Your Guide to Understanding E-closings
More and more, e-closings are becoming the industry norm. In fact, the technology to be able to conduct e-closings has been around for more than a decade.
So, if you or some of your customers have the mindset that e-closings are just a fad or not an efficient, secure way to do business, we’re going to challenge those misconceptions now. Think about it like being able to deposit a check to your bank account from your phone: It still seems like an idea from the future, but every financial institution with a banking app offers the technology and customers now expect to be able to have that capability.
Bottom line is that in 2018, consumers expect their providers to use technology to improve the buying experience and for real estate attorneys that can be achieved through e-closings. However, if you have never explored the idea of utilizing e-closings, simply the thought may be overwhelming. That’s where Easysoft can help. In addition to helping you automate parts of the closing process, we want to help you embrace e-closings so that it can benefit everyone in the transaction.
The recent rise of a business called Notarize in real estate circles has also quickened the timeline most observers have for fully electronic closings to become the industry standard. Though e-closings can streamline the process and save agents plenty of time, it’s important that you learn how to use the technology to your advantage. Understandably, previous concerns about time, cost and the risk for errors have prevented some closers from fully embracing e-closings for their deals, but with the help of Easysoft, those apprehensions can disappear.
The term e-closing is thrown around a lot, but did you know it covers a lot of different methods for closings, not just one? The truth is “e-closing” encompasses any closing that uses an electronic signature for some or all the documents needed to close a deal.
The validity of an electronic signature was officially established by the Electronic Signatures in Global and National Commerce (E-sign) Act in 2000. This law proclaimed that electronic signatures made by consumers with the proper consent could be used just like physical ones. Of course, that language was vague, and even 18 years later, the real estate industry has multiple definitions of what an e-closing is. Part of the reason for that is because closing documents require a notary, and prior to 2017, only two states had legislation governing how an online or remote notary service works. Those two states were Virginia and Montana. Ohio became the third state in 2017. Texas and Nevada also passed laws authorizing online notary services last year that will go in effect later in 2018 with many other states passing laws or considering legislation this year.
While trade groups are pushing other states to pass similar legislation, the service is already available across the country because online notary companies can establish themselves in one of the states where it is authorized and then service clients in other states. That is how the before mentioned Notarized got started. The company operates out of Virginia and claims that documents notarized by its agents are acceptable in “most U.S. states.” However, it also reminds potential customers that “every state provides its own legal authority for recognition and acceptance of common out-of-state notarizations.”
This is also a good time to mention that while electronic signatures are gaining popularity, there are some U.S. counties that still do not accept e-recording for mortgage documents. As of October 2017, the Consumer Financial Protection Bureau reported that about 80 percent of the American population lives in a county that accepts electronic signatures for such documents. That percentage, the CFPB noted, continues to rise. According to the agency – which is a proponent of using e-closings – said that figure was about 65 percent in 2014.
The time for full e-closings is now
Notarize has already gained plenty of traction in the residential mortgage industry. In 2017, HousingWire noted that the company already has the support of Fannie Mae and Freddie Mac, as well as multiple private entities. That kind of acceptance will likely lead to quicker adoption of full e-closings than we have ever had in the past. Previously, lenders in general were slow to embrace e-closings because even though making the change will ultimately streamline the closing process, some in the industry viewed the changes as unnecessary. However, now it’s time to figure out at least the basics of how e-closings can help both you and your clients, so you can get ahead of the curve. Now that some of the biggest providers in the industry are getting behind technology, everyone else will follow, especially because e-closings help both the closer and the consumers themselves.
Even though full electronic closings are a relatively new option, plenty of lenders and closing agents have been utilizing some degree of electronic services for a while through a hybrid e-closing or an in- person digital e-closing. Hybrid closings mean that some of the documents are physically signed while others are signed online. In a digital closing, all documents are signed using technology. Having documents available on a secure, online portal also would allow consumers an avenue to review – and digest – all the required documents needed for a closing in a way that is cleaner and less overwhelming than having to go through all the information printed out on physical pieces of paper.
Because there are so many e-closing options out there, take some time and explore what works best for you and the services you provide. There is certainly not a one size fits all approach when it comes to maximizing the benefits of what e-closings can do for your business. Do what makes sense for your market and your clients the best—the important aspect of this is to make sure that you’re using e- closings in some manner. If done correctly, e-closings will give customers more clarity while saving real estate service providers time and money. So, it’s definitely worth it for closing agents to invest time now to figure out how such closing can work best for you. If you’re not sure where to start, have a conversation with your lenders and real estate agents and ask how you can partner to create a better experience for your customers. Sometimes approaching the challenge together makes the entire process more manageable and easier to implement in the end.
How does Easysoft help?
Automation and e-closing solutions go hand-in-hand when it comes to how closing transactions are done. Easysoft is here to help make the e-closing transition as smooth as possible for your firm. If you and your team are comfortable with automation and other digital documentation practices, the adaptation of e-closings can be seamless.
Our Easysoft solutions suite will make every aspect of the closing process faster and more secure for you and your clients. Automation with Easysoft can save you time and money while ensuring that your documents are TRID compliant. Let us show you today how Easysoft can help you be ahead of the e- closings curve.