On a Wednesday at 4 p.m. in June 2017, I was in a small, packed office in midtown Manhattan.
The overcrowded conference room, with at least five more people than any fire marshal would recommend, was stacked comically high with paperwork and an eclectic collection of cheap pens. As I neared the end of the third hour and the ink of my seventh pen, I realized the mortgage closing process may be somewhat antiquated.
After closing on my first home, it was inconceivable to me that every other expense in my life has gone digital, but the most significant purchase I’ve ever made required hundreds of signatures and several handwritten checks delivered in person. By comparison, I have been able to repay my student loans, comparable in magnitude to a down payment, exclusively through online portals.
The COVID-19 pandemic has changed nearly every facet of our lives. One potential silver lining for the real estate world may be a forced reckoning with the mortgage closing process. Technological advances like e-closings are accelerating this arduous process into the digital age. The U.S. Census Bureau released figures in July citing the rise in homeownership across the country as the pandemic fuels the demand for single-family properties outside of urban areas. This is confirmed by the significant spike in mortgage applications seen in the second quarter of 2020.
The first signs of digitization of the mortgage origination process were seen in mid-2010 when lenders began adopting digital disclosures. Despite the availability of technology, the market has been slower to fully embrace digital closings that enable the full loan package to be electronically reviewed, recorded, signed and notarized. A true e-closing includes a digital promissory note (“eNote”), a virtual closing appointment and the electronic transfer and recording of documents by the county, all of which can be remotely coordinated and executed by the parties involved. The market started to pick up pace in recent years, and we’ve seen the number of e-mortgages increase by more than 450% from 2018 to 2019.
Every other expense in my life has gone digital, but the most significant purchase I’ve ever made required hundreds of signatures and several handwritten checks delivered in person.