There has been a lot of talk about e-closings recently. E-closings allow 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, most closings are hybrid e-closings, as opposed to a full e-closing.
What Is a Hybrid E-Closing?
A hybrid e-closing is a mortgage closing process that:
- combines electronic document signing for most documents,
- with wet signing for a few critical documents such as the Deed of Trust.
Many banks and some states are not comfortable with e-signed Deed of Trusts due to fraud concerns. This is why lenders are relying on hybrid e-closings and not allowing a full e-closing.
In a hybrid e-closing you would sign the bulk of the closing documents remotely by e-signing. Then you would schedule a traditional wet signing for the last few documents in your settlement company’s office.
As of the writing of this blog all lenders I know of rely on hybrid e-closings.
Key Benefits of a Hybrid E-Closing
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- Shorter wet sign closing appointments
- Enhanced convenience: e-sign from anywhere. Rather than signing everything at the closing table, most documents can be e-signed in the comfort of your home.
- Allows the homebuyer time to research questions.
- More secure than paper: Unlike paper docs, all personal information is password protected through a digital closing platform.
- No special software or equipment is needed other than a computer or cell phone with internet access.
- Applying your online signature is as simple as clicking a button.
Will I Still Need to Meet Someone in Person for any part of the Closing?
For any notarized documents, you’ll still meet with someone in person to sign those.
It is important to note that you will still attend a “wet signing” at the title company for a few important documents which cannot be e-signed.
The lender I work for has a $45 hybrid e-closing fee is on the Loan Estimate (LE) by default. If a mortgage borrower declines hybrid closing, the fee will remain on the LE in case the borrower changes their minds. However, the lender will remove the fee when preparing the final closing documents if no hybrid e-close is taking place.
Power of Attorney Usage
If you don’t think you’ll be able to attend the wet signing in person, discuss this with your loan officer immediately. It may be possible to get a “Specific Power of Attorney” approved for someone else to sign for you. However, Fannie Mae and Freddie Mac have started to frown on using a Power of Attorney for the sake of convenience. So they are getting harder to get approved.
What Happens at a Hybrid E-closing?
You will be alerted when the closing documents are ready for e-signing. Then you will log into the software that is being used for the e-closing. You’ll electronically sign most of the closing documents.
Once all the documents are signed the last few documents that need wet signatures will be scheduled at the title company location. There, the last few documents will require a witness, wet signature, and notary.
Ultimately the title company should securely send you a complete copy package of all the documents that you e-signed and wet signed.
Conclusion
This is a big convenience that everyone should at least consider. The one downside is that if there are questions on any of the documents from the hybrid e-closing, you’ll need to arrange a phone call or exchange emails with someone at the title company to get those questions answered. Whereas, if you’re going to sign all documents as part of a traditional wet signing, you’ll have a representative from the title company there in person to answer your questions.
I predict that eventually all closings will be e-closings. The process will continue to become faster and more advantageous. It will eventually become routine. But it could take many years to resolve compliance, legal, and fraud concerns.
Please schedule a call or email me with questions on hybrid e-closings or any other mortgage questions.
Brian Martucci is a loan officer for Capital Bank Home Loans, a division of Capital Bank, N.A. He has been in the mortgage industry since 1986 and has served in a number of roles, including loan processor, loan officer, mortgage broker, branch manager, and vice president. Brian Martucci – NMLS# 185421. His opinions do not necessarily reflect the opinions and beliefs of Capital Bank Home Loans or Capital Bank. Capital Bank, N.A.- NMLS# 401599. Click here for the Capital Bank, N.A. “Privacy Policy”.
