In today’s insanely busy real estate market, digital closings have quickly become the preferred real estate transaction method. Why? Because for all the modern tech-savvy lenders digital closings enable the efficient closing of more loans, as well as meeting the borrowers’ expectations.
You’ve likely heard the terms “digital closing,” “hybrid closing,” and “eClosing.” They’re often used interchangeably. However, they each have different meanings. Hybrid closings and eClosings are types of digital closings. This article will explain what an eClosing is and how it works.
What is an eClosing?
Let’s start with the definition of an eClosing. An eClosing is a mortgage closing where the entire process is completed electronically and the loan package is digitized, eSigned, and eNotarized. This includes the eNote, which is an electronic promissory note.
Since everything is done digitally, the closing appointment can happen in-person or remotely via audiovisual technology. Once completed, the necessary documents are electronically transferred to and recorded by the county, which is known as eRecording.
How do eClosings work?
The initial steps for an eClosing are similar to that of a hybrid closing. Where the two differ is when it comes to the documents that are electronically completed and how the closing appointment occurs. This is because there are no ink signatures or notarizations in a fully electronic closing.
Here’s how eClosings work:
- Information and documents are transferred to the eClosing platform. Then, the loan information and closing documents are transferred from the lender’s document preparation provider and into the digital closing software.
- Documents are annotated. The loan documents are annotated with fields for eSignatures, eNotarizations, dates, initials, and anything else that needs to be filled in.
- All parties have visibility into the closing documents that the parties to the real estate transaction eSign. Once the digital documents are ready, the lender can loop in the settlement company and the borrower so they have visibility into the progress of the closing. The borrower is able to review the closing package, ask questions, and eSign some documents before the closing. The settlement agent coordinates the closing appointment, which can take place in-person or remotely.
- The remaining documents are eSigned and eNotarized during the in-person or remote closing appointment. There are two types of eNotarizations available: in-person electronic notarization (IPEN) and remote online notarization (RON).
If the closing happens in-person, IPEN is used. RON eliminates the need to meet in-person, and is used when the closing can occur remotely. During a remote online notarization eClosing, the borrower logs into a secure platform, authenticates their identity, and virtually meets with their settlement agent or notary signing agent. Using two-way audiovisual technology, like a webcam, both parties can see and communicate with each other. They can also view the loan documents and eSign and eNotarize them.
5.After the closing is completed, the executed files are immediately available to the lender and settlement company for post-closing and funding.
- The eNote is registered with MERS® and stored in an eVault. The lender will electronically share the eNote with necessary parties and, if needed, transfer the eNote between eVaults.
- Finally, all necessary documents are electronically sent to the county recording office and eRecorded. After eRecording the documents, the county electronically sends the recorded documents back to the settlement company.
The concept of an eClosing is not complicated. However, the process of getting to the full eClose is complex. It is important to understand stakeholder requirements, how to overcome common challenges that you may face during implementation, and how to choose a digital closing solution that sets you up for success.
For all your eClosing needs go to Notaries247.com, found online at https://www.notaries247.com,
or 800-807-1260. Use Notaries247 today to rapidly and completely complete all your digital forms!