From floridarealtor.org
The Consumer Financial Protection Bureau published a report on its “Know Before You Owe” eClosing project. It found that electronic closings benefit buyers navigating the mortgage closing process.
According to the U.S. consumer watchdog agency, buyers who have an eClosing are generally better off on measures of understanding, efficiency, and feeling empowered compared to borrowers who used paper forms.
“While technology alone will not address all consumer concerns in the closing process, our study showed that eClosings do offer the potential to make the process less complex,” says CFPB Director Richard Cordray.
In April 2014, the CFPB released a report that outlined major pain points associated with the closing process — the last step before consumers are contractually obligated to their loan. The report found that consumers a) felt they did not have enough time to review the documents, b) were overwhelmed by the stack of complex paperwork and c) complained about finding errors in the documents.
eClosings use technology that allows borrowers to view and sign closing documents electronically. The benefits generally include faster document delivery and embedded links that, when clicked, help consumers understand specific terms. eClosing transactions are already available, but the CFPB believes industry adoption is slow.
eClosings benefits noted in the CFPB report:
• Better consumer understanding: The study found a 7 percent positive difference in perceived understanding for borrowers using eClosings compared to borrowers using paper documents.
• A more efficient process: The study found a 17 percent positive difference in scores for borrowers using eClosings compared to borrowers using paper documents.
• Greater feelings of consumer empowerment: The study found a 15 percent positive difference in the scores for the eClosing borrowers compared to borrowers using paper documents.
The bureau’s “Know Before You Owe” mortgage disclosure rule takes effect on Oct. 3, with two easier-to-use mortgage disclosure forms.
The first is the loan estimate, which provides a summary of the key loan terms and estimated loan and closing costs. This form will be given to consumers within three business days after they submit an application.
The second form is the closing disclosure, which offers a detailed accounting of the transaction. The rule requires the delivery of the closing disclosure three days before closing.