- Consumer Info
Ethan M. Powsner, Esq.
Vice President, Director of Compliance, Technology & Market Development
Fidelity National Financial
You will be reading more and more headlines about how ‘E-Closings are Around the Corner’ or ‘CFPB Pushes E-Closings’ or ‘Millennial Buyers Asking “Where’s the Technology?”’
Don’t panic. There isn’t even a common definition of what constitutes an ‘E-Closing’—does it mean ‘all documents’ or ‘some documents’. Further, there are still significant State-level legal and County-level procedural hurdles that need to be overcome before everyone will be closing real estate deals on an iPhone using an App. So where are we?
In 2000, the ESIGN Act authorized eSignatures. In 2004, the URPERA Act created the legal foundation for county recorders to accept electronic documents for recording. While approximately 75% of the population lives in a county that accepts eRecording, that figure is misleading in two respects. 46% of all US counties have still not authorized eRecording. And, even in eRecording counties many will not allow a deed to be eRecorded. Thus, even if you could have eClosings for the signing of documents, you still wouldn’t be able to electronically record the documents for a material portion of transactions. This removes some – or much – of the demand for eClosings.
Another piece of the puzzle is still missing, the witness and notary requirements. Even if you can technologically create a document that could be electronically accepted for eRecording, you still have the issue of having it notarized in compliance with State-law. Which means, printing out the documents and having wet signatures applied in the presence of a notary. Very few states have gone so far as Virginia and have allowed a notary to witness – from a remote location — a document’s being executed. As an aside the GSE’s do not allow remote interstate electronic notarization, though Freddie Mac will accept a remote electronic notarization where the notary is licensed and domiciled in the State where the property is located IF the State has authorized electronic remote notarizations. In 2010, there was an attempt to pass the Interstate Recognition of Notarizations Act, but it was vetoed.
There are some technical issues that still need resolution also. I’ll summarize them this way – there is no single MISMO standard that encompasses the Note, the Mortgage, and the Closing Disclosure.
The CFPB recognizes that an eClosing cannot be defined as a closing where all documents are executed, notarized, and recorded electronically. They are, however, committed to pushing the process forward. So, while it may be prudent for you to start looking into eClosing technologies and systems, in order to get a head start, you needn’t worry that eClosings are just around the corner.
Author’s Note: Much of the information for this article was adopted from
Other internet sources were used to corroborate some of the materials. Google® the terms “E Closings” or “E-Closings”