Participants in the mortgage ecosystem are increasingly seeking ways to maximize the benefits of a digital transformation. Initially this focus was centered around an improved front-end borrower experience, but has expanded to focus on operational efficiencies, process improvements and compliance of the asset being manufactured and better execution of the asset into the secondary market.
Understanding Phase II: eClose, eNote and eVault
As my colleague, eOriginal’s General Manager of Digital Mortgage Simon Moir noted at last week’s Digital Mortgage 2017 conference, “We are now in the second phase of ‘digital mortgage’—the digitalization of the closing process and the creation of an electronic asset (eNote)—which provides lenders with substantial benefits in alignment with the stakeholders in phase I.” As explained by Simon, there are three key concepts to keep in mind:
- eClose: The parties involved in the transaction come together at either a virtual or physical closing table to sign loan documents. An eClose doesn’t necessarily mean all documents must be signed electronically. In fact, for certain loan programs or geographical locations, a hybrid approach may be the only option currently available.
- eNote: The electronic form of the paper-based negotiable promissory note. The mortgage industry has settled on the SMARTDoc format and the MERS® eRegistry as the system of record for identifying the current location and controller of the eNote.
- eVault: Once the eNote is created and executed, it needs to be managed correctly. Using an electronic vault, authorized users can perform key actions against the eNote including registration, eDelivery, transfer and life of loan events. Additionally, the eVault is designated as the location for a given note holds the “authoritative copy”, or electronic original.
Digital Mortgage 2017 in San Francisco
Last week I journeyed to the City by the Bay for Digital Mortgage 2017, a SourceMedia event that blended stellar educational sessions, product demos and an innovation hall showcasing tech-savvy disrupters in the mortgage buying and lending space.
At the event I had the opportunity to sit-in on a presentation from the Editor-in-Chief of National Mortgage News, Austin Kilgore. He noted that it is a critical time in mortgage finance and to move the industry forward, digital tools and new ways of thinking need to be embraced across the ecosystem. Kilgore aptly highlighted that change is hard and people will resist, but aging legacy systems need to be replaced and adoption is an inevitable conclusion. I couldn’t agree more.
Another session highlight for me was Fannie Mae’s demo. The demo focused on warehouse funding expense models, eDelivery funding, production volume and the benefits of a faster close, specifically the ability to move capital faster. Fannie Mae’s new eMortgage Calculator, which will be available Q4 2017, was also revealed. If you recall, eOriginal supports Fannie Mae’s new modern, scalable eVault solution—making the demo that much more exciting.
Next Stop: MBA Annual
To say that the eOriginal team is excited by the digital momentum in the mortgage ecosystem would be an understatement. If you would like to hear more about Phase II of digital mortgage, how our solution allows originators and their partners in the secondary market to realize scale and next steps to make the benefits of eMortgage a reality, please schedule a time with our team at MBA Annual in Denver later this month.