Remote Closing in the Age of COVID-19
Over the past month, we've all become accustomed to the new phrase “social distancing.” The act of keeping 6-feet away from everyone else has helped reduce the spread of the coronavirus, but it's thrown a massive curveball at the mortgage industry. So, how do you manage the home-closing process in the age of COVID-19 when you have to keep your distance?
With the help of technology, nearly everything we do in person can now be accomplished online. Real estate attorneys have come up with creative solutions to ensure that prospective borrowers can close on a home loan safely and remotely. Some have cleverly asked mask-wearing notaries to watch from curbside while borrowers sign closing documents from inside their vehicles.
This article explores changes in the mortgage closing process and looks at best practices to help keep homebuyers, loan officers, real estate agents and attorneys safe amidst the current health crisis.
What is a home loan closing?
Let's look at the process of a traditional in-person closing. For new homebuyers, the closing process is the day you and your attorney meet with the attorneys of the seller, pay your closing fees to secure the loan, and snatch up the keys to your new home.
But first, there's the Closing Disclosure documents to review and sign. Then they need to be notarized, meaning a notary public witnesses you signing the docs and notarizes them to validate authenticity. That in-person requirement has to date made remote closings few and far between. Until now.
The benefits of remote closings
In theory, as well as in practice, e-signatures and digital notarization have been technically possible for some time. It's just that we haven't really needed such steps in the mortgage closing process except in cases where someone in one state is buying a home in another, and it's too far to make the trip. That's all changed with COVID-19.
If you're not interested in standing 6 feet apart and wearing a mask and gloves when signing documents, consider the virtual route. Remote closings may seem a little awkward at first, but they come with many benefits. For instance:
- Remote closings can be less stressful. Going digital makes it easier for borrowers to review loan documents before closing. This gives you time to get clarifications on things so you're not rushed during a closing meeting.
- Remote closings can save time. No more mucking about with everyone's scheduling conflicts, and worries about traffic delays as everyone converges on one particular law office are a thing of the past.
- Remote closings can be less expensive to handle. With no paper documents to produce and distribute, lenders may save a little money from a virtual closing. Whether those savings trickle down to the homebuyer are still to be seen.
- Remote closings can catch errors immediately. While not infallible, eClosings are arguably better at flagging missing documents or policing signature compliance.
Get familiar with remote closing best-practices
If you started the purchase of your new home before your area put lockdowns or stay-at-home orders in place, you've probably already had discussions with your lender about how to complete your home purchase with a remote closing.
It can take a little getting used to, but remote closings may be the way home buying moves forward in the age of COVID. Indeed, new and better eClosing technologies and apps will be born from this crisis, a small silver lining we all need. Here are some remote closing best practices that are destined to become common practice before too long:
- Consider a well reviewed app or online service. Today, many states have passed emergency pandemic response bills that do permit remote notarization. This wasn't the case just a few short months ago. However, some states still require the original notary for a wet-ink seal prior to recording. Be sure to check with your loan officer to see what options are available to you in your state. Because of this, you'll probably see more virtual notaries like Notarize and OnlineNotary.net pop up. Choose a reputable one.
- Your lender may suggest holding a closing by Skype or Zoom. Using a video conference app allows you to display your identity to the notary and then follow up with the signed documents delivered after the fact. A 50-100 page document is a lot to scan or fax. And overnight delivery by Fed Ex just delays getting your hands on the keys. We're partial to web-based tools like DocuSign or Movement Mortgage's own EasySign* tool, then turning the doc into a PDF and sending via email.
- The second to last step of the closing is paying the closing costs. Luckily, electronic bank-to-bank transfers are a secure way to handle such payments, as are traditional wire transfers.
- The last part is not so easy to do electronically: Getting the keys to your new house. For that, we'd rely on delivery services and a thorough scrub with soap and water after they arrive.
Ask us about Easy Sign for your remote closing:
EasySign* is Movement Mortgage's online alternative to manually signing a mountain of documents at closing. Buyers can now sign many of the papers online prior to the scheduled meeting or wait to sign the documents online with an attorney or closer present. Learn more about EasySign.
Remote closings may not eliminate face-to-face closings, but they are here to stay and can keep safe and secure as you finish off your home buying process. Speak with your local Movement Mortgage loan officer to discuss which method you're most comfortable with.
*While EasySign offers the ability to sign feasible documents electronically that are permissible by law, not all documents may be available to sign with this option. EasySign also offers the options to wait to sign the same documents online with an attorney or closer present, or opt out of online signing altogether in favor of signing documents in person.