The CFPB announced guidelines for an “e-closing” pilot program intended to reduce what the bureau called “pain points” in the mortgage closing process.
These points include insufficient time to review documents, too much paperwork, hard-to-understand documents and errors in the paperwork. The CFPB offered two principal causes for these problems: a “high number” of required disclosures under federal, state and local rules, and the presence of numerous stakeholders.
The e-closing pilot, which will launch later this year, will test a variety of technologies that might make it easier for lenders, borrowers and other participants to more efficiently review and sign documents. The bureau released a document describing the pilot and the requirements for banks wishing to participate.
In its report, the CFPB also identified “reduction and simplification of the closing package” as another potential solution. But “the volume and complexity of the documents and actors involved create high barriers that limit opportunities for direct CFPB action,” the bureau said. “Additionally, the need for action at multiple levels of government would likely take considerable time to bear fruit. As a result, the Bureau will not focus its efforts on this [e-closing] solution over the next year.”
“This initiative is puzzling coming just months after the CFPB finalized an entirely new set of mortgage disclosures,” said ABA EVP Bob Davis. “However, ABA has long supported simplifying the paperwork burden of banks and consumers and will watch the bureau’s efforts closely.”
Read the report.
Read about the e-closing pilot.