Borrowers Want Digital Closings More Than Loan Officers Think, ServiceLink Survey Finds

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Mortgage originators may be underestimating how much borrowers want a digital closing experience.

A new ServiceLink survey released Wednesday found that 45% of loan officers identified a lack of borrower interest or comfort as a major barrier to using eClosings more often. Yet recent homebuyers surveyed separately by the company overwhelmingly said digital capabilities would influence their choice of mortgage provider.

Among recent buyers, 88% said the ability to electronically sign some or all closing documents would affect their decision to work with a particular provider. Eighty-seven percent said the same about using a smartphone or tablet to schedule an appraisal or closing appointment, while 82% cited the availability of virtual closings.

The gap is notable, but it needs a qualification: ServiceLink surveyed two different groups. The results do not prove that individual loan officers misunderstand their own clients. They do suggest that borrower demand for digital options may be stronger across the market than some originators assume.

A perception gap — and not just about technology

ServiceLink surveyed 507 loan officers with at least three years of experience and compared their responses with a separate survey of 1,554 adults who had purchased a home during the previous two years. The company said this is the first year its Loan Officer Report has included a dedicated survey of originators.

Loan officers themselves see substantial benefits from mortgage technology. Sixty percent cited time savings and 59% pointed to convenience and ease of use. Eighty-four percent said they had seen a moderate to substantial increase in eClosing use across the industry during the past two years.

Still, borrower reluctance was not the only obstacle originators identified. Forty percent cited their own preference for traditional processes. Thirty-seven percent pointed to limited availability of fully compliant eClosing technology, 34% cited technical or platform-reliability concerns and 31% identified state or regulatory restrictions.

Those answers matter because an eClosing is not synonymous with a completely remote mortgage transaction. Fannie Mae defines an eClosing as a closing in which some or all documents are accessed and executed electronically. A hybrid closing can still involve paper documents and wet signatures. An eClosing becomes an eMortgage only when the promissory note is executed electronically.

Fannie Mae says digital mortgage technology can shorten the loan life cycle, reduce operational errors, improve data quality and make it easier for borrowers to review documents before closing. The agency also says most conventional first mortgages can be delivered as eMortgages, although certain products remain ineligible.

Borrowers and originators see mortgage fees differently

The ServiceLink findings also exposed a less intuitive divide: borrowers often rated their own understanding of mortgage fees more highly than loan officers rated borrowers’ understanding.

Fifty-three percent of recent homebuyers said they fully understood application and document fees. Only 39% of loan officers believed borrowers fully understood those charges. Half of buyers said they fully understood private mortgage insurance, compared with 27% of loan officers who believed borrowers did. And 47% of buyers reported fully understanding lender origination fees, versus 28% of loan officers who thought borrowers fully understood them.

That does not establish which group is correct. A borrower can feel confident about a fee without understanding every component, while an originator may underestimate how much research a buyer has already done. What the difference does show is that lenders cannot safely assume either confusion or comprehension.

The more useful approach is to explain the charge, who receives it, when it is paid and whether it can change — then let the borrower demonstrate what still needs clarification.

Speed and transparency remain unfinished business

Recent buyers were fairly direct about what they wanted improved. Thirty-nine percent wanted a faster mortgage process, another 39% wanted greater transparency and 36% wanted less paperwork and more electronic forms.

Loan officers put somewhat different issues at the top of the list. Forty percent said the industry should focus on reducing unexpected or hidden costs beyond disclosed fees. Thirty-five percent cited increased transparency, and the same share pointed to more proactive customer service and guidance.

“Originators who want to stand out in today’s competitive market should focus on two key areas: innovation and education,” Dave Steinmetz, ServiceLink’s division president of origination services, said in announcing the report.

The practical takeaway is narrower than a mandate to digitize everything. Lenders still have to contend with technology integrations, settlement partners, recording practices and state requirements. But assuming that borrowers prefer paper or an in-person closing can become its own competitive risk.

For originators fighting for purchase business in a difficult market, asking borrowers how they want to close — and then clearly explaining the costs and mechanics of the loan — may be a more reliable strategy than deciding for them.