eNotes are driving the surge in digital mortgages for residential housing. BAML’s Eileen Albus tells Janet Du Chenne how new innovations are helping to improve the consumer experience and lower lenders’ costs
If becoming a homeowner is a top priority for 72% of millennials, more so than travelling (61%), getting married (50%) or having children (40%),1 it is little wonder that the mortgage industry is finding better ways for this group to connect and consume. It has introduced electronic notes, or eNotes, which are digital versions of the promissory notes or documents borrowers sign promising to repay their lender for the amount borrowed.2
The eNote contains all of the information that would be included in a traditional paper note – property address, title agent address, loan amount, percentages, etc. – but is created, signed and managed digitally. Its digital make-up has been said to reduce the time it takes for a typical mortgage to close from 45 days to less than 30.
The take-up of eNotes has been remarkable. The Mortgage Electronic Registration System (MERS®) – a US national electronic database that tracks changes in servicing and beneficial ownership interests in residential mortgage loans on behalf of mortgage lenders and originators – shows that the total number of registrations of eNotes up to June 2019 was 402,526.3 MERS® registered 7,593 eNotes in June alone, compared with 558 in June 2018.
This rapid growth is a key indicator that the residential lending industry continues to drive towards greater digitalisation of the production process. eNotes are an essential component of a digital mortgage strategy, are enforceable in all 50 states and easily integrate into an electronic closing process that improves the consumer experience and lowers lenders’ costs (see Figure 1).
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