April 23rd, 2014 9:24 AM by Jackie A. Graves
BY NOERENA LIMON - Policy Analyst at
Consumer Financial Protection Bureau
Closing on a mortgage can be one of the most
exciting, and one of the most stressful times of your life. It comes after
you’ve chosen your home, scoured the neighborhoods, evaluated the neighboring
schools, and exchanged countless pieces of paperwork between your lender,
realtor, home inspector, and others. You’ve made offers and finally had them
accepted. You’ve been approved for a mortgage, and you have one more step to go
before that home is yours: sign a mountain of papers at closing.
Recently, we asked you to tell us about pain points in the mortgage
closing process. We also conducted in-depth interviews with consumers like you,
realtors, loan officers, attorneys, and others involved at closing to better
understand what goes on at the closing table. Through this research, we heard about four major pain points.
MAJOR PAIN POINTS
Not enough time to review documents. You told us that you don’t get the paperwork
until you arrive at the closing table, where there is pressure to rush through
and sign your name over and over – with not enough time to ensure that you
understand what you are signing.
Overwhelming stack of paperwork. You told us there are just too many
pieces of paper in the stack, making the process of closing on a home daunting
and overwhelming. The result is that many of you leave the closing table with a
nagging feeling that something hidden in the stack might have long lasting
effects on your financial well-being.
Documents are hard to understand. You told us that closing documents are
full of legalese and technical jargon, and that you often have little help from
others in the closing room to gain understanding.
Errors in the documents. You told us that errors in closing documents can often
lead to delays. Even common and seemingly minor errors, such as a misspelled
names or forgetting to include your spouse, require closing agents to redo the
entire closing package.
Finally, we tested ideas for improvements to
the closing process that help you play a more active role in the closing
process. Before you sign on the dotted line, we want you to be able to fully
understand the terms of your loan, have a chance to carefully review the
documents you are signing, and feel empowered to ask the right questions and identify
errors in the process.
From your comments and our research, it’s
clear that the current closing process is not ideal. We identified potential
solutions to some of the problems you identified. In particular, ideas for how
technology can improve the closing process which we want to test over the
coming months. Later this year, we plan to launch an e-closing pilot aimed at
encouraging lenders to put you in the driver’s seat of your closing.
Some of our ideas include using technology to:
If you want to learn more about the pilot, or are interested in
participating, check out the guidelines and solicitation.
We’re excited about some of the promising technologies in the
market today and we’ll keep you updated as we learn more about ways that the
closing process can be improved. You can check out the report on the current state of closing for
more about what we heard.
If you’re facing a specific problem with any part of the
mortgage process, you can also submit
a complaint online or by calling (855) 411-2372.