Opinion

Nationwide, e-closings are available for all mortgage lenders

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Every lender today can conduct e-closings nationwide. What is actually holding them back from committing to this strategy is the perception that e-closings are an "all or nothing" proposition.

In reality, lenders can begin by digitally closing a set portion of their overall production volume to gain experience with e-closings. They can then gradually transition more and more loans to e-closings as circumstances allow.

First off, there are no statutory restrictions on the books in any state prohibiting lenders from conducting mortgage closings electronically or remotely. Some may point to the lack of remote online notarization (RON) legislation in many states as a barrier to nationwide e-closings. But the reality is that these transactions can still be done — and have been done by several lenders — even if there is not an explicit RON law on the books in the state where the transaction is being conducted.

By far, the easiest segment of loans to begin closing electronically are refinance transactions, as lenders often direct the selection of the title/settlement agent so there is less coordination of outside parties involved. What’s more, title and settlement agents are rapidly getting on board with both e-closings and RON so the adoption challenge on that side of the transaction may not be as great as many lenders assume.


Speaking of RON, 13 states (Virginia, Texas, Nevada, Minnesota, Montana, Ohio, Tennessee, North Dakota, South Dakota, Indiana, Michigan, Utah and Vermont) have RON laws in effect already, providing ample opportunity for lenders to take their closing process even more digital. Furthermore, four other states (Florida, Idaho, Kentucky and Oklahoma) are set to implement RON on Jan. 1, 2020 and five more (Arizona, Iowa, Maryland, Nebraska, and Washington) will do the same later in the year, which further opens the door to add full e-closing capabilities in additional localities.

From there, lenders can certainly adopt a hybrid e-closing strategy for those remaining states that have not adopted RON. However, RON transactions can still be conducted in states where it isn't yet legal. Many title insurers will underwrite RON transactions in most states without RON laws for their own notaries, operating under state and federal laws requiring acceptance of duly notarized documents from other states.

Additionally, title and settlement agents also stand to benefit tremendously from e-closings and, if approached in the right way, are primed to adopt a hybrid e-closing strategy for those transactions that cannot be fully executed electronically.

What lenders should take away from all this is that any lender can conduct an e-closing in all 50 states. There is tremendous coordination involved, and for the time being, lenders may have to commit themselves to a bifurcated process. However, the rewards are certainly worth the effort, and if the nation’s largest independent mortgage lender (i.e., Quicken Loans) can commit itself to this strategy, there is no reason which the rest of the industry cannot do the same.

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