The Rapid Adoption of Digital Closings During Covid-19 Shows Whats Possible in the Mortgage Industry
Didier Malagies • August 7, 2020
The Rapid Adoption of Digital Closings During Covid-19 Shows What's Possible in the Mortgage Industry
Jordan Borchard posted in
Housing in Housing News
The Rapid Adoption of Digital Closings During COVID-19 Shows What’s Possible in the Mortgage Industry
Written by: Sarah Wheeler
We sat down with Nancy Alley, vice president of strategic planning at Simplifile and one of HousingWire’s 2020 Women of Influence, to talk about the rapid changes in the closing process as a result of the pandemic. Will this end up being a watershed moment for the industry?
HousingWire: You’ve been focused on helping the mortgage industry get to an end-to-end digital process for many years. Where are we in that evolutionary process?
Nancy Alley: We are at a turning point in the mortgage industry’s move to digital. While the industry has made steady movement over the years, the pandemic has accelerated the process. Business simply can’t be “as usual.” The pandemic forced everyone in the industry to review processes and quickly replace manual processes with digital to provide efficiency and protect market share.
The industry has been investing in digital for years with strong adoption of digital workflow in the application, processing, and underwriting phases. Yet, adoption by closing and post-closing operations lagged considerably.
We were seeing a lot of traction with hybrid closings in early 2020, but with the pandemic, lenders became hyper-focused on creating a socially-distant closing. We saw similar needs in post-closing as large-scanning or back-office operations were challenged in the new work-from-home environments. All parts of the mortgage value chain started creating digital momentum like we have never experienced before.
HW: Let’s talk about eClosing and the huge changes we’re seeing at closing and post-closing because of the pandemic. What do you think is going to stick when we go back to more normal circumstances?
NA: If there is a silver lining with the pandemic, it showed us that going digital is not only possible but essential to our businesses and our customers. Overnight, our industry had to automate age-old processes, or the manufacturing chain was going to grind to a halt. As I mentioned, the closing and post-closing segments had to turn on a dime.
I was impressed by the nearly-instant, industry-wide collaboration between key stakeholders and trade organizations. These groups came together and published almost daily updates regarding e-notary and e-recording acceptance as well as county closures
This collaboration helped clear a path through the chaos and provided lenders with the intelligence they needed to quickly shift to digital. While they may have made these changes under pressure, we are seeing lenders be very successful with digital adoption. A year ago, when most lenders were still “piloting” e-closings, settlement agents had to run bifurcated operations to accommodate the many varied pilots without achieving any economies of scale.
Today, increased e-closing volume eases the adoption curve for key stakeholders like title and settlement agents because as e-closing becomes the norm, muscle memory sets in and training burdens diminish. And the uptick hasn’t just been in hybrid e-closing, lenders are committed to making as much of the package digital as possible, driving e-note adoption and registrations by nearly 300%
In post-closing, we’ve seen record e-recording activity from March forward. Not only was face-to-face recording not “socially distant,” some counties were only open for e-recording to protect their employees and support work-from-home operations.
When the dust settles, I don’t expect lenders to go back to their old ways. No one expected or planned for COVID-19’s impact, but we are going to hold on to our collective gains and make sure we are well positioned going forward. What might have taken five to seven years with respect to digital adoption happened almost overnight.
HW: To get to a true end-to-end process, lenders need to collaborate with tech partners. In your experience, what are the hallmarks of a great partnership?
NA: In my experience, a successful partnership requires four things: transparency, collaboration, standardization and working together to achieve a common vision.
Transparency in processes, timelines and abilities creates honest discussions for all parties to trust each other. Once that trust is created, true collaboration can happen. When true collaboration is happening, the strengths of all partners are multiplied to create something greater than anything you could do alone.
When you work to combine separate systems, workflows, processes and cultures, standard processes are key in creating a bridge between parties. This is one thing we have taken to heart. We’ve dedicated years to standardizing settlement agent collaboration and e-closing processes for all transactions. Regardless of the lender closing system, the agent title production system or closing type, settlement agents that use Simplifile navigate the mortgage transaction with the same consistent workflow as they interact with their lenders.
Finally, great partners understand each other and work to achieve a common vision. For example, our e-closing partners share our vision that adoption relies on keeping the process simple, the operational processes consistent and stakeholder workflow predictable.
HW: You’ve worked extensively as part of MISMO — how does that work benefit the larger mortgage industry?
NA: Well, talk about a common vision. Not only does MISMO promote a common data standard for our industry, but the standard is based on an open collaboration between all stakeholders. The standard represents an industry consensus of how we exchange information efficiently and securely. If you ever go to a MISMO meeting, you will witness firsthand the active exchange and dialogue to “get it right.”
Since all stakeholders have a voice in the process, the vision becomes achievable. Since we are an industry based on proprietary systems and disparate parties, the adoption of the MISMO standard will only accelerate the return on our investment in digital, by creating a digital ecosystem.
HW: As one of HousingWire’s 2020 Women of Influence, what is an attitude or habit that has led to your success over the years?
NA: The mortgage industry may seem simple at face value: a transaction of lending someone money to buy a home. However, it is a highly-regulated, complex manufacturing process with multiple inputs, outputs and handoffs between a variety of stakeholders. Until recently, most of these steps remained paper laden and manual.
The two traits that helped me most on my journey are passion and tenacity. Having worked in the mortgage industry as far back as high school, I’ve always had a passion about automating the process. When you are on the assembly line, you can see firsthand the areas ripe for automation. A spark was lit way back then.
I credit tenacity or, at times, pure stubbornness to never giving up on reaching the vision. Digital adoption has taken much longer than any of us hoped, but the dream is coming true. Seeing the gains realized keeps the fire alive in me.
I would also be remiss if I didn’t mention that my success is really that of many individuals. I have been blessed to work with so many passionate people who believed in this journey: folks who mentored me, others who educated me and some who just kept pushing even when things looked dim. And now, I am lucky enough to lead some tremendous new talent who will take this thing to the next level.
Today, the term “influence” excites me most. I hope I can influence others to accelerate our industry’s digital trajectory.
Start Your Loan
with DDA todayYour local Mortgage Broker
Mortgage Broker Largo See our Reviews
Looking for more details? Listen to our extended podcast!
Check out our other helpful videos to learn more about credit and residential mortgages.
Here are alternative ways to qualify for a mortgage without using tax returns: 🏦 1. Bank Statement Loans How it works: Lenders review 12–24 months of your business or personal bank statements to calculate your average monthly deposits (as income). Used for: Self-employed borrowers, business owners, gig workers, freelancers. What they look at: Deposit history and consistency Business expenses (they’ll apply an expense factor, usually 30–50%) No tax returns or W-2s required. 💳 2. Asset Depletion / Asset-Based Loans How it works: Instead of income, your assets (like savings, investments, or retirement funds) are used to demonstrate repayment ability. Used for: Retirees, high-net-worth individuals, or anyone with substantial savings but limited current income. Example: $1,000,000 in liquid assets might qualify as $4,000–$6,000/month “income” (depending on lender formula). 🧾 3. P&L (Profit and Loss) Statement Only Loans How it works: Lender uses a CPA- or tax-preparer-prepared Profit & Loss statement instead of tax returns. Used for: Self-employed borrowers who can show business income trends but don’t want to use full tax documents. Usually requires: 12–24 months in business + CPA verification. 🏘️ 4. DSCR (Debt Service Coverage Ratio) Loans How it works: Common for real estate investors — qualification is based on the property’s rental income, not your personal income. Formula: Gross Rent ÷ PITI (Principal + Interest + Taxes + Insurance) DSCR ≥ 1.0 means the property “covers itself.” No tax returns, W-2s, or employment verification needed. 💼 5. 1099 Income Loan How it works: Uses your 1099 forms (from contract work, commissions, or freelance income) as income documentation instead of full tax returns. Used for: Independent contractors, salespeople, consultants, etc. Often requires: 1–2 years of consistent 1099 income. Higher down payment and interest rate required. tune in and learn https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329
A third mortgage is an additional loan secured by the same property after a first and second mortgage already exist. It’s essentially a third lien on the property, which means it’s in third place to be repaid if the borrower defaults — making it riskier for lenders. Because of this higher risk, third mortgages typically: Have higher interest rates, Offer smaller loan amounts, and Require strong borrower profiles or solid property equity. 🤖 How AI Is Transforming 3rd Mortgage Lending AI tools can make offering third mortgages much more efficient and lower-risk by handling the data-heavy analysis that used to take underwriters days. Here’s how: 1. AI-Powered Lead Generation AI platforms identify homeowners with significant equity but limited cash flow — ideal candidates for third liens. Example: AI scans property databases, loan records, and credit profiles to spot someone with 60–70% total combined LTV (Loan-to-Value). The system targets those borrowers automatically with personalized financing offers. 2. Smart Underwriting AI underwriters use advanced algorithms to evaluate: Combined LTV across all liens, Income stability and payment history, Real-time credit behavior, Local property value trends. This allows the lender to make quick, data-backed decisions on small, higher-risk loans while keeping default rates low. 3. Dynamic Pricing AI adjusts rates and terms based on real-time risk scoring — similar to how insurance companies use predictive pricing. For example: Borrower A with 65% CLTV might get 10% APR. Borrower B with 85% CLTV might see 13% APR. 4. Automated Servicing and Risk Monitoring Post-funding, AI tools can monitor the borrower’s financial health, detect early signs of distress, and even suggest restructuring options before default risk rises. 💡 Why It’s Appealing Opens a new revenue stream for lenders and brokers, Meets demand for smaller equity-tap loans without refinancing, Uses AI automation to keep costs low despite higher credit risk, Attracts tech-savvy borrowers seeking quick approvals. tune in and learn https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329
Great question — the 10-year U.S. Treasury Note (T-Note) is one of the most important benchmarks in finance, and it’s tightly linked to interest rates. Here’s a breakdown of how it works and why it matters: 1. What the 10-Year Treasury Is It’s a bond issued by the U.S. government with a maturity of 10 years. Investors buy it, loaning money to the government in exchange for: Semiannual coupon payments (interest), and The face value back at maturity. Because it’s backed by the U.S. government, it’s considered one of the safest investments in the world. 2. Yield vs. Price The yield is the effective return investors earn on the bond. The yield moves inversely with the bond’s price: If demand is high and price goes up → yield goes down. If demand falls and price goes down → yield goes up. 3. Connection to Interest Rates The 10-year Treasury yield reflects investor expectations about: Future Federal Reserve policy (Fed funds rate). Inflation (higher inflation expectations push yields higher). Economic growth (slower growth often pushes yields lower). While the Fed directly controls only the short-term Fed funds rate, the 10-year yield is market-driven and often moves in anticipation of where the Fed will go. 4. Why It’s So Important Mortgage rates & lending costs: 30-year mortgage rates generally move in step with the 10-year yield (plus a spread). If the 10-year goes up, mortgage rates usually rise. Benchmark for global finance: Companies, governments, and banks often price loans and bonds based on the 10-year yield. Risk sentiment: Investors flock to Treasuries in times of uncertainty, driving yields down (“flight to safety”). 5. Practical Example Suppose the Fed raises short-term rates to fight inflation. Investors expect tighter policy and possibly lower inflation later. If they believe inflation will fall, demand for 10-years might rise → yields drop. But if they fear inflation will stay high, demand falls → yields rise. Mortgage rates, business loans, and even stock valuations all adjust accordingly. ✅ In short: The 10-year Treasury is the bridge between Fed policy and real-world borrowing costs. It signals market expectations for growth, inflation, and Fed moves, making it a crucial guide for interest rates across the economy. tune in and learn https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329
