It’s about time. The title insurance industry is catching up and rapidly integrating technology into all aspects of the real estate transaction.
The ESIGN Act was federally passed in 2000 to enforce the viability of electronically signed documents, but ironically, an industry that thirsts for more efficiency has been slow in adapting to technology.
Eighteen years on, homebuyers and refinancing homeowners still come to our closing table every day to sign their closing documents, some 50+ pages, with pen in hand. But that all may be changing in the very near future.
With the emergence of online mortgage solutions and the increasing availability of technology to simplify the process of finding a home for purchase, the title insurance industry may be next on the fast track to online integration.
In the next year there will be a major shift toward electronic closings, or e-closings, as legislation is being proposed and adopted all over the country to make way for a faster and more secure way to close real estate transactions.
In 1996, Federal Title became one the first companies in the nation to offer an online service to shop and compare closing costs, and more importantly, order title and settlement services.
We are now positioned to be among the first in the country to offer e-closings in Virginia, Maryland and the District of Columbia. We’re still waiting for clearer legislation in Maryland and DC to make e-closings viable, and not all lenders have a system in place yet for tracking them.
How does an e-closing work?
Once the parties have a ratified contract, any party in the transaction may order settlement services at https://federaltitle.com/order. The title company and lender will work to finalize a closing disclosure and coordinate a settlement date with the borrower.
The closing documents from the title company and the loan documents from the lender will then be uploaded to an online portal where the borrower, lender, agent and seller (if a purchase), will have the ability to review and sign their documents in front of a video notary.
Can I close remotely now via e-closing?
Federal Title is up to date with the latest software to provide an online closing for our clients. However, there a few caveats to be ironed out this year.
Legislation in DC and Maryland does not yet explicitly state that the use of a video notary is acceptable, although no legislation against it has been passed.
Meanwhile, Virginia was the first state in the United States to allow the use of video notary and thus is a viable option for e-closing.
The second caveat is on the lending side. The Note and Deed of Trust are essentially the two most important mortgage documents that the borrower signs.
Some mortgage lenders have already established an “E-Note” and “E-Vault” platform and are capable of closing your entire loan electronically. Essentially, the E-Note allows for the Note to be enforceable when electronically signed, and the E-Vault stores the E-Note.
Many mortgage lenders are diligently working to transition to e-closings, and it will be no surprise to see a major influx of e-closings in the very near future. We’re also keeping an eye on e-closing legislation in DC and Maryland.