MARLBOROUGH, MA (April 9, 2019) — Digital Federal Credit Union, better known as DCU, is no stranger to venturing outside of the conventional banking norms.
DCU is continuously researching and vetting the latest and most innovative technologies to improve the overall banking experience for its members.
With a membership base of over 800,000 nationwide, DCU sought to identify a way to emulate the same personal closing experience members living within their Massachusetts and New Hampshire branch network have come to expect.
Most recently, DCU completed its first-ever remotely notarized electronic closing with a home equity loan borrower in Virginia.
“This process started four years ago when we decided that we wanted to create an electronic closing experience for our members,” said Caleb Cook, DCU Vice President of Mortgage Lending.
“At the time, there were only a couple of states that had an e-notary law. We saw an opportunity to do hybrid e-closings at scale, where the borrower can sign everything electronically except the note and mortgage before doing a full e-closing. In a full e-closing, the borrower is permitted to sign everything with an in-person electronic notary present. A remote closing enables the borrower to sign all documents remotely via webcam.”
Then, the DCU Mortgage Department identified which states permit remote or full e-closings and in 2017, the credit union completed its first full e-closing on a home equity loan for a member residing in Florida.
Participating in e-closings offers efficiencies for all parties involved because the mortgage can be instantly recorded, and no travel is required by the borrower or settlement agent/notary during remote closings.
After the Florida closing, Harry Tsianatelis, DCU Mortgage Operations Assistant Manager, was tasked with completing DCU’s first Remote Online Notary-enabled closing in Virginia.
Why Virginia?
DCU had previously completed full e-closings in Texas, and the credit union was looking to take the next step in completing a remote e-closing. Virginia’s e-notary law offers lenders and borrowers the most flexibility, and with a member about to close on a home equity loan in the state, it was the perfect opportunity to conduct a remote
e-closing.
“We looked at our pipeline of business and the different states where we could do remote closings in,” said Tsianatelis.
“Once the loan went through our approval process, shortly before the closing we reached out to the member to let them know about our e-closing capabilities to see if they were interested in being among the first to use the technology. The member, who happened to have a technology background, agreed to participate. Being able to close from the comfort of their own home was a plus for the member.”
DCU introduced remote closings to improve the overall member experience and make the mortgage lending process less time consuming for all parties involved.
DCU members receive all closing documents three days prior to their appointment for review through the credit union’s electronic closing portal.
Because of this streamlined approach, DCU estimates that it has saved members approximately 5,600 hours during the closing process.
“From the member-side — in the states that allow remote closings — they’re saving time and gas by not having to drive to a closing appointment,“ said Cook.
“The same goes for the closing agent because they don’t have to travel. It reduces costs and for us (DCU), we’ve been able to save about a million pages of paper a year using the hybrid process. Completing the closing through these portals is much more secure than the current method of sending documents out to settlement agents. It gives the lender complete control of the entire closing process.”
Providing e-Notary Services is the Future
Currently, DCU is actively lobbying with state lawmakers in Massachusetts on an e-notary law. “We want to get the conversation started and get the appropriate constituents at the table,” said Cook.
“We’re advocating for the remote e-notary (law) because that’s the future – you can conduct the closing from the comfort of your home. The remote closing process is also a win for closing attorneys. They don’t need to leave their office and they can complete four closings in the time it would traditionally take to close one loan.”
According to Cook, 30 states have e-notary laws on the books, and most of the remaining states are considering e-notary bills.
Those 30 states with e-notary laws are: Arizona, Arkansas, California, Colorado, Delaware, Florida, Idaho, Indiana, Iowa, Kansas, Kentucky, Maryland, Minnesota, Montana, Nebraska, Nevada, Ohio, Oregon, New Jersey, New Mexico, New York, North Carolina, Pennsylvania, Rhode Island, Texas, Utah, Virginia, Washington, West Virginia, and Wisconsin.
Cook has some advice for credit unions still on the fence about adopting this new method of closing.
“It may be early for some credit unions to adopt this technology and it depends on lending areas as well as your field of membership,” he said. “But the industry is ready. Fannie Mae and Freddie Mac have embraced and are actively accepting this technology, and the Federal Home Loan Banks are not far behind. With e-closings, the future of mortgage lending has finally arrived.”
DCU is a not-for-profit financial cooperative serving over 1 million members across all 50 states and Puerto Rico by offering a full range of financial services to consumers and businesses. For additional information, visit dcu.org.
Ed Niser, External Communications & Partnerships Manager at DCU | eniser@dcu.org
Sali Diakite | Sali@sdconsulting.io or media@masschallenge.org
