It did not take long after the Silicon Valley Bank failure for politicians in Washington to rush to the next available microphone and lament the “loosening of bank regulations”. Instinctively the finger pointing began, and in many quarters ended up in the direction of the prior administration’s policy to generally roll back stringent business regulations and allow free market decisions to govern various industries. Chief among the complainants (no pun intended) was Sen Elizabeth Warren, who emerged out of the 2008 crisis as an architect and advocate for the Wall Street Reform Act and the creation of the vaunted Consumer Financial Protection Bureau ( CFPB), which she briefly directed. Just yesterday in DC’s The Hill publication, Sen Warren was reported as blaming the the collapse of Silicon Valley Bank on Republicans in Congress, which in 2018 helped pass a law to ease bank regulations put in place following the 2008 financial crisis. “No one should be mistaken about what unfolded over the past few days in the U.S. banking system: These recent bank failures are the direct result of leaders in Washington weakening the financial rules,” Warren is quoted as saying. According to The Hill piece, Warren, who voted against the 2018 bank deregulation bill, said that the crises would have been avoided if the banks were required to hold more liquid assets because the bill exempted banks with less than $250 billion in assets from rigorous Fed stress tests. Warren and other Democrats say the old rules could have caught the issues at SVB sooner. Given that politicians generally “never let a crisis go to waste,” many now suspect that the banking industry is about to be slammed with heightened regulatory scrutiny, tighter operational rules, more audits and exams, and larger and very public fines, penalties and consent orders. What does this mean for independent mortgage bankers (IMBs)? It means that they have to get back to the compliance mindset they were frightened into adopting between 2008 and 2018, and before the bottoming out of interest rates led everyone to believe that easy money was here to stay and that self-regulation meant hiring more loan officers. Keep those risk management officers and compliance directors close by folks, we are all in for a bumpy ride on the regulatory
Back in October 2014 the industry had an opportunity to attend a public information session in Washington, D.C. organized by the Consumer Financial Protection Bureau (CFPB). The meeting was called to announce the results of a public commentary period regarding mortgage closing experiences as well as to announce details of the CFPB’s eClosing initiatives.
The eClosing pilot launched publicly at that time was part of the CFPB’s “Know Before You Owe” mortgage initiative, and the companies participating in the pilot were a mix of technology vendors providing eClosing solutions, and creditors that had contracted to close loans using those solutions. These included Accenture Mortgage Cadence, DocMagic, Inc., eLynx, Pavaso, Inc., and Pierson Patterson, LLP, as vendors, and Blanco National Bank, Boeing Employees Credit Union, Flagstar Bank, Mountain America Credit Union, Sierra Pacific Mortgage, and Universal American Mortgage Company, as lenders. The participants agreed to work together to examine how electronic closings might help both consumers and lenders save time and money and establish a better, safer consumer experience.
Much has transpired since then, and as we pass the four year mark since that day the landscape regarding eClosings has changed drastically. Today eClosings are a reality, with a growing number of mortgage lenders adopting the technology platform that allows a borrower to credibly review and execute closing documents electronically. In addition advances in technology, along with a bit slower regulatory authorization among the states, has made digital and remote notarization an integral part of the eClosing experience.
Lenders are embracing eClosings, slowly but surely and are now seeking to locate settlement professionals, attorneys, title agents and notaries who actually know how to manage an electronic closing transaction. Consequently eClosing education and training has become a necessary and important resource to match lenders willing to embrace digital mortgages and eClosings with professionals trained to properly manage the process for them during the closing segment of the mortgage manufacturing process.