Nearly everything about the industry’s prized digital mortgage is streamlined expect for the final, and one of the most important, steps at the end.
The entire online process comes to an abrupt halt when it's time to close a loan, forcing borrowers to still meet up and cross the T’s and dot the I’s on an official document with a notary present.
And while this process is evolving digitally, as noted here, it wasn’t until recently that the process truly became end-to-end thanks to a new company: Notarize.
Notarize took the current eClosing process and brought it to the next level by allowing buyers to never have to leave their home or wet sign a single document.
Compared to the previous option that requires either some in-person contact or a notary to eSign closing documents via a shared tablet, the company’s solution allows borrowers to FaceTime or Skype with the notary, making it the first eClosing borrowers can complete remotely, with a notary not having to physically be present.
The concept finally came to market earlier this month when Notarize closed the first of this type of loan with United Wholesale Mortgage.
Notarize also said it has partnerships with four other mortgage lenders, including Lenda, Mid America Mortgage, Eagle Home Mortgage, and WEI Mortgage.
In an interview with HousingWire, Notarize CEO and Founder Patrick Kinsel expanded on the process behind finally getting to a true eClosing and what the future looks like for eClosings.
Kinsel explained that mortgages aren't the only type of notarization that the company does, but it did prove to have the most pain points when it comes to notarization.
“Mortgages make up 40% of the notary market,” said Kinsel, “And we think it’s where we can solve the strongest pain point. It’s a center of focus for us, and we can really innovate there. We are excited for the future and to really help borrowers and people understand the terms of their loan better.”
“The fact that only a fraction of 1% of the 10 million mortgage closings executed in the U.S. in 2016 were eMortgages, was a clear indicator that the industry lacked the right solution,” said Kinsel.
When Kinsel was first getting Notarize started about 19 months ago, he explained that Virginia was the only state so far that had passed a law to allow the presence of a notary to be established over video and audio. Since then, Texas, Nevada and most recently, Ohio, have passed legislation to bring remote notarization into the state.
And the list hopefully doesn't stop there. Kinsel stated they’ve been at the forefront of getting the legal process going in states.
The key detail in these four states approving remote notarization is that the reach expands beyond the four states. The notaries in Virginia, Texas, Nevada and Ohio will be able to use Notarize’s platform to serve customers from all 50 states, regardless of where they’re located at the time of the signing.
For example, the first eClosing that Notarize executed actually happened in Illinois.
However, Kinsel added that the best model is for local notaries to perform local transactions.
Notarize is trying to get more bills passed across the country to expand its operations outside of Virginia, along with the three other states.
When it comes to industry backing, Notarize already has the support of Fannie Mae and Freddie Mac. Notarize has been verified by both for eNotes, eClosing and eVaulting.
“Freddie Mac is focused on innovation as a medium to help lenders achieve their goals around efficiency and deliver a better customer experience. We see the digitization of the mortgage process as one way to reduce errors, speed the closing process and offer a complete solution to consumers,” said Samuel Oliver, vice president of strategic delivery for Freddie Mac’s Single-Family Business.
“Lenders have long sought the digital mortgage, and today the industry takes a big step forward with Notarize's closing of the first ever fully online mortgage with electronic documents,” said Oliver. “With the vast majority of counties now accommodating eRecording of mortgages and more states adopting electronic notarization, we’re seeing a transformation across the industry. Freddie Mac intends to continue to support the digital mortgage space.”
Even though Notarize does have a lot of support behind it, it does face some challenges.
“A mortgage is a mission critical transaction,” said Kinsel. “You have a rate that’s approved for a limited period of time. Our technology has to work. We have made huge investments in what happens if a call drops or what happens if people are on different devices. You have to get it right. We are investing a ton of time and resources in this, and we want to tell a lender that we got it.”
The closing process involves a lot of parties, who all have to agree. And some people may even have to change their systems to accommodate the technology, Kinsel explained.
“Because this touches everybody, we are really investing in helping people make this transition. This change needs to be managed and helped along the way,” he said.
And the overall process for eClosings to be the new normal isn’t likely to take long, according to a recent interview with UWM CEO Mat Ishbia.
Since a lot of other states are okay with remote notarization on non-mortgage-related things, Ishbia said they feel that many more states will come on very soon.
“eClosings will be more of a standard practice next year and I think the majority of closings will be done this way by the end of 2019,” said Ishbia.