There has been a lot of talk about e-closings recently, which allows someone to close on a mortgage remotely from the comfort of their own home or office, without physically going to a title company office. However, knowing the details is important. You need to determine if this is an option that is available to you, and if it is a good idea for you.
As of the writing of this blog, e-closings are not available in all 50 states. You need to determine if your state has passed legislation to allow them. Then you need to find a mortgage lender and a title company that have the knowledge and technology needed to participate in e-closings.
You may also hear an e-closing referred to as a digital closing, electronic closing, remote closing, and other variations.
There are also different types of e-closings such as:
- Hybrid e-closing
- In-person e-notarization (IPEN)
- Remote online notarization (RON)
Hybrid e-closings are where the borrower/s and a notary meet in person, and they sign some documents digitally and they sign some documents traditionally. Usually, the digital documents will be e-signed in advance. Then the notary will go to the borrower’s physical location to sign the last couple of documents that require wet signatures in person, like a traditional notary. As of the writing of this blog most e-closings are of this type.
You may think this has limited benefit. If the notary is going to show up and witness you signing some of the documents in ink, then why wouldn’t you let the notary watch you sign all the documents like a traditional closing? That’s a good question. There are still benefits to an e-closing because you can review the bulk of the documents from the comfort of your own home or office, at your own pace, ask questions as needed, and not feel rushed or pressured. You avoid having to commute anywhere, park, and walk into someone’s office to sign a stack of paper documents. So, there is still benefit to a hybrid e-closing, and eventually the industry will get to the point where 100% of the documents are signed remotely.
In-person e-notarization (IPEN) e-closings are where the borrower/s and notary all meet face to face like they would in a traditional closing. 100% of the documents are digital and are e-signed on a computer or tablet, and are then digitally notarized. The benefit of this method is that you have someone there in person with you to walk you through all the questions and help with any technology hiccups. Again, this avoids the consumer needing to commute, park, and sign a stack of physical documents. But not many closings are happening this way as of the writing of this blog.
Remote online notarization (RON) e-closings are where 100% of all documents are e-signed and the borrower/s and the notary never meet. Instead, all parties meet by webcam instead of in person, and the notary can digitally notarize all documents after viewing the consumer sign them over the webcam. Not all states allow this, and not all title companies, lenders and notaries are setup for this. So, make sure to ask in advance what type of e-closing all parties are set up for, and which you’ll be doing, so you can ask questions and prepare.
There are numerous vendors and technology platforms that offer a way to do an e-closing. The consumer should ask if they’ll need to download any special software to facilitate an e-closing, if they need any advance training, if there are any user videos available, and what the hardware and internet requirements might be. Trying to do an e-closing over a slow internet connection will become frustrating, and possibly make it impossible to finish.
What happens at an e-closing?
You will log into the software that is being used for the e-closing and connect via web camera to the notary.
You’ll need your drivers license available and you will be asked to hold it up to the camera of the device that you are using so the notary can take a picture of it.
You’ll electronically sign a majority of or all of the closing documents.
Your electronic signature will be created by typing your name in the software which will convert it to a signature, or you may use your finger on a tablet or pad to create a signature.
Once all the documents are signed if there are documents that need wet signatures the notary will physically come to your location to witness and notarize you wet signing those last documents.
Ultimately somebody should securely send you a complete copy package of all the documents that you e-signed and signed.
What are the benefits?
Avoid driving anywhere, this saves time.
Avoid parking your car and potentially paying for parking.
Closing may happen more quickly with an e-closing.
It allows the consumer to have much more time to review documents and ask questions.
You can e-sign documents from wherever you are, which helps if you happen to have a vacation or other important event planned on the same date as the real estate closing.
I predict that eventually all closings will be e-closings, and the process will continue to become faster and more advantageous. While this was very helpful during the Covid-19 pandemic and helped with social distancing, it will eventually become routine.