Falcon Capital Advisors Among First to Earn MISMO Certified Consultant Designation

Caitlin Groves
(202) 557-2849

WASHINGTON, D.C. (April 23, 2024) – MISMO®, the real estate finance industry’s standards organization, today announced that Falcon Capital Advisors is among the first organizations to receive the designation of MISMO Certified Consultant.

“We are pleased to recognize these organizations for their dedication to effective business practices through their expertise in, and adherence to, MISMO standards,” said David Coleman, President of MISMO. “These organizations will be an asset to the clients they serve because of their deep industry knowledge and commitment to MISMO standards.”

“Falcon Capital Advisors is proud to be among the first to earn MISMO’s Certified Consultant designation,” said Armando Falcon, Chairman and CEO of Falcon Capital Advisors. “Our verified expertise in MISMO standards allows us to provide our clients with end-to-end transformation services at the highest level.  We are pleased to continue our support of interoperability and digital advancement across the entire mortgage finance industry.”

MISMO’s Certified Consultants Program is designed to allow seasoned consultant companies to display their mortgage industry domain knowledge, expertise in the MISMO standards, and their commitment in supporting the MISMO community.

Organizations of varying scale, size, and with different areas of MISMO expertise may become a MISMO Certified Consultant. The MISMO Certified Consultant program framework includes a multi-step process to verify that each consulting company meets the criteria outlined in the program requirements. The program also has several domains in which consultants can identify a specialization.

MISMO’s work to solve key business challenges is made possible by its members, champions, sponsors, and lender support through the Innovation Investment Fee. Visit MISMO.org to learn how you can get involved.

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MISMO develops essential standards to enable the real estate finance industry’s digital future. Through MISMO, all mortgage stakeholders have an opportunity to collaborate, innovate, and prosper by creating standards to improve efficiency, reduce costs, and enhance the overall mortgage experience. For more information on MISMO’s work to help shape the future of the mortgage industry, visit www.mismo.org. For more information about the Innovation Investment Fee and how the industry benefits visit here.

Visit Mismo.org for full press release.

Falcon Wins Research Grant to Study CDFI Mortgage Lending

Falcon Capital Advisors is pleased to share that it won a research grant from The Center for Impact Finance, with funding provided by the Citi Foundation’s Community Finance Innovation Fund, to support research on Community Development Financial Institutions (CDFI) activity in the single-family mortgage space. The study will be the first to examine how CDFIs support homeownership and do a deep dive into the products offered, the borrowers served, and the business models used by the CDFI lenders.

“This research is extremely timely,” said Armando Falcon, CEO of Falcon Capital Advisors. “The good work CDFIs do to serve homebuyers is ripe for illumination. This research will be a must-read for lenders and investors seeking to understand the CDFI participation in the mortgage market.”

CDFI Advisory: “What to Expect in the Revised CDFI Application”

On August 21, 2023, Acting Director of the Community Development Financial Institutions Fund (“CDFI Fund”) Marcia Sigal indicated that the CDFI Fund is still on track to release the new CDFI Application (“Application”) sometime this fall.[1] What can we expect to see in the new Application[2]?

The Community Development Advisory Board meeting on July 31 provides critical insights on the direction of the final draft.[3] In that meeting, the Advisory Board heard from the CDFI Certification Subcommittee (“Subcommittee”) on its recommendations for navigating a few of the most controversial areas of the proposed Application changes.

Representing the Subcommittee, Michael Swack outlined the recommendations to the Advisory Board that he styled as “capturing the unintended consequences” of early drafts of the revised Application. There was no substantive engagement on whether or if the CDFI Fund would adopt changes based on the Subcommittee’s report; however, it is reasonable to expect that these areas will get further attention for revision based on the Subcommitte’s work.

The link to the formal report is available here: “Final and Approved CDFI Cetification Recommendations presented by the Community Development Advisory Board to CDFI Fund Acting Director Marcia Sigal July 31, 2023”. https://www.cdfifund.gov/sites/cdfi/files/2023-08/CDFI_Certification_Recommendations_Presented_to_CDFI_Fund_Director_31JULY2023.pdf  (11 pages)

The areas discussed in the open meeting are:

  1. Mortgage Underwriting: The Subcommittee noted that the Ability to Repay (“ATR”) product feature requirements associated with Qualified Mortgage should be included. These include: points and fees are less than or equal to three percent (3%) of the loan amount (with important exceptions for loan amounts less than $100k); no negative amortization, interest-only, or balloon loans and a maximum loan term is less than or equal to 30 years.[4] That said, the Subcommittee recommended that loans for which there is a clear “community development purpose” that would otherwise breach one of these product features could be permitted if a compelling narrative is provided to the CDFI Fund.[5]It is important to note that while CDFIs can underwrite loans that do not meet the “Qualified Mortgage” or “ATR” standard without the regulatory overhang of liability, the CDFI Fund is within its right to impose its own regulatory standards. The “Official Interpretation of Paragraph 43(c)(1) published by the CFPB is likely to be very instructive on expectations of the CDFI Fund on the details of a compliant mortgage lending operation.[6]
  1. Low-Income Target Market Documentation: The Subcommittee noted that the documentation and verification standards for a CDFI to prove they were serving low-income individuals were operationally challenging for community service organizations. For example, it is impractical to ask that a small business operating as a community facility request tax documents from its customers. As a result, the Subcommittee recommended clarifying direction on providing income verification for “indirect” beneficiaries. Instead, the Subcommittee recommended that the CDFI Fund explore circumstances for which self-reporting of direct and indirect beneficiaries’ income or the broader use of income proxies.
  1. Staffing and the Financing Entity Test: One of the key metrics associated with meeting the “Financing Entity” test is that a predominance of the staff time is spent on providing financial products (or services). This proposed change in the drafts for the revised Application was met with significant pushback from the CDFI community that had become accustomed to including the staff time devoted to Developmental Services in the calculation. The Subcommittee recommended that Developmental Services should The Application (and, by extension, the certification process) should support the practice by granting it as time that can count towards the “Financing Entity” staff time test.
  1. Development Services and the “In-Person” Preference: The Subcommittee recommended that the changes related to qualifying “Development Services” should be more flexible to allow CDFIs to innovate. The implied result of the draft provisions in the revised Application was that only live, synchronous classroom-based teaching would be an acceptable delivery mechanism for Development Services. Instead, the Subcommittee recommended that the revised Application include an area for a narrative to a CDFI to make a compelling argument for their plans. Specifically, the Subcommittee noted that Zoom and online remote access are good ways to reach people.
  1. Accountability and Board Service: The Subcommittee noted that the drafts for the revised Application significantly limited the universe of people who could demonstrate “Accountability” by specifying that only the executives of qualifying nonprofits or service-related entities could count towards the Board service requirement. By implication, the Subcommittee recommended that less senior staff of the nonprofits or service-related entities should also be eligible. Similarly, the Subcommittee seemingly recommended that the Board of Directors of qualifying nonprofits and service-related entities be restored as suitable for the Accountability prong.
  1. Accountability and Conflict of Interest Rules: The Subcommittee noted that current borrowers of the CDFI should be eligible for service on the CDFI’s Board for purposes of the Accountability prong. The Subcommittee noted that borrower representations often provide invaluable insights into needs, opportunities and challenges. The Subcommittee stated that recusals could be used to mitigate any potential conflict of interest issues.
  1. Target Market Reporting and Conflicting Rules for Banks/Credit Unions: Without providing much detail in the meeting, the Subcommittee noted that the apparent conflicts in the CDFI rules with common regulatory compliance practices of credit unions, banks and venture capital funds deserve a closer look.[7] The final report details recommendations. Notably, the Subcommittee recommends that the CDFI Fund abandon reliance on the Military Annual Percentage Rate (MAPR) as the benchmark for the interest ceiling.

Details are available in the final report.[8] It is hard to predict exactly how much of the Application, reporting or Target Market Verification may change based on these recommendations, but the existance of this report certainly narrows the focus of the most likely areas for further adjustment.[9]

Falcon Capital Advisors is here to answer all of your questions! Please feel free to drop me a line, [email protected]

[1] See “Message from CDFI Fund Acting Director Marcia Sigal: A Status Check on CDFI Fund Activities.” Published by the CDFI Fund. Available here: https://www.cdfifund.gov/director-messages/40

[2] The proposed Application changes and the iterations of the drafts for public review are available here: https://www.cdfifund.gov/programs-training/certification/cdfi/certification-pra (last updated May 1. 2023)

[3] Virtual Public Meeting of the CDFI Fund’s Advisory Board Rescheduled to July 31, 2023

[4] See “Basic Guide for lenders: What is a Qualified Mortgage?” Published by the CFPB. Available here: https://files.consumerfinance.gov/f/201310_cfpb_qm-guide-for-lenders.pdf

[5] “Community Development Purpose” is a term of art that is commonly used in the Community Reinvestment Act compliance regime. One demonstrable definition appears in  the “Interagency Questions and Answers Regarding Community Reinvestment “:  “A loan, investment, or service has as its primary purpose community development when it is designed for the express purpose of revitalizing or stabilizing low- or moderate-income areas, designated disaster areas, or underserved or distressed nonmetropolitan middle-income areas, providing affordable housing for, or community services targeted to, low- or moderate-income persons, or promoting economic development by financing small businesses or farms.” Available here: https://www.fdic.gov/resources/supervision-and-examinations/consumer-compliance-examination-manual/documents/11/xi-12-1.pdf

However, in the CDFI proposed revised Certification application, it is part of a drop down that includes,

  • Business development.
  • Asset/wealth building.
  • Homeless/transitional housing/services.
  • Senior housing/services
  • Community facilities development/ improvements.
  • Special needs housing/services.
  • Accessibility modifications.
  • Affordable housing.
  • Job creation/retention.
  • Charter school development.
  • Community healthcare centers development.
  • Commercial real estate development.
  • Climate resilience
  • Reduced poverty and/or inequality.
  • Credit building.
  • Financial stability.
  • Other.”

See PM #9, Available here: https://www.cdfifund.gov/programs-training/certification/cdfi/certification-pra

[6] See “Official Interepretation of Paragraph 43(c)(1) General Requirement” Published by the CFPB. Available here: https://www.consumerfinance.gov/rules-policy/regulations/1026/43/#c-1

[7] See “Final and Approved CDFI Cetification Recommendations presented by the Community Development Advisory Board to CDFI Fund Acting Director Marcia Sigal July 31, 2023.” CDFI Fund. Available here: https://www.cdfifund.gov/sites/cdfi/files/2023-08/CDFI_Certification_Recommendations_Presented_to_CDFI_Fund_Director_31JULY2023.pdf

[8] Id.

[9] Drafts of the proposed changes are available on the CDFI Fund’s website here: https://www.cdfifund.gov/programs-training/certification/cdfi/certification-pra

Falcon Digital Mortgage August 2023 Newsletter

FHFA Request For Input on the Enterprises’ Single-Family Pricing Framework

An opportunity to advocate for eMortgages presented itself in May when the FHFA issued a Request for Input (RFI) on the Enterprises’ Single-Family Pricing Framework and how it can enhance FHFA’s ability to ensure that the Enterprises fulfill their mission. We saw the connection of this RFI to eMortgages and moved to coordinate a collective industry response.

On August 14th we submitted a response urging the FHFA and the Enterprises to continue to lead the market on eMortgage innovation and incentivize their adoption by reducing the upfront and/or ongoing guarantee fees for loans originated and delivered to the Enterprises as eMortgages.

With many of you supporting as co-signers our RFI response laid out the rationale for why widespread eMortgage adoption would help the Enterprises reduce their risk profile and capital requirements, and advance their mission- related goals, specifically in the areas of affordable housing, market liquidity, process efficiency, innovation, and environmental, social, and governance (ESG).

My hope is that at a minimum this collective industry response will lead to greater dialogue and out-of-the box thinking for how we can accelerate digital transformation within our industry for the benefit of all. Thank you for coming along side us and continuing to advocate for eMortgages

Please see the following link to view the submission:

FHFA RFI Submission_eMortgages


Startup Stavvy Acquires Mortgage Servicing Rival Brace

Stavvy, a fintech company specializing in digital and remote collaboration for lending and real estate companies, and Brace, a digital mortgage servicing platform will offer a collective solution that empowers homeowners with self-service capabilities encompassing every critical stage of default servicing.



Vendor News

Propel™ by Asurity® has integrated their document generation solution with NotaryCam’s® remote online notarization (RON) services and eClosing technologyLEARN MORE

Snapdocs has launched Connected Closings, an integration between the Snapdocs Digital Closing and Notary Scheduling platforms.LEARN MORE

Digital mortgage platform SimpleNexus has integrated with Finastra’s loan origination system, MortgagebotLOS.


Why Is Your eClose Technology Investment Not Paying Off?

Docutech recently posted a blog that emphasized the importance of making eClosing the default way to close in order to maximize your investment.


Time to Double Down on the Consumer Experience.

Matthew Woodhouse from ServiceLink discusses the importance of enhancing the borrower experience through technology, transparency, and education through the lens of their 2023 ServiceLink State of Homebuying Report (SOHBR).


Falcon CDFI Practice

On July 27, 2023, our CDFI Advisory practice offered a webinar entitled, “CDFI 101 for Non-Bank Mortgage Lenders.” The presentation reviewed current and expected rules and regulations that govern the space and offered important considerations for anyone in the mortgage industry looking to learn more about the CDFI model. To learn more and view the presentation, click here.

Our Services

CDFIs. FCA will help you prepare your CDFI Certification Application and provide everything you need to get your CDFI off the ground, from navigating the regulatory process, to setting up your lending platform with tools and best practices. For those seeking to do business with CDFIs, we vet candidates and advise on best practices.

  • Manage the CDFI Certification Process
  • Provide a federal compliance cloud-based compliance system
  • Develop lending policies
  • Advise on mortgage lending
  • Perform risk analysis of CDFI relationships for banks, investors, and donors
  • Advise on the FHLB membership process

Contact Jim Voth at [email protected] to learn more.

Join Our Webinar

MERS® Annual Report & Third-Party Review Process. Learn how to remain compliant with MERS® System requirements with Falcon experts.

September 7th, at 3pm ET.



Have an eMortgage-related news item you want to share? Want to make sure you and your team are on our distribution list? Have a question about Falcon’s digital mortgage advisory services? Send us a note at [email protected]

Falcon Digital Mortgage July 2023 Newsletter

The Impact of Today’s Mortgage Market on Digital Investment

This month, Falcon Managing Director Jim Voth moderated a HousingWire webinar titled Digital Lending in the Real World. Jim was joined by Kevin Wilzbach of Wolters Kluwer, Shane Hartzler of Stavvy, Teri Pansing of Fairway Independent Mortgage Corporation, and Josh Silber of Lennar Mortgage in discussing how the current state of the market is impacting the mortgage industry’s overall investment in technology.

Despite origination volumes being down and the undertaking by many organizations of a variety of cost-saving measures like reductions to staffing, digital transformation continues to be a priority for much of the mortgage industry. In a poll of webinar attendees, 53% of respondents indicated their organizations have recently accelerated, not stalled, their digital initiatives.

As noted during the webinar, a common motivator for organizations to digitize their mortgage processes is the desire to provide a better customer experience. But each organization’s digital transformation path is a unique one and is as much, or more, about reengineering operations and developing business solutions as it is about investing in technology. Yes, technology is an important enabler, but it takes introspection, a plan, commitment, and follow-through to be successful.


DocMagic, Finastra Partner on Mortgage Closings

DocMagic integrates its total eClose platform with Finastra’s Mortgagebot LOS solutions, enhancing the customer experience for mortgage borrowers. Finastra users can now access DocMagic’s eClosing tools, including compliant document generation, RON, and eSignatures



Simplifile by ICE Mortgage Technology Announces its Integration with The Closing Exchange (TCX)

Simplifile eSign events have integrated with The Closing Exchange, a mobile notary service provider. Simplifile customers can now leverage TCX’s extensive network of notaries and their expertise to conduct eSign transactions.



Wire and Title Fraud Risk Surges

In Q2 2023, wire and title fraud risk surged, impacting over half of analyzed real estate transactions with a 50.2% error rate. Digital mortgage technology offers a potential solution to rising wire and title fraud rates by implementing robust security measures and real-time verification processes.


FirstClose™ Equity Settlement Services Order Management Module Now Integrated with Calyx Point®

FirstClose™ has integrated its home equity settlement services ordering module with Calyx Software’s Point® loan origination system, enabling  Point users to streamline the origination of HELOCs and home equity loans.


Figure Expands Reach of HELOC Product Through Four New Partnerships

Figure Technologies Inc., a leader in blockchain-powered financial services has partnered with four top 20 independent mortgage banks, CMG Financial, CrossCountry Mortgage, Fairway

Independent Mortgage, and The Loan Store to offer HELOC to more customers. These partnerships will enable customers to apply and get approved in as little as five minutes through a digital application process.


Vendor Selection

Choosing the right technology partner is critical to a successful digital transformation or modernization initiative. A technology vendor that doesn’t align with an organization’s objectives, functional needs, and internal systems can make implementation and scale difficult and cause an initiative to fail.

Falcon is vendor agnostic, has intimate knowledge of the major players in mortgage technology, and has a best-in-class vendor selection methodology to help you make the right decision.

Vendor Selection Services

  • Program objective and technical requirements RFP and scoring methodology development
  • Vendor demo  facilitation Vendor shortlist and evaluation
  • Negotiating software licenses and service contracts Implementation planning
  • Program objective and technical requirements RFP and scoring methodology development
  • Vendor demo facilitation Vendor shortlist and evaluation
  • Negotiating software licenses and service contracts
  • Implementation planning

Contact Jim Voth at [email protected] to learn more.

Have an eMortgage-related news item you want to share? Want to make sure you and your team are on our distribution list? Have a question about Falcon’s digital mortgage advisory services? Send us a note at [email protected]

Falcon Digital Mortgage June 2023 Newsletter

Highlights from the MISMO Spring Summit 2023

I recently attended the MISMO Spring Summit in Portland, where the new president, David Coleman, shared his forward-looking vision for MISMO. The priorities expressed made me confident that MISMO is in good hands and will continue to build on its mission. David noted a focus on the continued growth of expertise within the communities of practice, prioritizing MISMO’s work on what is achievable and creating more awareness of the role MISMO plays and how it can increasingly be utilized for collaborative efforts to advance our industry.

Another Summit highlight for me was the progress made by the eVault Standards Development Workgroup, co-chaired by Falcon’s own Tim Renner and Camelia Martin of Snapdocs, which submitted SMART Doc® eNote validation rules for final approval and will soon be submitting eVault standards as well. I also enjoyed the discussion on standardizing electronic signatures for mortgages involving a living trust during the eMortgage Community of Practice and the inaugural meeting of the workgroup on standards for eHELOCs.

In summary, the MISMO Spring Summit once again proved a successful platform for mortgage industry collaboration and innovation.


Navigating the Wild, Wild West of Digital Closing Providers

The MReport article explores how time and cost savings are driving digital closing adoption and the challenges lenders face in selecting the right technology provider.



Ginnie Mae Extends Use of Electronic Signatures and Remote Online Notarization

Ginnie Mae has expanded the use of electronic signatures on remote online notarization (RON) transactions to include power of attorney (POA) mortgage documents.



Snapdocs Webinar Mastering eClosing: 4 Ways to Improve Secondary Market Profitability

Earlier this month, Falcon’s Jim Voth joined representatives from Snapdocs and The Mortgage Firm to discuss the key efficiencies that digital closings provide to the secondary market.


NotaryLive is the First Online Notary Service to Onboard New York State Notaries

NotaryLive became the first remote online notarization (RON) platform to onboard New York State notaries.




Vendor News

SimpleNexus has announced an integration with Empower, Black Knight’s loan origination system (LOS). The integration will provide automation capabilities, streamlined processes, and enhancements to the home-buying experience for borrowers.



MERS Annual Report

Does your organization service 1,000 or more MERS-registered loans? If so, you will need a third-party firm to review and sign off on your MERS Annual Report.

Falcon Capital Advisors provides best-in-class service as a third-party reviewer. Only Falcon has a review team consisting of former members of the MERS legal, operations, membership, and compliance departments. We have unmatched experience and expertise in developing, enforcing, and reviewing requirements covered by the MERS Annual Report.

Although it is not due until 12/31, it’s never too early to start planning for the MERS Annual Report. Take your organization’s MERS compliance soaring to new heights with Falcon.

Contact Tim Renner to learn more.

Have an eMortgage-related news item you want to share? Want to make sure you and your team are on our distribution list? Have a question about Falcon’s digital mortgage advisory services? Send us a note at [email protected]

Falcon Digital Mortgage May 2023 Newsletter

This month in Washington, DC, Ginnie Mae held its Summit on Digital Innovation in the Mortgage Industry. The event brought together a diverse group of leaders and innovators from both the private and public sectors of the mortgage industry, including housing agencies, the GSEs, investors, originators, technology providers, industry associations, document custodians, and warehouse banks.

The summit was kicked off by Ginnie Mae President Alanna McCargo, who discussed the vital role digitalization is playing to help Ginnie Mae accomplish its affordable housing mission. The many speakers and panelists who followed shared perspectives from their own digital journeys and touched on topics such as the benefits of standardized data, enhanced security, better customer experience, process efficiencies and automation, and interoperability advancements. The summit also featured a panel on Ginnie Mae’s Digital Collateral Program for securitization of eNotes, which was led by program director Lynne Chandler, and provided useful guidance to organizations applying to or currently participating in the program.

It was great to hear so many voices touting the numerous benefits of digital mortgages. I think it’s safe to say the widespread consensus is a digital process is a better process.


Figure Technologies Closes First Rated HELOC Securitization

Blockchain-focused fintech firm Figure Technologies completed its first asset-backed securitization of home equity lines of credit (HELOC). The securitization, underwritten by Jefferies, Goldman Sachs, and JPMorgan Chase, includes Class A and B notes rated AAA and A by DBRS Morningstar. The transaction comprises 3,568 loans, including loans from Figure and other lenders.



Mortgage Lenders Believe Technology Investment is Key to Scaling When Market Turns

A survey by Wolters Kluwer reveals that the majority of mortgage lenders believe technology provides higher operational gains compared to human capital.


Bipartisan Nationwide RON Bill Reintroduced

Senators Kevin Cramer and Mark R. Warner have reintroduced the Securing and Enabling Commerce Using Remote and Electronic (SECURE) Notarization Act (HR 3962). The bill aims to modernize the notarization process by allowing notaries and signers to complete transactions from different locations.


A Tech Sprint From the Federal Housing Finance Agency

The FHFA Velocity TechSprint is a three-day event hosted by the FHFA to bring together experts and practitioners from the technology and mortgage finance sectors to propose solutions for reducing mortgage costs and delivery times while increasing transparency and inclusivity. It will take place in Washington, DC from July 10 to July 13, 2023.


Vendor News

Stavvy has partnered with WFG National Title Insurance Company to offer eClosing technology solutions.

Docutech’s Solex eClosing platform has achieved MISMO eClosing certification, demonstrating its compliance with industry standards for digital mortgage solutions.

Snapdocs has integrated with Finastra’s Mortgagebot LOS to support Trustmark National Bank’s eClose transformation.

Digital Mortgage Expansion Program

Is your organization facing challenges in scaling your digital mortgage program? Don’t miss out on the benefits and savings that other lenders are already enjoying.

Falcon Capital Advisors specializes in assisting lenders with identifying and overcoming hurdles to scale their digital mortgage programs. Our expert team will provide actionable steps for quickly moving your program forward. Falcon’s approach encompasses components such as initial discovery, a diagnostic survey, an expansion roadmap, and execution support.

With support from Falcon’s team of experts, you can get your digital mortgage program back on track, achieving sustained adoption and long-term success.

Contact John Schuler to learn more

Have an eMortgage-related news item you want to share? Want to make sure you and your team are on our distribution list? Have a question about Falcon’s digital mortgage advisory services? Send us a note at [email protected]

2022 Year in Review

Take a look back at some of the biggest developments in the digital mortgage space in 2022.

Jim Voth of Falcon Capital Advisors on Digital Mortgage Adoption

Jim Voth leads the Digital Mortgage practice at Falcon Capital Advisors, Washington, D.C., where he manages digital transformation engagements for GSE, government, and banking clients. He can be reached at [email protected].

Q: Conventional wisdom is that digital mortgages thrive in a refinance environment, and less so in a purchase market. Is this in fact the case, and has the pivot to purchase resulted in a big drop in eNote origination?

JIM VOTH: Certainly, the prevailing view is that most of the progress to date with digital mortgages has been on the refinance side of the business. Not surprising really since the nation’s largest originator, and by far the biggest source of eNotes registered on the MERS Registry has been a refinance powerhouse.  At the moment there is no industrywide source that specifically tracks and publishes the purchase and refinance split for eNotes. However, there are other large lenders, including the one we’ve already mentioned, who are doing eClosings for purchase as well as refinances.

That said, overall eNote volume was down in the first half of 2022, according to the MERS eRegistry. As a percentage of total originations, however, eNotes are tracking at 6% of all originations, slightly ahead of the 5% they were at in 2021. There are simply fewer of them because overall mortgage volume is down. Purchase loans now make up more than 50% of overall volume, which suggests that lenders are creating eNotes using purchase loans.

The logistics for a full digital closing are easier in a refinance transaction because the lender has more control over the settlement and notarization methods.  But at the end of the day, the manufacturing process for digital mortgages is the same for both purchase and refinance loans.

That doesn’t mean that there aren’t some cultural and logistical challenges when it comes to fully digital purchase loans where the note, security instrument and other loan documents are signed electronically. In a purchase transaction, the seller, or more often the Realtor®, selects the title company. To do a fully digital mortgage, the title company must have access to an eClosing platform with in-person electronic notarization (IPEN) or remote online notarization (RON) capabilities, and of course access to an eNotary. Not all of them do, but this is rapidly changing. The lender can also provide the title company access to these tools via their digital mortgage vendor relationships.

Another challenge is that traditional in-person closing ceremonies are often encouraged by loan officers and real estate agents for purchase transactions. But there is no reason why these can’t remain traditional in-person ceremonies but with electronic signatures and eNotarization (i.e., IPEN).

Q: In a smaller, way-more competitive purchase market, is it wise for lenders to try to introduce eClosings to the borrower experience?

VOTH: One of the benefits of technology is that it gives consumers more options. Viewed from this perspective, lenders aren’t trying to shoe-horn borrowers into a single path. Many borrowers select lenders based on their promise of making the origination process faster and less painful. You know what’s not fast and not without its pain points… being given a pile of important legal documents on the day of closing to read through for the first time and sign while a settlement agent, notary, and potentially others wait on you. I think most people would agree that a much better experience is when you are given a chance to carefully review those documents in the comfort of your own home and, in some cases, sign them before coming to the closing ceremony, which by the way is now shorter because you’ve already reviewed and signed many of the documents beforehand.

In addition to offering a more modern customer experience, eClosings have significant economic advantages for lenders. Recent ROI studies have found that fully digital mortgages can save lenders and title companies over $400 per loan. Given that the most recent MBA numbers show that in Q2 the average lender lost $82 per loan, a gain of a few hundred dollars is not insignificant.

Not everyone will be persuaded immediately, which is why it will take a while before the majority of mortgages are fully digital. But make no doubt about it, those who think we’re going to scrap digital innovation to stick with ink are betting the wrong way.  Fully digital is the future and the benefits are too great to pass up.

Q: What can lenders do to make the eClosing process more “purchase mortgage friendly”?

VOTH: As we’ve mentioned, they can offer borrowers more options. This could include fully remote closings, hybrid closings (i.e., where one or more of the closing documents are signed electronically, be it remote or in-person)) or fully in-person closings ceremonies but with digital signatures. For the foreseeable future I think many borrowers will still want a traditional in-person ceremony for purchase transactions.  That’s why we anticipate an increase in IPEN to enable this latter option.

Q: What can lenders do to ensure adoption of a digital mortgage program across both purchase and refinance?

VOTH: There are several factors that a lender should consider to ensure the successful adoption and scaling of a digital mortgage program. Best practices include executive sponsorship of the digital transformation effort, clear transformation strategies, managing to objectives and milestones, and dedicating resources through full adoption. Not getting stuck in pilot mode is also critical.

Our conversations with lenders, as well as other recent industry research, has shown that internal resistance to change is one of the biggest challenges to digital mortgage adoption. One proven way to move the culture forward is to make eClosing the default setting in the origination process. In addition, a phased roll-out beginning with hybrid digital mortgages where some of the closing documents are eSigned can be an interim step to introduce change more gradually.