North Carolina Steps Up to eMortgage Challenges

Our own Shane Hartzler, Chief Strategy Officer, returns to Finside Chats. This time, he shares his experience as a North Carolina e-Mortgage Closing Advisory Committee member.

About five years ago, in an effort led by Secretary of State Elaine Marshall, North Carolina committed to being a leader in the eMortgage arena, hoping to encourage innovation and make buying a home more efficient, convenient, and transparent. Deeply involved in similar efforts at Fannie Mae at the time, Shane became a member of the committee.

We found his experiences very illuminating for both government and industry audiences.

Listen now: North Carolina Steps Up to eMortgage Challenges

Get everyone in the same room

Almost every week on Finside Chats, we discuss the complicated interactions between different players in the mortgage lending ecosystem. To its credit, the North Carolina committee recognized the many actors and actions crucial to the lifecycle of a loan. “The overall goal of the state was to bring together all of the different stakeholders that were going to help to drive adoption,” Shane describes. “So they have the realtor community, they have attorneys, title and settlement, lenders. They had various technology providers. And […] they had representatives from Fannie and Freddie, and from Ginny, all there as well, representing the investor community. And so the goal was to bring all of these groups together, and have them all come into one place to help drive adoption as one.”

While the state’s inclusive philosophy seems an obvious and essential approach in a complex industry, we’ve seen efforts elsewhere that leave it to all the players to somehow come together on their own. “Some of the states [just] put the legislation out there,” Shane says. “But they weren't driving it. And so you don't necessarily see that same move to action.”

While still the exception, not the rule, paperless e-closings are now occurring in the state.

Thinking beyond North Carolina

We discussed with Shane how the North Carolina effort might inform or inspire other states to promote the adoption of digitization in mortgage lending. His first thought was the importance of including all the relevant people and professions as discussed above.

He followed that up with observations about the value of standards across jurisdictions. “This is very much a state-driven piece right now,” Shane began. As different states have different processes and requirements, the more that the industry can come together and unify across states, the better. Shane suggested facilitation by organizations that transcend state lines, particularly lenders and technology providers. They can provide consistency and context that individual states may not see necessary. “Let's at least try to have some consistency across, or some standards that at least everybody understands. You can have the nuances that recognize different state processes, while still managing to a common framework across the board,” he suggested.

Having more tools isn’t always an improvement

Shane also shared concerns about some conversations he’d had regarding using multiple systems for closings. As he described, some title and settlement professionals told him, “I want lenders to actually bifurcate the process. Let me worry about just the recordable docks in the notarization. And you, lender, you go and have your system for all of the disclosures in the note, however you want to do it,” he said. “But as a technology provider, I say, well, that's not the most consistent consumer experience. Hey, sign these docs in the morning, including the note. And now, in the afternoon, we're going to sign these recordable docs [using a different tool]. We need to make it so you can sign any of the docs in one platform.”

“We are mostly competing right now with the status quo on paper. Until we can solve for some of that and until we create a process that is as easy or easier than just printing out a piece of paper, we're going to lose anyway. And so, let's solve that. And let's get adoption. And let's be above five or ten percent of [transactions]. And then we can start worrying about who's competing with whom.”
- Shane Hartzler