure, we focused on borrower experience, efficiency, and closing speed. With the efficiency in post-closing, we were able to repurpose a department of 3 people that used to receive our closing packages. Now we no longer need that department because Snapdocs pushes all the information and documents back into our LOS and into the required bucket. So from an efficiency standpoint, we're going from closing straight to post-closing. And, if we really push on our hybrid with eNote, we've actually closed the loan and sold it the next morning. So we were able to get through every department plus selling the loan to an agency in less than 24 hours.

Garth Graham

That could have been a savings — good for you for repurposing them for something more value-added.

Brey Stafford

Yes, that definitely could be a savings. You no longer have all that mail coming in opening the packages.  All that documentation around using this platform, even from a web signing perspective, it doesn't matter how the package is signed, it all comes back the same way. So we were able to repurpose that department.

Garth Graham

Yes, I think one other thing that a lot of people miss is the reduction in errors through an eClosing process. The errors are not often fatal and they can be corrected. But there's two things going on when a customer leaves the closing table. To use the old metaphor. When you call back to say they missed a signature, a document, or whatever — that's your last chance to make a bad impression. So, if 5 to 10% of them have errors, it's not a significant cost, but it has a significant impact on customer satisfaction. The reason I say it's not a significant cost… you need a human to chase it, you're going to probably have to FedEx it to them, they must sign it and send it back, and of course, you're going to pay for that FedEx. There's a couple of hundred dollars you're probably burning on it and that’s on 5 to 10% of your loans.

If you have errors and you have to burn a couple of hundred dollars in manpower and costs, you're suddenly at $10 a loan that you just saved by having everything go through an eClose process. Plus NOT having the customer impact of, ‘Oh, sorry about that one-hour closing you had and we missed the document.’

Brey Stafford

Exactly. That has definitely helped in our post-closing world. Not having to get those documents resigned, knowing that the documents are being signed on the appropriate date because they're not available beforehand. There are a lot of benefits from that eClosing hybrid perspective.

Todd Maki

For sure, that reduction of errors in terms of the borrow experience also, right?

Is that something you're measuring as well? Like how you've measured the result in terms of the efficiency on the back end and some of the people you've been able to reallocate. How do you gauge or quantify the benefits on the borrow experience side?

Brey Stafford

So, I think we understand the benefits because, during our pilot, we were very close to the borrowers that we were working with through this process, making sure we were timing it, and really understanding what the borrower impact was.

We obviously send out surveys at the end of every closing, so the borrower can let us know how their experience has been. So they're always given the opportunity to express any experience good or bad through the closing or the origination process.

Garth Graham

One other thing I would say, looking forward, is this is a tough market where it's such a high percentage of purchase business and we actually have a very high percentage of first-time home buyers and fewer refinances. First-time home buyers, and we don't have to make it all about the millennial or Gen Z cliches, but they're not going to be used to a process that's so paper-intensive when they get to the closing. 

So, what we see in the surveys is most of them are like, ‘What the hell is this pile of paper?’ And really, it's not a modern experience, it's not a great lasting impression. If you're a bank and you go through the stack of paper at closing, is that first-time home buyer likely to consider you an advanced digital bank for other services? If you're an independent mortgage banker, and it's their first time through, are they going to walk out and go, ‘Man, that was unbelievable’? It's going to cost business referrals and all that down the line, maybe it's not fatal initially, but at some point, it doesn't match the type of digital experiences that exist on other platforms. We as an industry, and I know its regulation, it's 50 states, selling to investors— I know the why, but we need to continue to improve and get as digital as we can be in order to improve the borrower’s experience and ultimately their satisfaction.

Headwinds & Tailwinds of eClose Adoption

Todd Maki

One hundred percent agree! All right. So we've had the opportunity to talk through some of the primary factors driving successful closes. Garth, what about your thoughts on the factors that are slowing adoption on the right? What are you hearing from lenders experiencing some of these issues or what thoughts can you share on how folks in the audience can overcome these?

Garth Graham

It is a classic people, process, and technology. The one thing you hear is that Brey is a very good leader in this process. She understands very well. And they have consistently stuck with it, including, with a vendor that didn't work, and now the vendor that did. You defined what you were trying to accomplish. You took reasonable steps, you measured the outcome, and you got buy-in. I remember when you first launched it a few years ago, the president of the mortgage company called me and asked me questions on this topic. So, there was a lot of buy-in at the top. And it's a classic change management piece, I think. Too often in eClose because it's different, the internal users revert back to what they're comfortable with, which is hit the closing package and send it out. Or the

other parties, title agents revert to what they're comfortable with and the lender doesn't sell them through that process. So it's a people process in tech like most change management initiatives are. It's not just the vendor. So, Todd can't solve it. It's got to be a people and process element as part of the change management as well.

Brey Stafford

Completely agree, yes, the largest thing was FirstBank had complete approval and support from executive management. So if it doesn't come from the top it's really hard to get everyone to buy in. But it came directly from the top. It was a goal, an initiative that we had at FirstBank to move forward with the eClosing. And it became a priority for everyone. Then you're as good as the team that you have supporting all the

functionality. So we have a very good closing department. We have a good closing manager who was able to really dive in and work through this process and make sure that we were hitting every aspect that we needed to hit in order to be successful. So you're only as successful as the team that you put together and then obviously the vendor as well.

FirstBank’s eClose Journey

Todd Maki

So I think we're scratching at it, but not only do we want to walk through the survey results with everyone here, but we also want to be able to give specific insights from Brey and the story of FirstBank's digital closing journey. So, obviously some incredible results here on the screen, 100% close adoption, over 90% hybrid, over 50% hybrid plus eNote, just incredible and truly leading in the industry. So walk us through the journey.

Brey Stafford

As I mentioned, before we started in 2020 with a prior vendor who unfortunately did not work out for FirstBank but we did not make that the end of our experience. We went back as a team and determined: what do we actually need? What do we need to look for? Who do we want to have as a vendor and a partner through this process?

So, once we had that recognition of what vendor and partner we wanted to move forward with, it was just working through the implementation. 

We started off slow. We started in February of 2022 in a pilot with our Consumer Direct division. Once we started doing some eClosing through there, we added our retail division in a pilot in June of 2022. And through the next few months, we just slowly continued to add to that pilot until we required all closings wet, hybrid, and hybrid with eNotes to go through our eClosing vendor Snapdocs. So it is a requirement for FirstBank that any document that is sent to the closing table is sent through our Snapdocs platform. That way we got that 100% adoption from that digital eClosing perspective and we could make sure that our closers, post closers, and our closing partners had the same experience with every package coming from FirstBank. Once we got that hybrid going, we were at about 70% in August of 2022. A year later in August of 2023, we became that 91% hybrid adoption. And you're always going to have a borrower that wants to sign a web package that wants to touch the actual document, sit at that table, have that explained. So we're always going to have that. But as much as we can, our closing department has made sure that, if we could close that loan as a hybrid, we definitely were going to be doing that. And then in December of 2022, we decided to start on our eNote journey we started off in December by closing 3% of our hybrid with eNotes and now in August, we are up to 51% hybrid with eNotes.

So FirstBank is approved with Fannie and Freddie from a GSE conventional perspective. And that's the direction that we are selling our loans right now and closing those hybrids from a conventional perspective. Looking forward, we are looking to Q4 of 2023 to work on getting our Gennie approval so we can continue building up that hybrid eNote, eClosing and then in Q1 of 2024 we are looking to move towards full RONs when applicable or when capable through the state. So, just because we've hit these milestones we're not stopping. We're going to continue to move forward so we can offer that fully, digitalized closing to a borrower that wants it.

Garth Graham

And you're on Encompass® by ICE Mortgage Technology® Docs. So there's nothing atypical about your tech stack. It's just that you committed to eNotes, managed through, and are driving high adoption.

Brey Stafford

Definitely. And I know that one question a lot of lenders ask themselves is what about that charge? When you have an eClosing vendor, there's a charge that comes with that. And as a company, are you going to absorb that charge or are you going to pass that charge to the borrower? And obviously, in the times that we're in right now, everyone's looking to make sure that our costs remain low. So FirstBank did decide to pass that cost on to the borrower, which helped with our 100% eClosing adoption. So every loan goes through our eClosing platform. So we're able to pass that cost on to the borrower to cover that eClosing that's taking place on the loan file.

Garth Graham

Oh, that's a win, win, win. So, I have an observation on this and then we’ve got to get to the questions at some point because they are good! What’s interesting is Brey is responsible at her organization for what happens after closing and was given responsibility for implementing eClose, which is what happens at or before closing. That is a very interesting approach. We often see it handed to production processing or closing which means that they may be making decisions like, no, let's not do it. They have a realtor who said they didn't like it. Processing says it’s a pain, they have to get it to closing sooner. The closer is like, I just hit the close button. They're not the ones that have to deal with the downstream impact of that decision. And the downstream impact is the consumer we've already talked about and it's Brey’s world. So I think it's maybe one of the reasons you all were successful. You picked the right person who understood the value intrinsically of having a really clean set of data and documents coming into post-closure.

Brey Stafford

Yes, understanding the back end, but really having the support as well from the closing and the production side and really getting their buy-in helped. It definitely didn't take as long as we anticipated. It took a few months. But once it caught on, the loan officers and the sales force became very comfortable with this process and how their borrowers were executing the documents. And then from a selling perspective, the goal was to cut costs. So from a hybrid eNote perspective, I no longer need a custodian because I have it in the eVault and it's certified within minutes of being delivered to Fannie and Freddie. So, there's cost reduction that takes place as well, moving to that hybrid with eNote, being able to cut out some of that back-end unnecessary work.

Garth Graham

Awesome, Brey, you're going to be super popular when we get to these questions.

Recommendations and Q&A with Panelists

Todd Maki

I know! All right. So one thing that we asked of Brey and Garth was to distill all the discussion into at least a few digestible strategies to successfully adopt close. And so we came up with these three: 

• Determine clear & measurable eClose goals
• Know how to evaluate potential eClose vendors
• Create an intentional rollout strategy

And what we've discussed here a bit is the staged approach of wet, hybrid, hybrid plus eNote, and then RON. Brey and Garth, I'd love for you to react to these. Please provide any additional perspective for the folks on the line and then once we get through this, we'll jump into the Q and A.

Brey Stafford

Perfect. I mean, I think it's what Garth said earlier. What was it, Garth?  People, process and technology. That sums up all three things. You want to make sure that you have the buy-in. You want to make sure that your process is strong and you want to make sure that your technology is strong and that's how we attacked our second round of trying this eClosing experience.

Garth Graham

Absolutely. I think hiring Brey is a good idea too. Brey could have been on a webinar entitled, eClosing didn’t work two years ago. So they stuck with it and they kept trying to improve it and make it better and the numbers prove it. So, yes, give them a lot of credit. 

Q&A

Todd Maki

Absolutely! So throughout the webinar, we've had questions come in and so we'll take the rest of the time to answer as many as we can. 

Garth Graham

There are a lot of questions about selling this to investors. 

Brey Stafford

So there are certain investors again, Fannie and Freddie right now are the main investors that are purchasing eNotes notes. But more and more investors are hopping on board with that. I know US Bank, Planet, Chase, I believe Mr. Cooper, they're all getting prepared to buy eNotes. As more lenders are doing this and selling directly to Fannie and Freddie, they're going to make sure they're hopping on board and getting the requirements they need to be able to start purchasing those eNotes. So we do have a limit on who we can sell them to at this time, but the list is constantly growing, every week there's a new available investor that's added.

Todd Maki

Here's a couple of related questions. What do you think about allowing eSign docs on a hybrid? Are they signed on a different date than those that are wet-signed? Do you have them all signed on the same day? Have you seen any issues from investors?

Brey Stafford

So all documents are signed on the same day. It's just the hybrid portion can be signed starting at 12 a.m. on that day all the way until 11:59 p.m. Depending on your time zone. We did get into that. So you have to check the time zone. But yes, so it just makes it easier that the borrower is signing those hybrid docs, if you have a husband and wife, they can sign them from work and not be in the same room, they log in, they can sign those documents and then at the closing table or if a notary comes to their house, they're only executing the documents that require that notary on there. So, the mortgage, the compliance agreement, signature affidavit, it's really cutting down those signing appointments to 15 or 20 minutes, if that. And so it just gives your borrower the ability to be at the signing table or be with a notary for a shorter amount of time.

The borrower can also review the documents prior to the closing. They're not available to sign, but they're able to review the documents and ask you the questions they have prior to getting to the closing table.

Todd Maki

Yes, we have many customers who do allow the non-critical portion that you close in a hybrid to be signed in advance— up to a few days prior to the actual closing date. But we recommend every lender make that decision based on guidance from their compliance group. But, as you stated Brey, we've seen customers see success in all different manner of signing those documents. 

And we also have a feature available now which is a split sign window. So for hybrid with eNote, for those lenders who want to have the non-critical docs signed in advance, but want to ensure that the eNote is signed on the closing date, we have the ability to split those out as well. 

Another challenge-specific question for you Brey. With wet sign docs and using Snapdocs, you mentioned being able to repurpose the team that got the mail open to review docs even without eSign. How did you handle the original note requirement?

Brey Stafford

So currently the documents still come into our office, but we just pull that original note from the package and file that for when we're ready to sell, we do not have to scan the entire package and then disperse it into our eFolder buckets and file that package. So we were able to cut down the department. Our mail room just handles this or our manual fulfillment department handles all the mail coming in, pulls the notes out of the packages, and we get those endorsed and filed away until we're ready to sell. So, we just moved that note functionality to a different role we already had that was handling some additional tasks like that.

Todd Maki

Thank you. This is a great comment: “I just had a wet signing with 167 pages. The borrower was floored that it wasn't electronic. Everything in the process through realtors was electronic. Fortunately, I was able to leave a positive attitude with them, but electronic would clearly have been better.”

Appreciate the comment! Question for you Brey, and I think Garth would be interested in your perspective as well. How do you get internal buy-in to begin the investment in eClosing? As you mentioned, this was aligned at the top. Would be interested in your perspective on this.

Brey Stafford

Yes, I think because our executive team bought into it so quickly. And for FirstBank, I think the pandemic is what helped with that. Everything shuts down, but mortgage still has all this paper flying around everywhere that we still have to sell and get to places. So, we weren't prepared for that to be fully electronic. And so that became a higher priority due to business continuity and the pandemic happening. That put it more at the forefront. Then looking at it from a cost perspective, expense cutting, where can we cut expenses with technology that we are already using? So that was the next thing, getting everyone on board and understanding that we're paying for this technology and if we

use it to its full capability, we can save in these other areas and possibly no longer need this other vendor. So, when you're able to show the monetary value to it, you get people to buy in a lot faster.

Garth Graham

What I see lenders doing, especially early on, is they launch it and make it optional or opt-in and then wonder why they don't get adoption. You’ve got to make it as easy as it can be. Hopefully, a single platform that can manage it straight through. Sometimes people will fall out, opt out or it won't work out. But going in and trying to implement that change is better. And to use the old Christopher Columbus analogy— sometimes you have to burn the boats! Which is to say, look, we're going to do this and we're going to stop doing all the other methods, and that can make people at least overcome the initial bumps of the change initiative. And with an eye on the prize, like, why are we doing it, going back to an early slide, it’s a substantially better customer experience and it's more productive for the staff. So, at some point, you must commit to it and keep trying to incrementally improve.

Todd Maki

There are a couple here on eNotes. And so we'll ask these questions together: Do you have a list of investors that specifically accept eNotes, or are you automatically just selling them to Fannie and Freddie?

Brey Stafford

So we do have that built out through our capital markets team. We did the research, we have our approvals and they are able to determine in the system if a loan can go in what direction. So yes, we work very closely with our capital markets team in determining who can buy our eNotes currently and that's constantly updating as we get new approvals. So it's just reaching out to your investors asking if they do, getting that addendum or whatever requirement met, and then giving them the opportunity to either bid or sell them that collateral.

Todd Maki

Great, thank you, and then there's a follow-up question but a relevant question, which is what's the value you're realizing from an eNote signed separately from the mortgage? Like rather than pushing for full RON, what value do you see in the eNote itself?

Brey Stafford

So, I think the value of the eNote for me is custodial purposes. I no longer have to have that custodian on a conventional. Obviously, Ginnie is going to be different, but from a Fannie and Freddie perspective, or from an investor perspective, you don't need a custodian.  So you no longer have to send, overnight your file, have it stored, have them review it, and have them certify it. It's all done through the system. So that really takes off a piece that even a RON wouldn't do. Obviously you want a fully electronic, but that eNote perspective really helps because it's housed in MERS® immediately. It's signed in your eVault. All the transfer is done through MERS®. So, it made sense to do it separately or as its own next step in our evolution of eClosing.

Garth Graham

Yes, it’s only not making perfection the enemy of the good. Meaning RON has some of its own challenges too. Getting the notary who's RON enabled, until MERS® really stepped up, where are they going to be stored? So, there was all sorts of lag on RON because of other issues which in and of itself does not impact the efficacy of trying to use an eNote. The other thing on the eNote is you're able to fund faster. Right?

Brey Stafford

Yes, we're able to fund faster because Snapdocs pushes everything right into the system. And so it comes back into our eFolders, our funders can do the review, give their funding release, and then it's hitting post-closing that afternoon/evening. Post-closing can start looking at it before those wet docs come in. So we're able to actually speed everything up by 24-48 hours because we're immediately getting that signed package back into the system once the borrower and the closing agent are done with it.

Garth Graham

I only bring it up because when the market was great, people really didn't worry about warehouse. I mean, they worried about warehouse capacity because they had so much volume. They didn't really worry about the warehouse cost because it was so low. It's flipped a little. Lenders, independent mortgage bankers, not FirstBank, but independent mortgage bankers are under pressure from warehouse lenders due to their financial situation.

So the idea of getting loans off warehouse faster is a good thing. A.) It costs a lot more than it used to. And b.) every one of them on that warehouse is at some risk in a tough market. So clear them off the warehouse as fast as you possibly can. To me that is worth something.

Todd Maki

Yes, and that's something we see with lenders every day. To any customers, if we haven't worked with you to quantify the potential benefit of eNotes notes in your business, then please ask your customer success manager, we can absolutely do that. Garth, to your point we're noticing significant cost savings, often hundreds of dollars per loan. This is especially true now, with interest rates being so high. The process can reduce the time a loan stays on the books by several days, sometimes even more than a week. This translates to real financial benefits, not just for individual loans but across the board.

Garth Graham

So the question came in, Todd. Not that I want to suddenly become master of ceremonies here, but it's about settlement agent adoption or resistance. Are settlement agents resistant to change? How does it work from Snapdocs' perspective? I don't know if one of you wants to address that because I think it's a pretty interesting question.

Brey Stafford

I think we have the same concern. We don't want to change what is already working. But no matter how we sent the docs to the closing agent or closing attorney, they had to log in to pull those docs down, whether that be Ellie Mae or Snapdocs. So we just took their login experience to a different portal for them to log in and pull those documents down and now have the ability to upload those documents back to us.

So we did not get very much resistance from a closing agent perspective. And I don't know if Todd, you've seen it yet or if you guys have, but Donna Ross, one of our loan officers, in the chat did let everyone know that she's from FirstBank, she's an LO from FirstBank, and her customers are loving the eSigning, as do her attorney and title agents.

It's freeing up time and the borrower has the opportunity to review. So there's a loan officer's firsthand experience of what this process has done for their clients.

Garth Graham

Yes. The other thing too, it is possible any delay in closing delays a commission check to a realtor. In fact, it's probable. So at some point, if you're a good loan officer having conversations with your real estate partners- who often dictate the title agents, it can be part of a 'here's why we are doing this and, oh, by the way, we're trying to be sure this thing is as smooth as can be because we know that's how you get paid and when you get paid.' I hear stories of people where the realtor shows up, everything is pretty much done, and boom, the loan's funded, and here's your check. I mean, that's a 'wow.' Right? So I think once they understand the process and the benefit of the process, they can bring along the partners as well.

Todd Maki

And to the question around settlement adoption, we absolutely support customers in best practices training, even working directly with some of the settlement organizations. So more than happy to engage directly with any customer on that as well to ensure that we're doing all we can to help support adoption. We typically see very high engagement rates and very, very low settlement fallout rates. So to Brey's point, I think we often see more positive feedback than negative from settlement partners, but we're absolutely happy to engage and support that as well. 

Garth Graham

Are you doing home equity lending? Brey? I was going to ask that real quick.

Brey Stafford

We do not on the mortgage side. The bank does and they're exploring opportunities for that, but we're not doing anything like that.

Todd Maki

It's great. We see a huge portion of the business from several of our customers via HELOCs at this point and the platform absolutely supports them. And there's a lot of interest also in the concept of HELOCs as MISMO and the organizations begin to look to support those next year. Let's see, regarding the closing experience survey. Is that something you're doing through the Snapdocs platform or is that something you're doing separately through your organization?

Brey Stafford

It's something separate through our marketing department. Yes.

Todd Maki

Here’s a comment: “Snapdocs works well for HELOCs in our business as well.” So I appreciate that. 

Let's see, would be interested in your perspective. Do you have organizations and teams focused on supporting or championing eClose internally? How have you supported and trained on scalability across your organization?

Brey Stafford

Yes, so we definitely had a team that was assigned to work through all of the setup calls and how it's going to work and how the process needs to be built out. And definitely, the closing manager is going to be probably one of the most important in that team just because we want to make sure that the process for the closing team doesn't really change and that it actually becomes more efficient for them. So we did do a team and then we did a pilot of loan officers in certain areas and regions. So we could control that and have a real good understanding of what the issues that may arise were. So I think it is important to have an assigned team that meets weekly and really can dive into every aspect. So as we were doing this, we were meeting with Snapdocs weekly, we met with our IT weekly, and our closing manager met with post-closing weekly. So we just made sure that everyone was constantly in communication and that we all had an understanding of the entire process.

Todd Maki

Garth anything to add?

Garth Graham

It's a classic change management piece. You just need to understand. I mean, bigger companies. I think that question was from Fairway. That's a big company, right? So yes, you'd need some people, I think, devoted to championing it and making sure it works and monitoring the progress. Smaller companies might be able to get by with a champion or two. But, like any change management, you have to be focused on the change management in order to succeed.

Todd Maki

All right. We've got still got a few questions that I think we're going to have to leave unanswered, but we'll reach out directly. As we come here to the top of the hour. Thank you to all of our attendees for joining. Thank you so much Garth and Brey for participating on the panel, hugely valuable discussion and I appreciate you taking all the time with us. So, thank you, everybody. Have a great Wednesday and have a great rest of your week. Thank you.