The State of eClosings & Quicken

Yesterday, Quicken announced: Quicken Loans Becomes First Mortgage Lender With Ability to Perform eClosings in All 50 States. And as the originator of 96% of all eNotes (not to mention other eClosings) Quicken is the voice of experience. So congratulations, they won the race - even if they were the only runner.

The release telegraphs the hybrid option as the clear winner today. This is what attorneys have been discussing for months. If you want a comprehensive solution, you are going to have to break the closing package and restyle what seems like two processes into one new one - the hybrid. And each hybrid will rely on state requirements to define which documents need to be wet-signed. IPEN and RON, discussed below, are catching up - but will only backfill the hybrid option as the attorneys become more comfortable with the risk.

Currently, there are three primary options for eClosings:

1. The Hybrid: This is available in all 50 states. The process includes both traditional ink-signed and electronically-signed documents. The Borrower gets most of the closing fluff done digitally, then the Lender has the Borrower sign a few with ink - mostly the note, the mortgage/DOT, affidavits etc...The documents required depend on the closing state.
2. IPEN: In-person electronic notarization. This available in about a dozen states where electronic notarization is approved, to include California, Colorado, Minnesota, Iowa, Texas and Pennsylvania. This process involves a notary sitting with the Borrower while they electronically execute the entire closing package. Importantly, just because the notary is allowed to execute the entire package, doesn't mean your investor or warehouse lender will take the eNote. There is more due diligence required to ensure you are in compliance with your downstream.
3. RON: Remote Online Notarization. With remote notarization, the Borrower appears before the Notary using webcam technology over the internet. Currently, 22 states have passed RON, but only around 9 have fully implemented it. Due to the potential for fraud, as the Borrower does not appear in person, you can imagine the logistical procedures necessary to implement this safely. Another 10 states are due to "go-live" in 2020 - but expect the mortgage industry to proceed with caution.

Legislatively, the barriers to entry continue to evaporate. However, it is important to note, legislative barriers are just the first issues to consider. What is your risk originating a fully digital eclosing? It will depend on your investors, your warehouse lenders, and whether the loan is in a judicial or non-judicial state. As a mortgage banker, you will need solid legal counsel defining the parameters of a hybrid package by jurisdiction. There are several vendors offering a suite of eClosing solutions, to include: DocVerify, Notarize, Pavaso, and NotaryCam.