Mortgage closings are typically stressful, confusing, riddled with too much paperwork and way too long.
It comes after you’ve done months, if not years, of research and homework, including saving money for the down payment and choosing your home after scouring neighborhoods.
After getting approved for a mortgage, the last big step comes at closing where a mountain of paperwork awaits your signature.
The U.S. Consumer Financial Protection Bureau is now seeking participants in a pilot program to see if technology can improve and streamline the process of mortgage closings, which seem to be stuck in a time warp.
The CFPB conducted in-depth interviews with consumers, realtors, loan officers, attorneys, and others to better understand what goes on at the closing table.
The four major pain points:
Not enough time to review documents. 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. Many consumer 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. Closing documents are full of legalese and technical jargon, and there is little help from others in the closing room to gain understanding.
Errors in the documents. 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,” the CFPB says. “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.”
Later this year, the CFPB said it will launch an “e-closing” pilot aimed at encouraging lenders to put borrowers “in the driver’s seat of your closing”.
Some of the ideas include using technology to:
- Help explain key terms, the closing process, and important documents
- Give you more time to review the stack of documents
- Help you find and fix errors in the documents prior to closing
Meanwhile, you can read more about the pilot program’s guidelines.