A traditional promissory note for a mortgage closing is an irreplaceable piece of paper. If something happens to it — it gets misplaced, the ink fades, or it’s destroyed by a natural disaster — the lender and buyer face a complex process. Over the life of a 30-year or even 15-year mortgage, the odds of something happening to the note is high. Not to mention the cost of transporting and storing the document in a secure location.
For many reasons, the paper promissory note no longer makes sense in today’s world. As mortgage and titling professionals turn to eClosings, they see firsthand the benefits of using eNotes, which are legal in all 50 states and required for eClosings.
What is an eNote?
During an eClosing, the eNote, which is the digital replacement for a promissory note, becomes the cornerstone of the process and replaces the physical note. The eNote is the official document that proves the borrower promises to pay the lender the agreed upon amount based on specific terms. However, an eNote is more than a digital version of the physical promissory note and traditional closing process.
eNotes must meet three criteria when used during an eClosing:
- Use a specific Extensible Markup Language format called MISMO SMARTdoc
- Be registered on the Mortgage Electronic Registration System (MERS) eRegistry, which proves it is not altered or tampered
- Be stored in an eVault, which is an approved document management system for stakeholders to share information
To meet these specific technical and process requirements, lenders turn to an eClosing solution such as Notarize. The platform enables all of the technical details for the eNote — from eSignatures to storing in an eVault — in a single place. Notarize integrates the eNote seamlessly into the eClosing workflow to ensure its validity.
5 benefits of using eNotes
By using eNotes, lenders see numerous benefits for their customers and employees:
- Save money. According to a survey by MarketWise, lenders see an average of $444 savings per loan when switching to fully-digital closings with eNotes. Multiplied over even half of the loans processed in a year, this amounts to big savings. Even moving to hybrid eClosings, using eNotes can result in increased revenue.
- Save time. Because there is no need to process and mail physical documents, the loan process is considerably quicker. In fact, the MarketWise survey found loans using eNotes closed 2 hours and 37 minutes faster than loans using the traditional promissory note.
- Reduce errors. When executing an eNote, an eClosing platform like Notarize allows borrowers to sign electronically, which reduces the chance for missed signatures and the need for rework.
- Improve transparency. When using traditional promissory notes, only the person who has the physical note can view the information. With eNotes, all stakeholders can view the note at any time and see where the eNote is in the eClosing process.
- Increase customer satisfaction. As buyers increasingly turn to online options throughout their home buying process, they will expect more aspects of the transaction to be done digitally. When it comes to the ease of use and time savings, buyers often prefer the eClosing process over the traditional, paper-based mortgage closing process.
Getting started with eNotes
As you design the future of closings at your organization, look at how eNotes fit into your process. By implementing an eClosing software solution like Notarize, eNotes can be seamlessly integrated into the workflow all while saving time and money and increasing customer satisfaction.