Disrupting the Title Industry: The Impact of E-Closings

How home buyers research and tour properties, meet and build relationships with real estate professionals, and move through the closing process is dramatically different than it was even a decade ago.

Like many other parts of our professional and personal lives, each phase of the home buying and selling process is undergoing a digital transformation.

One of the most dramatic changes has been the rise of e-closings, which move part or all of the closing process online using electronic documentation and perhaps even digital signatures and live online meetings.

So what do these shifts mean for your title business, your customers, and the security of your real estate transactions?

This article will explore the key elements of e-closings and how to keep the process secure.

What are the ins and outs of e-closings?

Driven by the flexibility and benefits of digitization and accelerated by the COVID-19 pandemic, the demand for e-closings increased dramatically in the last couple of years. In fact, in 2019, only 18 percent of lenders had e-closing software implemented; just a year later, that number jumped to 42 percent with a continued upward trajectory. 

Whether completed in person or facilitated digitally, the mortgage closing process is a highly detailed and organized process with a strict set of requirements that must be followed for a deed to change hands and for the loan to be processed.

E-closing takes some or all of these elements of the preparation and closing digital, including:

• E-signing in place of physical signatures recorded in person
• Notarizing key loan, title, and deed documentation
• E-note signing 
• Distributing documentation to all parties of the transaction
• Collecting wire transfer account information to handle mortgage payoff or closing costs

E-closings can also take several different forms depending on the preferences of the title agents and parties to the transaction, taking all or some of the closing digital. These include:

• Hybrid E-Closings: Aspects of the closing are completed online, such as e-signing documentation, but other elements, such as notarization and documentation distribution, are done in person and on paper.
• In-Person Electronic Closings: A face-to-face meeting is conducted at an earlier time to validate identities, but documents are signed electronically during the closing.
• Fully Remote E-Closings: Every element of the closing process is completed online, supported by a web videoconference. Key functions are also done digitally, such as e-note, e-signing, e-recording with government agencies, and notarization.

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What are the benefits and risks of e-closings?

The dramatic increase comes from the benefits that e-closings provide to both title agents and customers. Some of the most significant benefits include:

• Cost Savings: One study by Notarize and MarketWise Advisors found that e-closings can save lenders up to $444 per loan, savings that could eventually be passed on to customers. Taking the process digital also means the opportunity to save on document preparation, printing, and storage costs.
• Documentation Preparation: E-closings also make it easier for all of the various parties to collect, coordinate, and finalize documentation, allowing documents to be reviewed and signed no matter the time and location of the parties to the transaction. 
• Error Reduction: Using e-closing software can help to reduce the opportunity for errors from manual data entry.

However, taking the closing process digital still comes with some risks that title agents and customers should be aware of:

• There are increased opportunities for key documents of the closing process to be intercepted or tampered with by cybercriminals.
• Completing an e-closing via a videoconference requires reliable internet access and for all parties to be comfortable with the technology.
• Not all parties to the closing, including state and local agencies, may be compatible with or accept the outputs of e-closings.

How can title agents improve security with e-closing?

For many, especially those with years of experience in real estate closings, a move to e-closings may seem strange, especially with some of the potential risks involved.

But, with the right e-closing software and industry-leading wire transfer account information collection and validation tools, the process can not only be secure but also can allow your business to appeal to a new type of tech-savvy customer.

For example, title agents and customers can find peace of mind with platforms such as CertifID, which create encrypted connections for parties to share sensitive wire transfer account information and instructions after their identities are independently verified. This allows customers and real estate professionals to take more of the closing process digital while still having the security of knowing each wire transaction facilitated by CertifID is insured up to $1 million.

E-Closing can shift from industry disruptor to competitive advantage

As more of our lives move online and into the digital world, the real estate market will need to continue to evolve to meet customer expectations for flexibility and convenience.

This is why those organizations that are able to meet both evolving customer expectations with services such as e-closing and the need for increased security will continue to build trust and grow their business to appeal to a more diverse customer base.

Want to learn more about how to keep your real estate business secure in this new digital world? Schedule time to learn how CertifID can protect your business from wire fraud.

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