Are the days of Realtors®, buyers, sellers, an attorney, a representative from the title company and a mortgage lender sitting in a conference room for a closing numbered?
According to the American Land Title Association 2021 Digital Closing Survey, the percentage of title and settlement companies offering digital closings has jumped 228% since 2019. Obviously, the advent of the COVID-19 pandemic accelerated that growth. Nearly half (46%) of title professional respondents said they offered digital closings in 2020, compared to just 14% in 2019. Remote online notarization were a part of more than 5% of closings and more than one-third of companies offer remote online notarization.
A wide variety of closings involved remote online notarization. Most likely to utilize it were sellers only (40%), followed by cash deals (23%), refinances (17%) and then purchases (14%). And title professionals expect it to continue. Close to two-thirds (64%) said that remote online notarization closings will increase in 2021. It’s not surprising, as 52% of respondents said closing times were faster, thanks to remote online notarization and 43% said the transaction was cheaper. But companies do have to make an investment to have remote online notarization become a reality in their business, and that cost close to $30,000, according to respondents. This included estimates for software, training and equipment. So there are barriers to entry, and more than 80% of title professionals said that none of their closings were digital, while about 5% said all of their transactions were.
“The majority of closings we are seeing are still paper,” said Frank Dowd with Associates Land Transfer Company in North Wales. “We are seeing a large increase in lenders who offer hybrid closings, signing the majority of disclosures online, but nothing to be notarized. Most will still attend a closing with 12-18 documents that have to be signed in person.”
Dowd said how the closing takes place is mostly driven by the lender’s choice.
“Post-pandemic, digital closings will be the future, I believe,” said Dowd.