Capital Region Legal News

Saturday, June 25, 2016

Toward Electronic Mortgage Closings

What are the benefits of e-Closings?

Technological innovation has dramatically changed the landscape of real estate finance making new and different types of mortgage loans available to consumers. In addition, the delivery real estate related services has become far more efficient, and the mortgage origination process is becoming more digitized, enabling many deals to close more quickly.

What is an electronic mortgage closing?

The Federal National Mortgage Association, Fannie Mae, calls the closing of a mortgage loan electronically an "eClosing."  When an mortgage loan is being executed today, many of the closing documents are accessed and signed on the web. The key instruments such as the note and the mortgage, are printed and hard copy is signed. However, Fannie Mae also accepts notes and mortgages that were signed electronically, and does not require additional printed documents to be "wet signed."

There is broad based support across the mortgage industry to implement full service e-closings, and the Consumer Finance Protection Bureau also supports the idea as well. While the digitization of the initial phases of loan originations, including application and underwriting, have helped lenders convert many applicants into customers, the last hurdle to going to fully electronic e-signings has been acceptance by investors. However, because of industry wide adoption of data standards that comply with the requirements of Fannie Mae and other government sponsored enterprises, investors are becoming more accepting of e-signed notes and mortgages.

The Millennial Effect

As has widely been reported, the millennial generation is far more tech savvy than previous generations, and many of these consumers favor the ease of closing mortgage loans on-line or through a mobile application on a smart phone. As more of this generation become first time homebuyers, their expectations of efficiency will force the industry to fully leverage technological advances across the consumer finance industry.

Although paper-intensive mortgage closings may soon become of a thing of the past, technological innovation is ultimately geared toward improving the loan origination process. While mortgage closings are becoming more efficient, the legal obligations of financing a home purchase or a refinance will remain the same. For this reason, if you have any questions about real estate transactions in the Capitol Region, you should engage the services of the experienced attorneys at Ianniello Andersen, P.C.


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