Category Archives: Investing

The game changer for end-to-end digital mortgages: eClosings

Nearly everything about the industry’s prized digital mortgage is streamlined expect for the final, and one of the most important, steps at the end.

The entire online process comes to an abrupt halt when it’s time to close a loan, forcing borrowers to still meet up and cross the T’s and dot the I’s on an official document with a notary present.

And while this process is evolving digitally, as noted here, it wasn’t until recently that the process truly became end-to-end thanks to a new company: Notarize.

Notarize took the current eClosing process and brought it to the next level by allowing buyers to never have to leave their home or wet sign a single document.

Compared to the previous option that requires either some in-person contact or a notary to eSign closing documents via a shared tablet, the company’s solution allows borrowers to FaceTime or Skype with the notary, making it the first eClosing borrowers can complete remotely, with a notary not having to physically be present.

The concept finally came to market earlier this month when Notarize closed the first of this type of loan with United Wholesale Mortgage.

Notarize also said it has partnerships with four other mortgage lenders, including Lenda, Mid America Mortgage, Eagle Home Mortgage, and WEI Mortgage.

In an interview with HousingWire, Notarize CEO and Founder Patrick Kinsel expanded on the process behind finally getting to a true eClosing and what the future looks like for eClosings.

Kinsel explained that mortgages aren’t the only type of notarization that the company does, but it did prove to have the most pain points when it comes to notarization.

“Mortgages make up 40% of the notary market,” said Kinsel, “And we think it’s where we can solve the strongest pain point. It’s a center of focus for us, and we can really innovate there. We are excited for the future and to really help borrowers and people understand the terms of their loan better.”

“The fact that only a fraction of 1% of the 10 million mortgage closings executed in the U.S. in 2016 were eMortgages, was a clear indicator that the industry lacked the right solution,” said Kinsel.

When Kinsel was first getting Notarize started about 19 months ago, he explained that Virginia was the only state so far that had passed a law to allow the presence of a notary to be established over video and audio. Since then, Texas, Nevada and most recently, Ohio, have passed legislation to bring remote notarization into the state.

And the list hopefully doesn’t stop there. Kinsel stated they’ve been at the forefront of getting the legal process going in states.

The key detail in these four states approving remote notarization is that the reach expands beyond the four states. The notaries in Virginia, Texas, Nevada and Ohio will be able to use Notarize’s platform to serve customers from all 50 states, regardless of where they’re located at the time of the signing.

For example, the first eClosing that Notarize executed actually happened in Illinois.

However, Kinsel added that the best model is for local notaries to perform local transactions.

Notarize is trying to get more bills passed across the country to expand its operations outside of Virginia, along with the three other states. 

When it comes to industry backing, Notarize already has the support of Fannie Mae and Freddie Mac. Notarize has been verified by both for eNotes, eClosing and eVaulting.

“Freddie Mac is focused on innovation as a medium to help lenders achieve their goals around efficiency and deliver a better customer experience. We see the digitization of the mortgage process as one way to reduce errors, speed the closing process and offer a complete solution to consumers,” said Samuel Oliver, vice president of strategic delivery for Freddie Mac’s Single-Family Business.

“Lenders have long sought the digital mortgage, and today the industry takes a big step forward with Notarize’s closing of the first ever fully online mortgage with electronic documents,” said Oliver. “With the vast majority of counties now accommodating eRecording of mortgages and more states adopting electronic notarization, we’re seeing a transformation across the industry. Freddie Mac intends to continue to support the digital mortgage space.”

Even though Notarize does have a lot of support behind it, it does face some challenges.

“A mortgage is a mission critical transaction,” said Kinsel. “You have a rate that’s approved for a limited period of time. Our technology has to work. We have made huge investments in what happens if a call drops or what happens if people are on different devices. You have to get it right. We are investing a ton of time and resources in this, and we want to tell a lender that we got it.”

The closing process involves a lot of parties, who all have to agree. And some people may even have to change their systems to accommodate the technology, Kinsel explained.

“Because this touches everybody, we are really investing in helping people make this transition. This change needs to be managed and helped along the way,” he said.  

And the overall process for eClosings to be the new normal isn’t likely to take long, according to a recent interview with UWM CEO Mat Ishbia.

Since a lot of other states are okay with remote notarization on non-mortgage-related things, Ishbia said they feel that many more states will come on very soon.

“eClosings will be more of a standard practice next year and I think the majority of closings will be done this way by the end of 2019,” said Ishbia.

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Freddie Mac extends appraisal-free mortgage program to purchase loans

Freddie Mac announced Friday it is making buying a home a better experience for lender and homebuyers – by cutting the appraiser out of the process.

The company is now offering a new product which will cut the appraisal process out of qualified home purchases and refinances. This could save borrowers an estimated $500 in fees and could reduce closing times by as much as 10 days.

The new Automated Collateral Evaluation assesses the need for a traditional appraisal by using proprietary models and utilizing data from multiple listing services and public records as well as the historical home values in order to determine collateral risks.

“By leveraging big data and advanced analytics, as well as 40+ years of historical data, we’re cutting costs and speeding up the closing process for borrowers,” said David Lowman, Freddie Mac executive vice president of single-family business.

“At the same time, we’re providing immediate collateral representation and warranty relief to lenders,” Lowman said. “This is just one example of how we are reimagining the mortgage process to create a better experience for consumers and lenders.”

Lenders can determine if a property is eligible for ACE by submitting the data through Freddie’s loan product advisor. This will then assess credit, capacity and collateral to determine the quality of the loan. Lenders will receive the risk assessment feedback in real time.

ACE will be available for home purchases beginning on September 1, 2017.

Earlier this summer, the company announced it began using this product on qualified refis beginning June 19, 2017.

“When we launched loan advisor suite in July 2016, we set out to give our customers certainty, usability, reliability and efficiency,” said Andy Higginbotham, senior vice president of strategic delivery and operations for Freddie Mac’s single-family business. “ACE is our most recent capability to deliver on that vision.”

Fannie Mae also updated its policy on appraisals this year, and clarified its “existing policy that allows an unlicensed or uncertified appraiser, or an appraiser trainee to complete the property inspection. When the unlicensed or uncertified appraiser or appraiser trainee completes the property inspection, the supervisory appraiser is not required to also inspect the property.”

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Walter Investment could be booted from NYSE for low stock price, market cap

On July 14, 2017, Walter Investment Management Corp. disclosed that it received a notice from the New York Stock Exchange after the company’s shares closed at an average price of less than $1 for a consecutive 30 trading-day period.

Walter’s stock closed at $0.77 that day, and since then, things haven’t gotten any better. In fact, they’ve gotten much worse – so much so that Walter is now at risk of being kicked off the NYSE.

On the first day of August, Walter closed at $0.83 per share, but the stock has dropped steadily since then. Last week, the stock began trading at less than 40 cents per share, and has stayed below that mark ever since.

With Walter’s stock trading at prices that low, the company’s market capitalization has fallen down below $12 million.

And the company’s consistently low market cap now has the NYSE threatening the nonbank with delisting.

Walter disclosed late Wednesday that it received written notification from the NYSE that the company was “considered to be non-compliant with the continued listing standards set forth under Rule 802.01B of the NYSE Listed Company Manual,” because Walter’s average market cap was less than $50 million for consecutive 30 trading-day period.

As with the previous notice it received from the NYSE, Walter said that it plans to officially acknowledge that it received the notice and will notify the NYSE of its intention to submit a business plan that will lay out the company’s plan to get back into compliance with NYSE standards.

From there, the NYSE will have 45 days to review Walter’s plan and determine whether the company has made a “reasonable demonstration of its ability to regain compliance” within an 18-month period ending Feb. 11, 2019.

If the NYSE accepts the plan, then Walter stays on the NYSE.

If the stock exchange does not accept the plan, Walter may be subject to suspension and delisting from the NYSE.

“The Company intends to take steps to remedy the listing deficiencies in a timely manner; however, no assurance can be given that the Company will be able to regain compliance with the applicable listing standards or otherwise maintain compliance with the other continued listing standards set forth in the NYSE Listed Company Manual,” Walter cautioned in its announcement.

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