The mortgage industry was moving toward remote closings
before the coronavirus outbreak in the United States. As more firms look to enable themselves for such capabilities, they may be stymied by the many complications in the process.
"While the technology components necessary for a fully electronic closing have been built by various companies that support the mortgage industry, my impression is that a relatively small percentage of mortgages industry-wide actually go through that fully electronic process," said PK Parekh, senior vice president and business head at Discover Home Loans. "That's because there is a complex web of county, state, agency, and investor requirements that make it difficult for many lenders to scale up a simple, uniform process for all of their customers."
Ultimately, social distancing may make things like remote notarization
more common, but not overnight. It can take upwards of 30, 60 or 90 days to install the remote notarization technology components because of multiple systems, parties and methods involved, said Craig Focardi, senior analyst, banking, at Celent.
For example, different forms of remote notarization are used depending on what local rules and capabilities allow. These include remote ink-signed notarizations (RIN), remote online notarization (RON), in-person electronic notarization and online IPEN.
Companies have been able to operate without the technology, but may work more efficiently with it. Discover Home Loans, for example, reduced closed-end home-equity loan origination costs by more than 50%, notary errors by 46% and processing times by more than 30%, according to a Celent case study based on the lender’s experience implementing electronic closing and recording technologies from DocuTech and Simplifile last year.
"Virtually all mortgages can get closed today, but there's a huge disparity in the level of effort and security between remote closing and notarization, versus when consumers have to drive to get to a closing, particularly in an environment where many banks are closing branches," Focardi said.