Taking the pulse on eNotes

HousingWire recently spoke to Kevin Wilzbach, director, product management at Wolters Kluwer, about the adoption of digital technology and the future of eNotes.

HousingWire: What kind of impact has the overall deceleration of the mortgage market had on the adoption of digital technology over the past few quarters?  


Kevin Wilzbach: Well, I guess the short answer is, it hasn’t helped. Two years ago when the market was booming, many lenders were too swamped to focus on digital transformation projects; now their focus is on cost reduction.

Having said that, we’re seeing continued strong interest in evaluating and purchasing mortgage closing platforms. What we’re hearing is, “Give me a platform that will grow with me and provide me with a consistent operational workflow regardless of whether I am closing via paper, hybrid or fully digital with an eNote.”

Several of the country’s largest lenders are moving in this direction, having seen the value of digital closings in their refinance options over the past several years.

We’re also seeing interest in technology and solutions that support home equity lending. Our IDS business, for example, has a real foothold in the home equity space with its credit union clients. And mid-last year, we introduced an OmniVault that supports digital HELOCs.

Having said that, prospects are mindful about costs per loan and asking us, and all their tech partners, for evidence of ROI so that they can sell these projects to management. At the end of the day, institutions know that eClosings and eNotes are the future. I think the painful experience of downsizing has probably convinced them that when the next cycle comes, they will need to scale to meet it using technology and not by another hiring boom.

By the way, budgetary constraints aren’t the only factor in the slower-than-expected digital adoption. Recently our company conducted snapshot survey of 138 lenders, asking why they aren’t more digital. Budget reasons were cited by 15% of the respondents, but more than 60% said they hadn’t found the right solution, the right provider or they weren’t sure of the value. Kind of eye-opening.

HW: What do you see as the value proposition of eNotes? Is it evolving as the market shifts from speed and volume to costs and margins? 

KW: There’s no question that cost and margins are top of mind with our customers and using eNotes addresses both of these concerns. But eClosings also mitigate risk and support a focus on improved customer experience.  Simplifying the closing process through electronic signing, in general and in pre-signing specific documents in advance of the formal closing, is critical to an enhanced customer experience.

As I mentioned earlier, I don’t think we’re seeing a major change in buying patterns. What we are seeing is a real effort to associate overall cost on a per-loan basis. We’re even seeing interest down market with smaller institutions who are looking for more efficient closing solutions. 

There are several reasons for this. Recent ROI studies show that hybrid and eClosings can save a lender somewhere between $200 and $400 per loan in time and costs. These aren’t insignificant numbers when lenders are losing money on originations, as they were in the most recent quarter, according to the MBA.

Digital lending solutions also improve loan quality. Going back to the snapshot survey I mentioned, we asked lenders how many of your closing packages have errors or mistakes in them. Only 6% of the respondents said “none.” The other 94% said they believed somewhere between a quarter and all of their closing packages contained defects. Scary thought with all the put-back activity we’re hearing about these days.

HW: Are you seeing changes in buyer behavior? For example, sourcing from best of breed components vs bundling end-to-end? Are clients looking to add new vendors or to do more with fewer?

KW: Customers come to us looking for solutions, not technologies or components. They have specific market and customer needs they are trying to address, and they look to companies like Wolters Kluwer for solutions.

From our perspective, we’ve never believed that we had to own each component. We build what we know is in our core competencies and integrate with others where appropriate. We ensure that we own the integrations and when clients purchase from us, they integrate once with us, and we’ll handle subsequent downstream integrations for them, which is a huge benefit and resource savings.

Going back to your question about adding new vendors, we’re seeing clients trying to do more with fewer vendors which, of course, brings efficiencies. Being able to add services like documents or eVaults under a single MSA has a lot of advantages in terms of due diligence and vendor management.

This has certainly been the case with our recent addition of IDS, for example, and our introduction of OmniVault.

HW: What regulatory changes/trends do you see impacting mortgage technology in the near term?

KW: I think the nature of highly regulated industries is that we’re always reacting to regulatory change. Uniform Instrument updates took center stage in 2022, and the 4506-T tax transcript is being phased out for the 4506-C in 2023. 

This coming year, any lender doing more than 25 loans per year in 2022 and 2021 will be required to do HMDA reporting. Three years ago, that threshold was 200 loans per year.

At the end of the day, the number of government regulatory agencies at both the state and federal levels is considerable. Clients look to Wolters Kluwer and other compliance providers for solutions because they know we have the expertise to monitor for and then implement compliance related changes so that they can focus on their business.