The Consumer Financial Protection Bureau (CFPB) recently announced that it is launching an electronic-closing (e-Closing) Pilot program designed to address some of the most common concerns relating to the mortgage closing process. CFPB states that electronic closing has the potential to address current challenges by shifting the closing experience toward a more paperless process and by facilitating other consumer-friendly improvements. Common consumer concerns relating to the current mortgage closing process include:
- Not enough time to review documents – consumers indicate that they do not receive the paperwork until they arrive at the closing table, where there is pressure to rush through and sign the documents without enough time to ensure that they understand what they are signing;
- Overwhelming stack of paperwork – consumers indicate that there are too many pieces of paper involved and that many leave the closing table with uncertainty that something hidden in the paperwork might have long lasting effects on their financial future;
- Documents are difficult to understand – consumers indicate that the closing documents are full of legal and technical jargon and that they often have little help from others in the closing room to gain adequate understanding.
- Errors in the documents – consumers indicate that common errors in closing documents, including misspelled names, can often lead to delays and may require the closing agent to redo the entire closing package.
CFPB's e-Closing Pilot seeks to explore ideas to improve the closing process using technology and is aimed at encouraging lenders to place consumers in control of their mortgage closing. The e-Closing Pilot encourages the use of technology to:
- Help explain key terms, the closing process, and important documents;
- Give consumers more time to review the stack of closing documents;
- Help consumers find and fix errors in the documents prior to closing.
Additional information regarding the e-Closing Pilot and the current state of closing is available on the CFPB webpage.
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