Digitally signing an agreement
ComplianceFebruary 01, 2022

Bringing digital signature to mortgage close

(As published in Mortgage Professional America)

Companies are integrating their technology so consumers can sign digitally at a mortgage close 

The electronic signing of upfront disclosures has achieved widespread adoption in the mortgage industry. Closings, with the official signing of the final promissory note, are still commonly done in person and signed on paper.

A new partnership between Wolters Kluwer Compliance Solutions and Floify, a point-of-sale product for the mortgage industry owned by mortgage technology company Porch Group, Inc., should help change that and make digital closings in the consumer space more ubiquitous.

The companies are collaborating in a product integration that incorporates Wolters Kluwer eOriginal’s digital promissory note (eNote) technology into Floify’s loan processing system. By doing so, Floify customers gain the ability to do digital e-closings, so they can use digital signatures rather than pen and paper.

This partnership with Floify is about being able to take what was once a paper promissory note and making it an electronic promissory note, or what we would call an eNote.
Simon Moir, Vice President, Banking Compliance Solutions

“This partnership is actually very specific about just one document,” said Simon Moir, vice president, Banking Compliance Solutions for Wolters Kluwer Compliance Solutions.

“You might sign 200-plus pages of documents as part of the mortgage process, but the most important document in that package is the promissory note… you borrowed this money and you promised to pay back this lender, and that’s called the promissory note,” Moir said.

“This partnership with Floify is about being able to take what was once a paper promissory note and making it an electronic promissory note, or what we would call an eNote.”

That ability matters for a number of reasons. Electronic signature technology has been around for while, but, as Moir explained, many of these documents can be signed using digital signing tools on a normal PDF, with no need to know which of multiple copies that might exist is the original. For many documents, that approach works just fine. With the final mortgage document, the electronic promissory note, there’s a difference.

“When you come to this electronic promissory note… you know which one is the original,” Moir explained. “If you think about a negotiable instrument, if you hold that piece of paper or you have that (signed) check, then that is the authority you need, right? You have the original [and you can] ask someone to pay for it. How can I do that in an electronic world? If you have a copy… who has the real promissory note? Our technology helps you create, store and assign that original electronic note to the right party.”

Dave Sims, Floify’s CEO, said in prepared remarks that the arrangement will let it offer mortgage products “that reduce time and fees throughout the process.”

Porch Group, an insurtech and software company focused on the home services industry, paid $76.5 million in cash and $10 million in Porch common stock for Colorado-based Floify in 2021. Floify focuses on helping mortgage companies and loan officers create a better customer experience during the mortgage and refinancing processes.

New uses

Wolters Kluwer obtained additional digital lending technologies, including its eNote technology, when it acquired eOriginal the company in 2020, a Maryland-based provider of cloud-based digital lending software founded in 1996. Moir, the acquired company’s former chief product officer, said that uptake of the digital signature process was slow at first because not everyone in the banking system embraced it.

In a closing you have “the lender, the settlement agent, the borrower – this is a multi-party transaction,” Moir said. “For it to be digital, you need to have a borrower who is comfortable or has access online to get documents. You have to have a lender who is able to create documents that can be electronically signed. You have to have a settlement agent, or even a person who is going out to do the closing … with the ability to access or operate a digital system.”

Moir noted the MERS registry, a platform that is a registry of all electronic promissory notes in the mortgage space. It indicated a slow take-up of eNote technology at first, he recalled.

From 2004 into 2017, fewer than 300,000 eNotes were signed and managed out of between 6 million and 7 million mortgage transactions annually. Over the last three years that has grown to about 1.5 million, Moir said.

According to Moir, business clients have used Wolters Kluwer’s eNote/eVault technology well before the Floify arrangement, including Quicken, Wells Fargo, Fannie Mae and Ginnie Mae, among others.

The Floify integration is complete at this point, and is now in implementation phase, Moir said, with plans to go live with a customer shortly. Target customers include banks that handle mortgages, as well as independent mortgage bankers.

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