From online showings to all-digital signings and closings, the digital transaction has fully come into its own. All month, Inman examines the companies and technologies driving this new world of digital transaction.
This article is the second part of a three-part series that takes a deep dive into digital transactions.
Perhaps no other part of the transaction process needed to go virtual sooner than the signing process. With the advent of electronic signatures and remote online notarization in recent years, options have emerged.
Digital signings are a reality in some states, for some lenders and for most settlement providers. This is a result of patchwork state-level legislation and resource-intensive lender adoption of newer technologies.
While there are numerous variations, in 2021, there are basically two main types of digital signings — hybrid in-person e-closing, or “hybrids,” and remote online notarizations, or “RON.” Both are described briefly below:
1. Hybrid e-closing (Hybrids)
Full electronic closings, as the name suggests, require every single aspect of the transaction to be electronic. Few lenders, settlement agents and county recorders are able to jointly meet this tall order.
Like links in a chain, every piece must be in place. Hybrid e-closings are simply an approved way to handle most of the documents electronically while “papering out” those documents that need a wet-ink signature or in-person notarization.
2. Remote online notarization (RON)
Both seller and buyer sides of the closing process can be finalized using RON platforms that ensure proper authentication, security and privacy throughout the signing process. Most providers offer both the purpose-built technology platform and a panel of certified notaries that facilitate the signing on behalf of the lender and settlement agent.
While everyone agrees that fully digital signings are the ultimate digital destination, some state laws and most lender technologies are still a work in progress. Where remote online notarization and electronic notes (“e-notes”) are not available, the need for wet-ink signatures and in-person notarization remains.
Fortunately, tech-forward notary companies are now able to facilitate hybrid e-closings which allow one or more signers to DocuSign the documents not requiring notarization. This leaves only a few documents to be wet-signed by the consumer and stamped by the notary. While not fully digital, the hybrid e-closing does afford the consumer more time to understand the paperwork and less time in front of the notary.
If your state does not allow for remote online notarization or your lender is not yet e-note-ready, then there will be some face-to-face signing involved. However, this can be minimized if the lender allows what is now called a “skinny” or “express” package in a hybrid signing.
As Mark Fleming, Jr., president of Signature Closers recently said, “We believe hybrid signings are the next logical step for companies considering a digital transaction strategy. These signings serve as a gateway to fully remote online signings in the future as the barriers to entry are addressed and eliminated across the country.”
Today’s consumer expects a range of choices, which is why agents need to partner with mortgage and escrow providers that offer the full range of digital signing options allowed.
Veteran agents know that seamless closings are the final piece of the puzzle in earning positive reviews and warm referrals. That is why the closing experience is so critical, whether it takes place in person or online. In order to provide the best digital closing experience available in your state, be sure to do the following:
- E-signature: Ensure that your mortgage lending and escrow closing professionals have the ability to provide documents in advance for electronic signature where allowed.
- RON closings: Find out if remote online notarization is available in your state and if so, which mortgage lenders and title companies have adopted online closings. In states where RON is now legal, this method of signing can be used for signing sellers on nearly every transaction.
- Hybrid e-closings: Make sure your industry partners can facilitate hybrid e-closings which are available, to some degree, in all states. With hybrid closings, everything can be signed electronically except for those documents that require either wet ink signatures or traditional notarization.
Continuing your digital transaction journey
The digital transaction experience being provided to consumers continues to evolve, providing greater time and location freedom along the way. Today’s technology can provide an excellent digital experience, from searching to showing and signing.
Agents need to explore how major players and new disruptors are working to improve the consumer experience. Further, agents need to explore and evaluate new tools that can meet rising consumer demands for a seamless digital transaction.
Marvin Stone serves as senior vice president, business integration for Stewart Title Guaranty Company. Connect with him on Twitter.