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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 36 February 2024 E X P E R T I N S I G H T S Digital closings also enhance the borrower's experience by making each closing faster and more convenient. This makes lenders more likely to receive referrals and repeat business, which cre- ates critical revenue. The question isn't whether lenders can afford to transition to digital closings, but rather how they can afford not to. Q: How much are lenders saving with digital closings? Maki: Our research analyzed the average savings across 25 top lenders using eClose technology. The results validate that lenders are saving $110+ per hybrid closing and $290+ if the hybrid closing includes an eNote. On a full hybrid trans- action that involves an eNote and RON (remote online notarization), the savings spikes to more than $400 per loan. Let's say a regional mortgage compa- ny handles 200 mortgages a month. The savings potential is huge. By implementing hybrid closings alone, they would save $264,000 a year. Add eNotes to the mix, and they're looking at an annual saving of over $700,000. When you consider these numbers, the financial incentive for mak- ing the digital transition becomes clear. That being said, the exact dollar savings realized by implementing digital closings depends largely on the lender's business model and level of eClosing adoption. We also recently conducted a lender survey in collaboration with Arizent Research. The report found that 74% of lenders have invested in eClose technology, but only 28% of those offer- ing eClosings have achieved an adoption rate above 60%. The lenders that are achieving stronger adoption and thus, greater savings, are those prioritizing change management and working with an eClosing technology partner focused on their unique business needs. We're proud of the adoption rates and savings our customers are realizing. Based on our data, 60% of lenders using Snapdocs eClosing, the company's digital closing platform, have reached an adoption rate above 60%. This is about double the adoption rate of the lenders surveyed. But again, it's not just about the direct cost savings—it's about the value created by going digital. In addition to increas- ing borrower satisfaction, lenders that implement digital closings can free up resources to focus on value-added tasks, such as nurturing referral relationships or launching new channels of business. Q: The same report from The Mortgage Bankers Association indicated that total production revenue for Q2, which includes net secondary marketing income and warehouse spread, worsened by 30 basis points from the prior period. How can lenders improve on these spreads? Maki: Market conditions often dictate secondary market income and ware- house spread, which makes production revenue difficult for lenders to control. However, lenders do have control over the business's operational efficiency during low and high market conditions, which is where a strong digital closing strategy enters the picture. Digital closings not only speed up transactions but quality control ini- tiatives as well. When it comes to due diligence and portfolio analysis, it's much easier to accomplish both when the documents are digitized and easier to analyze. This is crucial when navigating the secondary market, since the faster lenders get their loans from origination to sale, the better their spread. Moreover, a cleaner portfolio is nat- urally more appealing in the secondary market. Digital closing technology that automates manual tasks and leverages AI to improve accuracy will reduce the risk of errors. Lower risk translates to better rates and improved spreads. When every document is digital, it also becomes substantially easier to sift through data, spot trends, and even leverage analytics for predictive insights. Q: In the current market, what is most important for lenders to think about? Maki: Given that the average mortgage company has been losing money on each loan they originate, reducing expenses is paramount. But the goal is not strictly cutting costs, but doing so in a way that enhances overall business agility and the customer experience. By facilitating digital closings at scale, we're providing substantial cost savings that enables lenders to run their companies at maxi- mum efficiency and do more with less. The idea of efficiency is a critical factor, but so is building resilience and adapting to current market demands. Keep in mind, today's borrowers expect smooth, hassle-free closings and increas- ingly demanding online closings. By leveraging digital closings to meet their customers' expectations, lenders increase their prospects for referrals and repeat business. In fact, Snapdocs lenders see a 10-point increase in NPS (net promoter score) when offering digital closings to borrowers, which equates to a higher level of satisfaction. As with any lender, IMBs must balance efficiency, adaptability, and cus- tomer satisfaction to remain successful in today's market. There's no more effective strategy to achieve this balance than by implementing digital closings with the right provider and strategy for adoption at scale. While the current environment remains challenging, we're excited to see more lenders turn to digital closing technology to reduce their operating costs and ensure long-term profitability. It's truly an exciting time.