The Mortgage Industry Standards Maintenance Organization (MISMO)
has announced the issuance of standardized Closing Instructions
, templates that lenders can use to communicate with settlement agents. The templates create a common format for closing instructions and are intended to improve communication between lenders and settlement agents, thereby reducing closing errors. By using the same templates, lenders and settlement agents will save money, reduce operational overhead, have fewer compliance violations, and be able to provide better customer service.
“Participants across the industry have collaborated effectively to produce these closing instruction templates, which enable lenders to provide consistency in what’s included and where to find it,” said Kate Steineman, senior vice president, business liaison manager for Wells Fargo Home Mortgage. “Closing instructions communicate important loan details and requirements, and these templates mean settlement partners will no longer have to search through pages of instructions for information they need. As a lender, we all win through increased efficiency, quality and happy customers.”
The Closing Instruction templates include two distinct documents: The Master Closing Instruction Template and the Transactional Closing Instruction Template. The new templates focus on the format and organization of closing instructions, rather than legal language often included in instructions. MISMO has also developed an implementation guide to assist with adoption.
“The new standardized closing instructions are a real game-changer,” said Kurt Pfotenhauer, vice chairman of First American Title Insurance Company. “Industry adoption will enable settlement providers to enhance the closing experience for borrowers, while reducing the potential for last-minute changes that impact efficiency.”
The Master Closing Instruction Template contains lender instructions common to all loans closed for that lender, including items such as instructions for conflicts of interest, data security and document destruction, verification of signer identity, and recording.
The Transactional Closing Instruction Template consists of information relating to a specific loan, including borrower contact information, property information, critical dates, and conditions and stipulations. The templates were developed through a collaborative effort across many sectors of the mortgage ecosystem, including national and regional lenders, title and settlement services companies, escrow companies, LOS vendors, and document preparation vendors.