Despite its often critical take on mortgage practices, the Consumer Financial Protection Bureau says the mortgage industry is getting something right: it’s endeavor toward eClosings in simplifying the mortgage closing process.
The agency’s “Know Before You Owe” eClosing project found borrowers benefit from electronic closings when navigating the closing process, the CFPB reported Wednesday, noting that during its pilot program, borrowers were better off in terms of their understanding, efficiency and feeling of empowerment when they used e-closing technology rather than paper closing documents.
The four-month pilot spanned seven lenders, more than 3,000 consumers, four technology companies, and many settlement agents and real estate professionals. Some used a combination of paper closing documents and eClosing processes.
“While technology alone will not address all consumer concerns in the closing process, our study showed that eClosings do offer the potential to make the process less complex,” said CFPB Director Richard Cordray. “We expect this pilot project and its findings to help inform further innovation that will be a win-win for consumers and industry alike.”
Last year, the agency identified a number of mortgage “pain points” experienced by borrowers during the closing process. Now, the CFPB says, eClosings are working in part to address those concerns, and it hopes more lenders will adopt them.
“The CFPB believes that the eClosing process has the potential to give consumers more time to review closing documents while also providing them with educational tools that can help them navigate the closing process more successfully,” the CFPB says.
Written by Elizabeth Ecker