The CFPB recently released the report of its study on the benefits of electronic mortgage loan closings also known as "eClosings" that it commenced in April 2014. eClosings are mortgage closings that rely on technology for borrowers to view and sign closing documents electronically.

The CFPB study was conducted over a four-month period and involved seven lenders, more than 3,000 consumers, four technology companies, and many associated real estate professionals. Some consumers used paper documents, others used a complete eClosing process, and others used a hybrid of electronic resources and paper documents. Consumers were surveyed following their mortgage loan closings, and about 1,200 consumers completed surveys.

According to the CFPB's press release announcing the report, the study revealed the following regarding consumers' experiences with eClosings:

  1. Better consumer understanding: The study found a 7 percent positive difference in perceived understanding scores for borrowers using eClosings, compared to borrowers using paper documents.
  2. A more efficient process: The study found a 17 percent positive difference in scores for borrowers using eClosings compared to borrowers using paper documents.
  3. Greater feelings of consumer empowerment: The study found a 15 percent positive difference in the scores for the eClosing borrowers, compared to borrowers using paper documents.

Although this study was not conducted in connection with any effort to promulgate new rules or regulations, it is clear that the CFPB is encouraging the mortgage industry to move toward the use of technologies such as eClosings. "While technology alone will not address all consumer concerns in the closing process, our study showed that eClosings do offer the potential to make the process less complex," said CFPB Director Richard Cordray. "We expect this pilot project and its findings to help inform further innovation that will be a win-win for consumers and industry alike."

It is important to note, however, that eClosings have not been widely adopted in the industry and the efficacy of any technological innovations will have to be weighed against other consumer concerns such as data privacy.

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