The 30-Minute Mortgage Closing

Truliant FCU completed an end-to-end electronic mortgage closing in March 2020 and became the first credit union to transfer an eNote to the FHLB in Atlanta in 2021. Other credit unions can follow suit.

 
 

Top-Level Takeaways

  • Truliant FCU implemented a digital closing process in four months. Now, electronic closings take 30 minutes.
  • Parties dial into a conference call similar to a Zoom meeting. In North Carolina, however, notaries and borrowers must meet in person to sign the note and deed of trust.

Even before the pandemic, traditional mortgage closings were too often inconvenient for members and inefficient for credit unions. That’s why when Beth Eller joined Truliant Federal Credit Union ($3.5B, Winston Salem, NC) in the fall of 2019 as the first vice president of Truliant mortgage services, she made it a top priority to help the cooperative reach of its goal of becoming the first credit union in the state of North Carolina to conduct an end-to-end eClosing.

Thanks to some early prep work, Truliant achieved its goal in just four months and completed its first eClosing in March 2020, drastically reducing the typical six to nine months new projects typically require for implementation.

CU QUICK FACTS

Truliant FCU
DATA AS OF 03.31.21

HQ: Winston Salem, NC
ASSETS: $3.5B
MEMBERS: 275,904
BRANCHES: 32
12-MO SHARE GROWTH: 24.9%
12-MO LOAN GROWTH: 8.8%
ROA: 1.09%

Similar to a Zoom meeting, in an eClosing the member, the lender, an attorney, and an eNotary all dial into the conference call and appear on screen with the closing documents. North Carolina uses in-person electronic notary (IPEN), which means the notary meets the borrower to sign the note and deed of trust in person. The borrower inscribes an electronic signature on a fully encrypted biometric pad. The borrower signs only the two required notarial documents at the closing itself, which cuts down the average time from nearly two hours to just 30 minutes.

A More Convenient Experience

Members may choose to complete their eClosing at home or at work. They also can go to an attorney’s office, as North Carolina requires an attorney be present, or they can visit their credit union branch. They get to choose the option that is most convenient for them.

In North Carolina, emergency video notarization (EVN) allowed for remote online notarization during the pandemic. This is similar to remote online notarization (RON) used in other parts of the country and means the notary and the borrower don’t have to be physically present. Instead, the borrower proves their identity visually or by answering questions remotely.

North Carolina has yet to pass permanent legislation, but Eller says Truliant will likely use those types of fully remote transactions if they are authorized. For now, IPEN offers a better member experience than a wet closing package.

“In the next two to three years, the public will expect to be able to close a mortgage completely remotely without going into an attorney’s or title company’s office. eClosing is the future.”

Beth Eller, VP of Truliant Mortgage Services, Truliant FCU

According to Eller, eClosings provide a number of benefits for all parties involved. This includes members receiving, and having an opportunity to thoroughly review, their closing documents several days beforehand. “Missed signatures” are also eliminated as the software will not allow members to advance if a signature or initials are skipped. The digital documents are instantaneously delivered to the courthouse, which makes for a much faster process and happier buyers & sellers who now receive their keys or funds more quickly.

Slow Start As A Strategy

Truliant was converting its loan origination system in late spring 2020, so it started off slowly after its first eClosing in March 2020. By late in the second quarter, however, the credit union was comfortable offering them to more members. Now, it offers eClosings to all members.

The credit union gains a lot of internal efficiencies through this electronic process and typically receives documents within three to five days compared to the average seven to 14 days with wet signatures. Post-closing efforts have become more efficient for the credit union, too. According to Eller, the servicing department doesn’t need to double check whether everything is there or go back to the member if they missed a document.

Notably, as soon as the attorney sends back the closing package, the credit union has an eNote it can portfolio or deliver to investors. To that end, Truliant participated in an eNote pilot for the Federal Home Loan Bank of Atlanta and became the first financial institution in the Southeast to complete a transfer of an electronic promissory note (eNote) to FHLBank Atlanta in March 2021, coincidentally coinciding with the anniversary of the cooperative’s first eClosing. Eller believes the program will provide more flexibility for credit unions to hold more real estate loans. Case in point: Prior to its ability to collateralize with the FHLB, Truliant hadn’t been keeping eNotes on its books; it had been selling them to Fannie or Freddie.

Beth Eller, VP of Truliant Mortgage Services, Truliant FCU

Tips To Start

“We spent a lot of time on preparation,” says Eller, who advises other credit unions to do their homework and plan on a six-to-nine month implementation timeline. “Some of the groundwork occurred before I even joined the credit union.”

Other items Eller advises credit unions to line up before offering eClosings include:

  • Credit unions must be in an e-registry. Truliant chose MERS.
  • A partner to generate the closing docs.
  • A secure e-vault to house everything.
  • Someone passionate about making the project happen.

“It’s also a good idea to know what you intend to do with your e-notes in the long run,” Eller says. “If you plan to sell to a GSE, you’ll need its approval.”

Fortunately, Eller says, there is a lot of help available. All a credit union needs to do is ask for it. She suggests starting with the e-registry and then working with vendor partners who can help guide the credit union through the process.

The Future Looks Digital

Truliant staff was integral to the preparation process, and the credit union has been resolute in sharing experiences with staff members throughout implementation.

“We held all-team calls to discuss every eClosing we completed that week to share difficulties and gain buy-in,” Eller says.

When things went well, they’d celebrate the success. And when problems arose, they’d categorize and address them.

The mortgage team also learned to prepare for the unexpected. After all, the technology is still new and isolated issues, such as a laptop crashing, could require them to paper out a loan. Now that eClosing is offered to every Truliant member, the credit union is focusing on attorney adoption.

“In the next two to three years, the public will expect to be able to close a mortgage completely remotely without going into an attorney’s or title company’s office,” Eller says. “eClosing is the future.”

Request a Mortgage Scorecard Today

Would you like to see how your credit union stacks up against your peers in the mortgage market? Using Home Mortgage Disclosure Act (HMDA) data, the analysts at Callahan can craft a scorecard that includes the peer group of your choice and compare key metrics like funding ratios and loan types.

Request Now

Want more credit union strategies? Sign up for the CreditUnions.com free newsletter.