On August 21, the Consumer Financial Protection Bureau (CFPB) has selected seven mortgage companies and five vendors to participate in a three-month pilot program that will aim to determine whether electronic filings could improve mortgage closings. The pilot program is a part of the CFPB’s “Know Before You Owe” mortgage initiative.
Earlier this year in April, the CFPB released guidelines for its eClosing pilot project that are meant to address the “pain points” affecting consumers. Namely, the eClosing features that the CFPB plans to study in the pilot include (1) how pre-closing educational materials such as document summaries, term definitions, or process explanations can help improve the closing process for consumers, including whether the order of the documents changes the consumer experience, (2) various technologies that would let consumers see the entire package of closing documents ahead of time, and (3) how eClosings can help consumers and industry save time and money by preventing last-minute surprises and unnecessary bottlenecks caused by outdated processes.
The CFPB has stated that the eClosing pilot program is not part of a rulemaking process, but rather is designed to identify best practices in the marketplace. However, as some commentators have pointed out, the practices utilized by smaller mortgage companies may not be the same as those utilized by the larger companies, and the twelve selected participants do not include any of the top ten mortgage originators. We will continue monitoring the findings of the eClosing pilot program and its potential effect on the industry.