Digital mortgage closings near full adoption: survey

Digital mortgage loan closings have become ubiquitous, if not quite universal, in the real estate finance business as 90% of lenders state they offer some form of the process to their borrowers.

That is an improvement from 74% in 2023, according to a study conducted by National Mortgage News and its parent company Arizent for Snapdocs of 100 lenders in February and March. Snapdocs was not identified as the sponsor of the research.

Digital closings have been around for a long time, noted Todd Maki, vice president of customer experience at Snapdocs. Garth Graham, now of Stratmor Group, did a pilot digital closing on his own mortgage in 1999, Maki pointed out.

So even though they have been possible for several decades, digital closings are still in their growth phase, he said. The needs created during the pandemic so real estate transactions could take place has served as a catalyst for further growth.

In looking at the survey results, "The biggest surprise is the gap in what's being offered [in terms of digital closings] to the level of adoption in the industry," Maki said. It is also a matter of being able to meet customer expectations at a time when other parts of the economy are digitizing.

Of the lenders which do offer digital closings, several have multiple formats available. The most cited, by 61% of the respondents, is for a hybrid closing combined with the use of an e-note, with 55% have a stand-alone hybrid closing available. Remote online notary was available at 25% while a "wet" closing was used by 37%; in this scenario, the borrower receives and reviews the documents electronically but a physical meeting takes place to sign and notarize them.

In the 2023 survey, 44% of lenders had e-note capabilities, while 11% offered RON. On the other hand, 26% had no digital offerings while 53% of the respondents' had a wet closing process.

Still, actual usage of digital closing proceedings still lagged in popularity. A minority percentage, 31%, confirmed that six-in-10 or more of their loans closed electronically; at the 80% mark, the share slipped to 14%.

"Lenders who are not achieving high adoption levels often miss out on the full value of their investment," a comment in the report added.

Cost was the biggest barrier to adoption of e-closings, cited by half of all respondents. Meanwhile, 42% found the lack of adoption by other stakeholders in the process was an impediment, followed by 41% who claimed "issues with digital closing technology."

Yet other studies have shown that eClosings actually reduce transaction costs. A 2022 finding from Notarize put the cost savings for lenders at $444 per loan.

Still, even with the cost conundrum, 60% of the non-digital lenders plan to adopt some form of this technology in the future.

For 2025, 48% of the lenders said automation and artificial intelligence integration were their No. 1 priority in their general technology goals.

"There are different types of AI that are appropriate for different tasks," Maki said. "Particularly in mortgage lending, particularly in closing related and back office tasks, the accuracy and precision of AI models needs to be extremely high because we're dealing with transactions where errors can prevent a successful close [and] can cost significant sums of money [and more], which is why there's such a focus in the industry on ensuring accuracy of documents right and reducing errors."

Snapdocs, for example, has a variety of AI technologies as part of its offerings, including those that help to reduce the "stare and compare" for loan documents, reducing errors.

When it comes to digital closings, 49% wanted to have an increased application of the hybrid process in their portfolio. Next on the list, implementing a new digital closing technology was one of the primary goals for 44%. Maximizing e-note adoption and offering RON were each named by 41% of those asked.