If you were closing on a mortgage in Florida, it wouldn’t matter if it was 1950 or 2019 — the closing process was exactly the same, according to Title ClearingHouse of Jacksonville President Valerie Saunders. Then, 2020 changed everything.
“I got into this business over 20 years ago, and it really had not changed for the last 20 years until remote online notarization and hybrid closings came around,” Saunders said.
eClosings are all the rage as stay-at-home orders and fears of the pandemic are keeping Americans in their homes and avoiding any unnecessary travel.
But for those wanting an eClosing – that is easier said than done. One of the greatest obstacles is the acceptance of remote online notarization (RON), both at the regulatory and business level. While growing in popularity, RON is still a slow process and only recently became accepted by many states because of the pandemic.
Florida was one of those states, passing statewide acceptance of RON on Jan. 1 – just before the pandemic hit. Parts of the law went into effect later, such as the execution of wills and estate planning documents, which went into effect on July 1. This has allowed many transactions across the state and beyond to continue the closing process with ease, but as with every state, Florida also has its quirks.
After speaking with RON experts across the states, here is a list HousingWire compiled on things every lender, title agency and borrower need to know about performing a complete eClose on a mortgage in Florida.
You need a witness
In order to perform an eClosing in Florida, you will need a witness. No, not the video camera recording and storing your every move. You need another witness to the transaction.
This odd rule has many experts laughing. After all, why is there a need for a witness to say you signed the transaction when there is actual video evidence of you signing it?
Aaron Davis, CEO of Florida Agency Network, one of the largest RON providers in the state, helped the push to get eClosings accepted, even testifying before the state Senate on the topic at a committee hearing. He explained that despite a perception of increased security issues, RON is actually less susceptible to fraud than a traditional closing because of the video requirements.
At the start of a RON, borrowers must:
- Scan their driver’s license into a system which does a quick scan to ensure it is real and hasn’t been altered;
- Enter their social security number for a soft credit pull which will ask security questions; and
- Sign on video.
“The final icing on the cake is that the transaction is video recorded and held for seven years accessible by a court of law,” Davis said. “So should someone had tried to commit fraud in any way, they’re on video doing it.”
But despite these high levels of safety, a witness is still required in the state. The witness can be any adult such as a friend or family member, to watch the closing transaction.
“If you’re signing a document in Orlando, you need to have a witness standing there; even though there’s a notary that watched you sign and verified your identity, somebody else has to witnesses it,” Knight Barry Title Chief Operating Officer Craig Haskins told HousingWire. “It’s a little weird because the notary act of you signing at home or on vacation or wherever, is recorded. There’s a digital video recording of you and your entire process of you signing the documents, so why there needs to be a witness…?”
But Haskins says that technology may soon do away with this rule.
“Technology might get that changed some day where you wouldn’t need a witness requirement because it’s recorded and preserved,” he said.
The state to move to
Florida is a popular destination for migration patterns in the U.S., with four Floridian cities dominating the top list of cities migrated to in 2019. Whether this is Baby Boomers retiring, young families looking for economic activity or the attractiveness of the no state income tax, it is a popular destination for Americans to move to.
And 2020 continued that trend at an even higher rate.
“Florida is very much a state that people move to,” Davis said. “So we have a lot of folks from the North and the Midwest. These long, cold winters are driving people to Florida. We have great beaches and no state income tax so we have a big population of out-of-state people moving in. I think at last count, we still have about 1,000 people per day moving into the state of Florida.”
“And that number may even be higher now post COVID because of the work-from-home phenomenon,” he continued. “If I can work from home, I’d rather do it close to a beach than up in the snow of Massachusetts.”
And this traffic from out-of-state buyers creates an even higher demand for eClosings in the state.
“Florida, because of the nature of our state being a high inbound traffic population from these other states, I think we have an even higher demand than a lot of the rest of the country for the for the solution,” Davis said.
And one law in Florida allows even the notary to be out-of-state, catering to the long-distance population.
“You can have a notary that’s in a different state perform the notarial act, which is very helpful because as you know there’s a lot of people from Florida who aren’t from Florida,” Haskins said. “There’s a lot of second homes, vacation homes, a lot of people travel on vacation to Florida.”
Because of these migration patterns from other states, home buyers and sellers bring their own customs to the homebuying process. Title companies in Florida must learn these customs and be prepared for anything in order to thrive.
“It’s very unique in Florida, you really have to know where you’re at to know what are the customs and norms as to who takes title and that’s incredibly important for a for a RON transaction,” Davis said.
He explained that coastal areas may have one tradition whereas the southern part of the state, with a high population of migrated New Yorkers, has another idea of how the closing process works. “It just boils down to customs and norms,” he said.
Growing up in the title industry, David said the change is sweeping from where he first saw it 35 years ago.
“My mom actually started our original title company with Hillsborough Title 35 years ago,” he said. “So I’ve been doing this since I was about nine years old. From my perspective, being born in this industry, to see an industry move from zero technology – no servers, no emails, first fax machines, first website – and now to the ability to buy a home on an iPad is just a phenomenal thing to be a part of.”