How Guild Mortgage enabled digital closings amid coronavirus
Guild Mortgage's presence in Washington state, the epicenter of the first U.S. coronavirus outbreak, gave the company an early glimpse of the pandemic's potential impact on the mortgage market. Of the lender's 222 retail branches across 30 states, there are 35 branches in Washington, served by 351 employees.
About a week before the shelter-in-place orders took effect across the nation, Lisa Klika, senior vice president and chief compliance officer, received a call from Guild's operations manager and EVP of production, both based in Washington state. They voiced concern for the safety of customers, partners and employees and spoke about the need for e-closing software and a new process in the delivery of closing packages.
"While it had been a priority for some time for Guild to get closer and closer to a truly digital mortgage, there were obviously barriers to adoption," she said, noting the widespread discomfort with technology in the marketplace, especially on the post-close end of things. "With the pandemic, the resistance to an e-closing experience dissipated overnight and there was a huge demand for it."
The company used what it learned from implementing a hybrid close model a few years ago to accelerate the move to an all-electronic closing, according to Klika.
In mid-March, Guild looked at possible vendors and called MERS to set up an e-registry addendum — one of the first steps any lender must take in enabling end-to-end digital transactions. The company also reached out to its warehouse banks, servicers, subservicers and investors to understand their e-note readiness.
Guild incorporated its partners' requirements with its own and laid out its project scope and estimated e-note volume to MERS. Having an assessment of its own operational needs in advance fast-tracked the testing schedule once it put the agency-approved tech in place.
Guild considered four vendor options before choosing eOriginal as its e-closing software provider.
"We had conversations in the past with them and all of those conversations indicated that they were experts in the field," Klika said. "We saw them partnering with a lot of key players in the industry, not just other reputable mortgage lenders but also the agencies."
On April 14, Guild announced its partnership with eOriginal, enabling the lender to offer e-note options in electronic closings. The company completed initial testing with MERS, the GSEs and its warehouse bank partners on May 4 and began a controlled e-note pilot. Klika said she expected Guild to complete the pilot process by mid-May.
During the pilot, employees get experience with the eVault — a secure platform for the management of electronically signed assets — and learn how e-notes are financed and delivered. eOriginal's technology replaces any manual processes with API integrations and Guild's e-close portal while broadly expanding the use of e-notes.
To train its now-remote staff on the new procedure within a tight timeline, Guild included all of the business leads from its affected departments right away, keeping everyone on the same page from the start. In addition to the department leaders being involved on the communications with the GSEs, MERS and warehouse banks regarding their specific requirements, Guild provided them with written materials on the similarities and differences from the paper process.
The most significant operational changes involved the post-close and delivery to the warehouse banks, and the delivery from the warehouses to the GSEs. Before, the original paper note had to be shipped back to the lender, endorsed with a wet signature, mailed to the warehouse bank or a custodian, and then on to the investor's document custodian. With an e-note, that process gets automated with a few clicks. The virtual document custodianship and removal of manual endorsements provide a net lift to the workload.
"When you start to go down the e-note process, it feels foreign because we were so ingrained in the paper world and how things have been done in the mortgage industry for decades," Klika said. "It almost feels like you're talking a different language."