How Title Agents Can Prepare for When Lenders Want to Close Online
There’s no doubt that the future of real estate is digital, but everyone’s journey there is likely to be a little different. Some folks jumped right in. Others are waiting for their partners to voice interest, and until then, believe that online closings have no place in their workflow.
The truth is there’s plenty that companies can do to prepare for fully digital closings and help their partners understand the value of moving their workflow online.
Here is what title agents can do to prepare for when lenders want to close online.
1. Talk With Your Underwriters
This is a conversation you should have early in your evaluation process. Understanding your underwriters’ position on digital closings is a critical first step – either on your path to adoption or for future discussions about the role of technology in the closing process.
While online notarization is completely legal, each underwriter must be willing to insure closings that include remotely notarized documents. Some may ask for certain process requirements, like Texas properties closing with only Texas notaries.
Notarize has underwriting partners that will insure a digital closing in 38 states and the District of Columbia. We have over 1,000 title agents within our network who are actively close homes in communities across the country for homebuyers across the globe.
2. Understand Your Local Jurisdiction
If your underwriter is willing to insure online closings, the next step is to brush up on the rules of your local jurisdiction. Specifically, you’ll want to ensure that your county recorder accepts eRecordings.
According to the Property Records Industry Association (PRIA), though only half the counties in the country currently accept eRecordings, 85% of Americans live within the counties that accept eRecordings.
Land records officials may legally accept and store electronic records, but they are not required to do so by Federal law. Before you do anything, you need to check with the county clerk to ensure they accept eRecorded documents.
Notarize can take this task off your plate with its Smart Routing feature, which allows you to immediately discover if your loan is eligible for an online closing. Just enter the property address and our platform will tell you if your underwriters will insure a digital closing and if the county clerk will accept your eRecorded documents.
We continuously update the Smart Routing feature for accuracy to ensure no loan is executed without the prior consent of any participant.
3. Pick an Online Closing Vendor
We’re not saying you need to make up your mind right now, but it’s important to do your homework before selecting a RON vendor. Competitors may bill their services in a similar way, but no two platforms are exactly alike.
Here are things to consider when deciding what technologies are right for you.
- Will an integration promote or inhibit your organization’s workflow?
- Does the product allow you to eSign and remotely notarize documents?
- Does the platform meet important security and legal requirements?
- Do you or the signer need to download additional software to use the platform?
- How quickly can the vendor onboard your organization?
- Will the product work for some of your most difficult use cases?
- Will you be able to get ahold of the vendor if and when you need them?
Your best choice for a vendor is someone that views you as a partner in their success. Be sure you’re working with your vendor, not for them.
And once you identify your preferred online closing vendor...
4. Try an Online Closing Yourself
As of July 2019, 22 states have passed bills on remote online notarization, but nearly 40 states have completed at least one fully digital remote closing. How is this possible?
Simply put, you only need two things for an online closing to occur:
- An underwriter who will insure the transaction; and
- A county clerk that will accept eRecordings.
When states pass laws on remote online notarization, it’s to allow notaries in those states to perform remote notarizations. We’ve helped folks in Colorado, Missouri, and Hawaii close completely online -- all without RON bills.
And in some cases, without lenders.
Notarize can help you complete your cash and seller-side closings, often on the same day that you submit the order. That means you do not need to wait for lenders to request online closings to complete your first transaction.
There’s a lot of talk in the real estate space about the importance of the buyer experience, but sellers deserve modern conveniences, too. Digital closings allow you to offer your sellers two of the most important elements of any home closing: ease and certainty.
You no longer have to ask your sellers to buy a plane ticket so they can sign a couple of documents, or sit there for hours while the buyers sign dozens of pages. Sellers can sign their closing documents from wherever, whenever, allowing them to smoothly transition from their old life to their new one.
5. Realize This Technology is Coming
If you’ve been in real estate long enough, you’ve heard about the mortgage process moving online for the last 20 years.
But we mean it this time – online closings are the future, and we have the numbers to prove it.
The most telling sign is the growing popularity of electronic promissory notes – or eNotes. The number of eNotes added to the MERS® eRegistry during the first quarter of 2019 (19,000) exceeded the number of eNotes registered in all of 2018 (17,000).
Four of the Top 10 warehouse lenders from Q4 2018 are now funding eNotes, and the number of outstanding active eNotes increased to 109,000 – roughly $28 billion in residential mortgages.
According to MERS, “Rapid growth of eNotes is a key indicator that the residential lending industry continues to drive toward greater digitization of the production process.”
This is your opportunity to position yourself as thought leaders in a changing mortgage industry. Being able to educate and guide lenders on the path to fully digital closings will help strengthen your existing business relationships and position you to grow in the future.
The obstacles that have long blocked digital mortgage adoption are melting away. That leaves your organization with two options: you can learn about RON and the online closing process to get ahead of your competition, or you can learn as your lenders learn.