Quicken Loans will begin closing mortgages using electronic promissory notes, marking a critical operational shift for the tech-savvy lender.
While the Detroit-based lender is highly regarded as one of the industry's most innovative lenders, much of its consumer-facing tech developments focus on digitizing the upfront application process with online self-service tools and electronic documents. Now, that approach will extend throughout the entire loan process.
Quicken Loans will manage the e-notes with technology from eOriginal, a Baltimore-based e-doc and e-vault technology provider.
"Quicken Loans has worked diligently to provide clients a completely online mortgage experience from application to closing. The next step in this evolution is to digitally move the note to the industry stakeholders who need it," said Jay Farner, Quicken Loans CEO, in a press release.
"Taking the mortgage process online provides home buyers with accuracy, clarity and transparency, in addition to speed and convenience. We are fanatical about innovating and will continue to invest our time and resources in technology that helps us breaks down the cumbersome barriers of the old-fashioned mortgage process," he continued.
The companies did not say when Quicken's e-note capabilities will be available or how much of its loan productions will use the e-notes.
From an investor perspective, the most critical component of a mortgage transaction is the e-note, according to eOriginal. And in addition to offering e-notes, Quicken will also be able to securely store authoritative copies of the e-notes and deliver them to custodians and the secondary market with the vendor's e-vault.
Earlier this year, Fannie Mae selected eOriginal to support its next generation e-vault.
Electronic notes have been legal in the U.S. since 2000. Still, many mortgage industry participants have been hesitant to adopt the technology because there is little precedent to test whether courts will enforce foreclosures when the loan was closed electronically.
However, in separate foreclosure cases in New York and Florida last year, judges ruled that the electronic transfer histories of loans originated with e-signatures proved the plaintiffs had standing to foreclose.
Other lenders have also made recent strides with e-closings and e-notes. North State Bank Mortgage in North Carolina began offering borrowers a completely paperless closing process earlier this year, selling the e-notes to Dallas-based Mid America Mortgage. And Troy, Mich.-based United Wholesale Mortgage completed what it says is the industry's first virtual closing on a loan in Chicago on July 28.