This article originally appeared in the December 2018 edition of Mobility magazine.
E-closings align transferee convenience with mobility objectives
The mobility industry has benefited from remarkable innovation in recent years, increasing efficiency and improving the transferee experience. Two primary examples include transferee portals with application programming interface integrations for service partners and video surveys for household goods shipments. Similar advances have transformed the process of purchasing real estate, with electronic signature (“e-signature”) technology becoming the norm and online platforms allowing transferees to find the best rates and providers to maximize their benefit spend.
Yet when we get to the real estate closing, there’s little to distinguish the experience in 2018 from 1998 or, in some ways, 1978. Some of the formalities have changed, but the process itself can feel antiquated. The time required for closing can be unpredictable as we wait on last-minute concessions, outstanding documents, and approvals. Communication often overlaps and can appear confused and contradictory as we work to meet the requirements of the parties, lender, and settlement agent. There is still a stack of paperwork to be signed at the closing table, and all too often, some documents are seen for the first time when the purchaser is handed a pen.
Electronic closings (“e-closings”) will modernize the settlement process to meet the expectations of an increasingly digital real estate ecosystem. The movement to e-closings in mobility programs promises to increase transparency and service while freeing transferees and their families to focus on the most valuable uses of their time. There are many hurdles to overcome before e-closings are available and implemented nationwide. There are policy considerations because, at least initially, the benefit is available only in certain locations and from certain providers.
To the extent that state law allows, companies that are early adopters of e-closings will find that they not only provide tremendous convenience for the transferee, but also give their teams a seat at the (virtual) table and the ability to oversee a traditionally underserviced transaction.
WHAT IS AN E-CLOSING?
An e-closing in part involves:
(1) the e-recording of the e-signed deed and mortgage, and
(2) the e-registry of the e-note, which is ultimately filed in the e-vault until sale to an investor.
Buzzwords aside, an e-closing brings the closing table into the digital world, utilizing software and/or a web-based technology platform to provide a centralized virtual space for the buyer, seller, real estate agents, lender, settlement agent, and others to communicate, execute documents, and perform tasks related to the closing. As a nascent technology, there are many flavors of e-closing, but we will simplify these into two broad categories for discussion. An “in-person e-closing” requires the buyer to be physically present with a notary, either at the closing table or with a “mobile closer.” Documents may be executed entirely within the e-closing platform or through a hybrid approach, with some documents printed for signature and scanned back into the system for further processing. All other aspects of the closing are handled through the platform. A “remote e-closing” takes this one step further, with no physical presence required. The platform uses the video feed from the e-closing system to verify the party’s identification and enable the notary to conduct all interaction through the system.
For mobility, an in-person e-closing will provide additional visibility into the transaction for a transferee’s service partners, but not necessarily revolutionize the process for the transferee. The remote e-closing is where things get really exciting.
HOW DOES IT WORK?
Closings look very different in New York, Texas, and California, but there are common milestones and outcomes. Similarly, an e-closing must address the same basic requirements in every state:
(1) signing and notarizing documents,
(2) recording the deed and security instruments with the county recorder’s office, and
(3) securely storing and delivering the promissory note to the lender and secondary market investors.
The current status of each of these requirements varies by state and will determine how and when e-closings will be available.
Read the rest of the article for more information on e-notes, recordings, signatures and notarizations, in the December 2018 issue of Mobility magazine.