Understanding How Digital Mortgage Closings Work

Snapdocs, a digital closing provider, made news when it launched Connected Closings, a first-of-its-kind integration between the Snapdocs Digital Closing and Notary Scheduling platforms. With Connected Closings, Snapdocs customers reduce closing times by at least a day and a half, settlement companies return scanbacks two-times faster by eliminating manual tasks, and borrowers electronically sign documents prior to the closing appointment more than 90% of the time. Snapdocs lender and settlement customers using Connected Closings include The Federal Savings Bank and BCHH, a leading provider of real estate title and closing nationwide. We talked with Snapdocs CEO Aaron King about digital closings and so much more. Here’s what he said:

QUESTION: What is eClose technology?

AARON KING: eClosing (or digital closing) is a mortgage closing where most or all of the process is electronic. Documents are digitally managed between all participants—including the lender, borrowers, settlement, notaries, and ultimately, the secondary market. eClose enables these participants to automate and seamlessly coordinate in ways that are not possible in a traditional paper closing.

Many people think of digital closing as simply eSigning closing documents, but the challenge and opportunity is much larger and more transformational. Snapdocs is focused on building technology that connects all participants of a closing. Once connected, we can keep these parties in sync with real time updates, and automate a lot of the manual workflows while customers continue operating out of their respective platforms. This approach creates immense value for lenders, as well as everyone else involved, by reducing errors, eliminating manual work, and improving closing speed. The result is a celebratory 15 minute closing online, instead of spending over an hour in person.

QUESTION: What qualifies as a full digital closing?

AARON KING: A full digital closing is a mortgage transaction in which many of the processes are automated, and all of the closing documents are executed online. The entire loan package, including the eNote, is eSigned and electronically notarized (eNotarized). Most of these fully digital closings happen remotely, but they can also still happen in person with mobile devices. Once completed, the necessary documents are electronically transferred to and recorded by the county.

While full digital closings are not adopted at scale yet, lenders are already seeing tremendous value in digitizing parts of their closing process. We recently released market research which found that lenders can spend less per loan, the more digital the transaction becomes. The key finding here is that most of the value of digital closings can be achieved even before the process is 100% digital.

QUESTION: Are IPENs part of a fully digital closing process?

AARON KING: IPEN closings can be part of the fully digital closing process today. This is a situation where the closing happens in person, but the notary and/or title agents are using a mobile device like a tablet to eSign and notarize documents instead of printing them. It’s a great concept, but we’re not seeing any fully digital IPEN closings today.

QUESTION: Why do digital closings matter now?

AARON KING: Digital mortgage closings are more relevant than ever for two primary reasons. First, profitability matters, and second, lenders will be behind the curve if they’re not investing here today.

According to the MBA’s recent Q1 2023 Profit Report, independent mortgage bankers (IMBs) lost an average of about $300 per loan last year. Snapdocs’ own research released in March 2023, shows that by implementing digital processes—even if just a hybrid closing and an eNote—these lenders could have actually been profitable. The companies that embrace a fully digital strategy now are saving over $400 per transaction and have a huge competitive edge over other lenders.

Over half of lenders have already adopted digital closing processes and those that don’t, may not be positioned for success. It’s critical for lenders and all participants in the closing process to embrace digital transformation to create a sustainable and competitive business well into the future. For example, Gold Star Financial reached 23%+ eNote adoption and more than 76% total hybrid adoption within less than 3 months of implementing Snapdocs eClose. As a result, the company’s loan officers started getting more referrals and a higher number of 9 or 10 NPS scores from borrowers because of the differentiated experience offered with this digital process. This will set them apart when competing for new business.

QUESTION: How did you get into real estate closing technology?

AARON KING: My journey into mortgage closing began 25 years ago when I was still in high school. I got a job at an IMB, then became a notary at 18, and at 21 started a nationwide signing service. Through those experiences, I saw firsthand how complex and inefficient the closing process was, and I realized there was a critical need for a more streamlined, digitized approach.

All of that led to founding Snapdocs in 2014 with the vision of helping connect all the parties in a mortgage closing to help them work together better.

Since then, Snapdocs has grown into a holistic ecosystem that offers a diverse range of closing services—eClose, eVault, and Notary Scheduling solutions. We have a dedicated team filled with industry veterans, and our solutions touch 25%+ of all U.S. mortgage originations. Our clients include a number of the top mortgage bankers, depository institutions, and settlement and title companies. Through our strong relationships with our clients and industry partners, we’ve been able to continuously innovate and customize our eClose technology to meet the market’s evolving needs.

Looking back, my early beginnings played a crucial role in shaping my understanding of the industry and over the years, I’ve watched as technology has become critical to ensure the current and future health of the industry. Today, I’m as excited as ever to bring my experience and passion for technology to the industry while delivering on the Snapdocs vision.

INSIDER PROFILE

Aaron King is the founder CEO of Snapdocs, the mortgage industry’s leading digital closing platform that powers millions of closings each year. Snapdocs combines an open platform, patented AI technology, an extensive settlement network, and a team of industry experts to ensure digital closing success. A passionate advocate for digital closings, King began his career in the mortgage industry working at an IMB while he was still in high school. At 21, he founded NotaryLink, a nationwide notary signing service. King is a frequently sought speaker at industry events and has been featured in publications such as The Wall Street Journal and Forbes.