Settlements in the Era of Covid-19

The Covid-19 stay-at-home orders and social distancing recommendations have made settling on a home—whether in person or at the closing table—a whole lot more complicated, and the need for fully digital closings has increased significantly.

Though the real estate industry has been talking about transitioning from paper and wet-ink signings to remote options for years, it has yet to become the norm. There are several options to close on a home with at least a portion of the signing completed remotely. A fully executed digital closing is not yet a widely accepted practice, but we are seeing more and more indications that it will happen.

What’s Preventing Fully Digital Closings
Adoption of the full electronic closing as standard practice, including remote online notary, has been slow to roll out due to several influencing factors.

State regulations. At this time, only 35 of 50 states have enacted some form of remote online notarization. In these states, the specific rules for what is allowed and what technology can be used varies.

Courtroom capabilities. For a digital closing, it is required that courthouses have electronic recording capabilities, and many across the country are not yet set up to accept e-recordings.

Lender rules. Not all lenders accept electronic closings.

A Path to Electronic Settlements
The industry is wanting, now more than ever, to find a way to allow buyers and sellers to close remotely. In response to the Covid-19 pandemic, Fannie Mae and Freddie Mac have issued guidance accepting loans where documents have been electronically notarized either in person or remotely using real-time, two-way audio/video communication tools.

There is also a bill introduced in March 2020 called the SECURE Notarization Act, which if approved would supersede state laws, allowing for remotely notarized documents to be accepted nationwide. In the meantime, many state governors are issuing temporary guidance to allow consumers in their state to have more digital closing options available to them while stay-at-home orders are in place.

A State-by-State Overview
With so many options available and regulations varying state by state and changing rapidly, how can you know which option is best and if it is allowed?

Here are the different options and in which states they are available.

Our Team, Ready for Your Clients
Across our markets, many clients could utilize some sort of technology to sign at least a portion of their closing documents from the comfort and safety of their home. Your Long & Foster partners at RGS, Sage and Infinity are well positioned with both the technology and the expertise to help your clients choose their best option for closing remotely, based on what’s available in their market.

Contact your settlement partner today to learn more.