Electronic Closings a ?Business Imperative,? but Hurdles Remain Before They?re Widespread


Fri, 16 Jun 2017 13:23:45 +0000

Realtors« know first-hand that real estate closings are a complex process that?s often slow and confusing for their clients. Consumers want simplicity and transparency, and Realtors« say electronic closings have the potential to deliver on that demand, but widespread acceptance of so-called ?e-closings? has yet to take hold.

National Association of Realtors« 2017 President-Elect Elizabeth Mendenhall convened a meeting of tech and industry leaders in Washington, D.C. with the goal of identifying and addressing some of the challenges to widespread e-closing implementation.

Among them, concerns remain about the legal ramifications of accepting electronically submitted signatures, notarization, and other elements of the transaction. But concerns over e-closings extend well beyond the closing documents consumers see at the closing table.

In a typical closing, the documents must be properly recorded and payments disbursed to the entities involved. Oftentimes the loan originator will also receive funding for a mortgage from a loan ?warehouse,? and those funds may be repaid when the loan is eventually sold or securitized on the secondary mortgage market.

The result is a wide range of actors are involved in each transaction, often with their own varying technology platforms, making the transition from paper closings to e-closings fairly complex from both a communication and business standpoint.

Those challenges haven?t stopped various entities from trying, of course. The Consumer Financial Protection Bureau launched an e-closing pilot program in 2015 and found that consumers ?are generally better off on measures of understanding, efficiency, and feeling empowered? than those who moved forward with a tradition paper closing.

The idea of an e-closing isn?t new. The issue took one of its first major steps forward with passage of the ?E-SIGN Act of 2000,? a federal law establishing the legal equivalency of electronic signatures in commerce. Since then, a range of federal agencies have moved to implement policies that utilize e-signatures, most notably the Federal Housing Administration in 2010.

Acceptance with e-closings within the industry however is inconsistent, and in many areas is entirely unavailable. NAR and the broader real estate industry recognize the need for this to make e-closings more available.

Mendenhall said she sees hope for e-closings on the horizon and highlighted the value e-closings offer to both consumers and agents.

?We?re already seeing e-closings take place, but we need to see more of it,? Mendenhall said. ?This is a business imperative for our members.?

Additional commentary on the event is available in a video featuring Elizabeth Mendenhall, available here:

Closer to full use

In addition, Margo Tank of Buckley Sandlin andáJohn Kmiecik, chair of NAR’s Federal Technology Advisory Board, also weighed in with their expert opinion on the e-closings trend.

E-closing video 2

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