Consumer Financial Protection Bureau Launching Pilot eClosing Program

The Consumer Financial Protection Bureau last week announced that it was launching a pilot eClosing program for the mortgage industry. The program is intended to address the key pain points that surfaced during the agency’s recent initiative to explore how technology can improve the mortgage closing process.
As part of that initiative, the CFPB solicited comments from the public about the mortgage closing process. In its report on the initiative, “Mortgage closings today,” the agency said commenters identified four key issues — or pain points — that consumers commonly experience during loan closings:

• Not enough time to review documents. This was one of the most common complaints. Consumers said they often don’t get the paperwork until they arrive at the closing table, and there is pressure to rush through and sign without enough time to understand what they are signing.
• Overwhelming stack of paperwork. Loan packages contain too many documents and pages, making the process of closing on a home daunting and overwhelming. As a result, consumers worry that something buried in the stack might have long lasting effects on their financial well-being.
• Documents are hard to understand. Loan packages are full of legalese and technical jargon, and borrowers often have little help from others to understand what they are signing.
• Errors in the documents. Commenters said there often are errors in closing documents, which can lead to delays. These include common and seemingly minor errors, such as a misspelled name or forgetting to include a spouse.

And sitting at every closing table is a Notary, usually a Notary signing agent, witnessing borrowers struggle with these pain points.
“The package of closing documents is too large, and the process is overly complex and stressful for consumers,” CFPB Director Richard Cordray noted in the report.
The CFPB initially plans to focus on using electronic closings as a way to ease the pain points. The agency noted that eClosings can eliminate steps and thereby reduce errors; allow participants to review the documents in advance; and potentially include educational tools to help consumers understand loan documents.
During the pilot program, the CFPB will work with technology and mortgage industry stakeholders to conduct targeted, detailed research on eClosing solutions and ultimately release its findings. The agency said that it intends to act as a catalyst for expanding the use of technology rather than write new rules.
 By: Michael Lewis Managing Editor of member publications for the National Notary Association.