The novel coronavirus has turned the 2020 real estate market into uncharted territory. The topsy-turvy industry has been impacted by record-low interest rates, shelter in place mandates, social distancing protocols and working from home.
People are leaving the big cities behind and getting ridiculously good deals on homes in smaller communities. The challenge has been how to process all these loan closings in the face of so many hurdles. eClosings are the solution, but there will be challenges along the way.
With residential properties selling like turkeys on Thanksgiving, the real estate industry is scrambling to implement eClosings. Pandemic or not, the show must go on. Electronic loan closings are on the rise, even if real estate professionals are making it up as they go.
According to the Consumer Financial Protection Bureau (CFPB), there are two kinds of eClosings.
One is fully electronic with no paperwork. It requires a working knowledge of eNotes, eNotarizations, eRecordings, eSignatures and MISMO SMART documents.
The other is only partially electronic. One document must be in digital form, and the other documents are on paper. From a risk perspective, these are two different processes requiring two different assessments.
eNotarization procedures vary from state to state. Some states are ignoring the issue. Other states have approved it, but they offer no guidance. Still other states have developed rules about it. The upshot is a confusion of procedures, policies and laws that are not always easy to make sense of.
For the eClosing process to be effective, every county has to implement it. Roughly 75 percent of the population is currently living in an eRecording county. Recorders must develop the ability to accept electronic document submissions.
Electronic closings improve risk management. An eNote can’t be lost. With an automated quality control process, electronic documents preserve the data. Because no endorsement is required, eNote endorsement errors disappear.
This reduces risk, lowers costs and increases data integrity.
Electronic signature systems will require audit capability or the ability to demonstrate ESIGN and UETA compliance. Gone are the days when an inspection of a visual signature was verification enough.
The differences between state and recording jurisdiction requirements must be addressed. Ongoing due diligence with respect to state legislation will be required.
The Uniform Real Property Electronic Recording Act (URPERA) offers some guidance about how local recording offices can implement electronic document processing and eSignatures.
Here’s What We Know
The CFPB has issued a report about its pilot eClosing program. The participants learned a thing or two about how best to navigate the tricky terrain of eClosing.
Participants identified key factors that were instrumental in helping them implement or expand their eClosing processes.
Team members had clearly defined roles and maintained ongoing communication with each other. Participants believed this practice to be essential for a successful eClosing implementation.
Pilot participants agreed that an effective eClosing implementation depended heavily on the support of everyone in the organization at all levels.
Study participants found that by allowing time for preparation, rollout and testing, they could reduce technology issues for all stakeholders.
Lenders and technology vendors experienced fewer roadblocks during the pilot when they had fully deployed teams. Dedicated user testing performed prior to starting the pilot was another factor that the team deemed necessary.
Team members agreed that ongoing training was indispensable for a successful eClosing implementation. Stakeholders must understand the objectives of the eClosing process and trained to use the new technology platforms.
With so many people involved in the loan closing process, education is a top priority. Stakeholders must stay on top of changes to ensure consistency among participants.
Need an Expert Signing Agent?
Since 2008, BNN Services has been trusted by title agencies, mortgage lenders, servicers, and consumers to perform loan and document signings in multiple languages across the country.
Unlike other signing services, BNN Services “touches” each file 8 or 9 times to ensure the process moves forward free of delays. That’s why we’ve completed over 250,000 signings in all 51 jurisdictions and maintained a closing ratio of 96 percent.
Ready to experience the BNN Services difference? Get started today!