eClosing = online closing = mortgages over the internet.
eClosing is not exactly new these days. Conditions over the last few years has made the ability to close out a real estate transaction online easier than ever. And more importantly, it is becoming an accepted transactional process.
Look at the three main models for an eClosing.
- Hybrid – this is when a portion of the closing documents are e-signed and a portion are notarized in-person with a notary agent. Easy to understand process and something that is frequent with participants who cannot be near the property or agents.
- In-Person E-Notification (IPEN)
All parties are present for this transaction. However the notary is permitted to perform their notary duties electronically, without the use of paper. Cool for the notary, but everyone is still in the room.
- Remote Online Notarization (RON)
Here all the document signing and notarization is done electronically. None of this has to be done in-person. Signers appear in front of notary using online video and audio. Super convenient and helps avoid mistakes that could require another visit. Worth noting that this method is not valid in all states.
- There is still a requirement for actual wet-signatures on titles or deed transfers in most cases. (Yes, this is an important #4).
There are pros and cons to this new age of digital documentation.
- Convenience and can be cheaper: eClosing allows buyers and agents to work off their schedules and availability. And if the agent doesn’t have to travel, you save those potential costs.
- More Lead Time: All parties are sent the documents electronically ahead of time. All parties should have more time to review before signing. This is a huge time saver at the title office and a tremendous comfort to understand what’s on the paper ahead of time.
- E-docs have required sections – This means you can’t submit without all the sections filled out. Missing a section or a signature does not make for good day, and it does happen. Technology helps avoid these problems.
Yes, there are technology concerns.
- Getting reliable internet service, trusting the digital domain and avoiding tech support problems will make the process work better. In some cases the participants are more comfortable with paper and pen. You do what you have to do.
- Fraud is a concern. The title transfer requires iron clad verification of identities. This is why most title companies rely on fact to face transactions. This is an understandable technology concern and should see better solutions going forward.
eClosing are more popular than ever, but still have some challenges for both the humans and technology. Looking over the benefits there is one area that stands out as a time and cost saver – getting the documents to the participants early and accurately is really helpful.
It stands to reason that if all parties have their documents with enough lead time, time consuming questions and research can be addressed early. This is one area that should not be a hindrance for either buyer or seller or title.
And this is an area where technology can provide real benefits that can be measured in efficiency, effectiveness and revenue.
For California HOA managers in particular, you have a bundle of documents that have to be supplied with every transaction. There are technology solutions out there, but many of them have a built in delay to the document delivery schedule. For a better way to move those association documents, check out the docLine app service from BiminiCorp. Immediate document delivery and the service is free for self-managed associations and larger management groups.
eClosings are happening today and they promise to be a point of conversation in all real estate transactions going forward. The more you know about them and the capabilities of the technology, the better you will be able to facilitate the process and find the best-fit solution for your clients.