Traditional notarized loan signing documents are extremely difficult to replace, especially in the event of the document becoming damaged, stolen, or in the most likely case, simply lost. — the lender and buyer face must walk a road one does not want to travel in this lifetime and fight through complicated bureaucracy.
What is eClosing?
Signing with pen and paper to complete your loan signing is to traditional banking what eClosing is to modern banking. A full eClosing will include all the following elements:
- Electronic documents: Loan package documents are sent digitally to the borrower to get their eSignature
- eSignature (Electronic signatures): A Secretary of State accepted alternative to an “ink” or “wet” paper signature.
- Online notarization: Also known as Remote Online Notarization, is an online session where you get the signers identities validated and your document notarized online
- eNote: An electronic version of the promissory mortgage note completed as part of a transaction and stored on a secure server
- eRecording (Electronic Recording): The process of submitting documents for recording online. Once reviewed and recorded by the county, they return the approved documents to the submitting party. This is not to be confused with the 10 years of video storage required for your Online Notarization session.
What is an eNote?
An eNote is an electronic version of a promissory note. It’s stored in the cloud, rather than on paper, so it can be accessed securely by authorized parties at any time.
The advantages of digital records are well-known — they’re more secure and easier to access for your whole team than paper documents — but what about the benefits of eNotes specifically?
eNotes used in eClosing require the following:
- They must be compliant with the Uniform Electronic Transactions Act (UETA),
- Secure and backed up by reliable technology.
- They must meet local and state laws governing promissory notes, just like paper notes.
- Be registered on the Mortgage Electronic Registration System (MERS) eRegistry
- Be stored in an eVault, which is an approved document management system for stakeholders to share information
Here are five benefits of eNotes:
- Increased Security: The cloud is more secure than paper records because it is more difficult to tamper with, and the data is encrypted to further protect the security of eNotes.
- Improved Accuracy: By eliminating manual processes, such as handwriting errors and missing signatures, eNotes help reduce errors due to inaccurate paperwork. This will reduce the need to redo the work at a later time.
- Faster Processing: Since an eNote can be accessed by authorized parties at any time, it can be processed much faster than a paper note. Overall turnaround time of a closing is decreased by 48 hours.
- Cost Savings: By eliminating manual costs associated with paper notes, eNotes help to drastically reduce the cost of closing loans. Lenders save over $400 per closing.
- Efficiency and Convenience: eNotes are convenient for lenders, buyers and other parties involved in the transaction because they can easily access the notes from any location. You can now close deals from the next state over with ease.
- Regulatory Compliance: eNotes can be easily tracked and audited for compliance with applicable laws and regulations. This is an essential feature of any digital document, and eNotes are no exception.
The future of eClosing is bright as more states move towards enacting laws that allow for digital documents. As eNotes become more popular, it’s likely that the process for closing loans will continue to become faster and easier for all involved parties. This can help lenders reduce their costs and make transactions more secure for all parties. In the future, it’s likely that eClosing will become the norm, rather than the exception. It’s an exciting time for the industry, and we’re confident that eNotes will continue to revolutionize the way we close loans.