CFPB Digitizing Mortgage Closing: Onsite Coverage
WASHINGTON – The CFPB is launching a pilot program to evaluate “eClosing” solutions and how they can improve the mortgage loan closing process.
“Our goal will be to determine how the eClosing process can be made to reflect the spirit of our Know Before You Owe rule by generating increased consumer understanding, fewer surprises at the closing table, and a more empowered consumer,” said CFPB Director Cordray (pictured at left) on Wednesday during a forum held at the CFPB headquarters in Washington.
“This is not a rulemaking process. Instead it is a potential ‘win-win’ effort to work with all stakeholders to ensure that consumers understand the commitment they are making and experience a more transparent, efficient, and effective process,” he added.
“The bureau hypothesizes that technology-enabled electronic closing (eClosing) solutions may have the potential to improve consumer understanding and empowerment and efficiency for all involved,” said the CFPB’s eClosing pilot guidelines.
In his remarks, Cordray also addressed the risks associated with electronic signatures.
“We have heard some concerns about data security and the risk of fraud with people using eSignatures that are not their own. Nevertheless, the federal government and every state have weighed the same concerns and adopted laws that approve the use of eSignatures,” said Cordray.
“We would also be concerned if eClosings meant that consumers could not freely and easily access a full record of the documents they signed. But there is no obvious reason why this should be a problem and lenders can easily establish a repository of electronic documents for each closing,” he also said.
During the public forum, panelists included Amy Moser (pictured at left), vice president of mortgage services at Mountain America Credit Union, who along with others on the panel were supportive of an electronic system.
Moser said her credit union was the first to use e-signatures for an FHA loan.
“We forged ahead because it was the right thing to do for our membership,” Moser said.
“We are currently 100% paperless through origination and closing,” she added.
Read more: Mountain America Debuts FHA E-Loan
However, some of the panelists expressed concerns.
Margot Saunders, counsel at the National Consumer Law Center, said many minority and elderly households not connected to the Internet would not have access to an electronic system.
She also warned about fraud and the risk of documents being changed after the transaction by the lender.
Moser told CU Times if a member of her credit union does not have Internet access at home, they are able to e-sign when they get to title.
“They still can have their documents before, either printed or whatever they want,” she said.
Michelle Korsmo, vice president of government affairs at the American Land Title Association, said an eClosing system could make people feel like they are buying a home from a computer.
To join the CFPB’s pilot on electronic closings, each participant must currently have a system that meets minimal technical capabilities and requirements set by the bureau including the ability to audit and facilitate electronic signatures.
The panelists cleared the stage for remarks by HUD Secretary Shaun Donovan. Following his speech, audience members were able to comment on what they heard at the event and make recommendations to the CFPB, but could not ask questions.