Digital mortgage closings could be legal in all 50 states by 2022, expert predicts

Digital mortgage closings – alternatively known as eClosings – were accelerated by the need for homebuyers and mortgage lenders to remain socially distant amid the coronavirus pandemic. Closing on your home loan without having to be physically present when signing documents has certainly increased in popularity – where the ability to do so is legal. But some experts believe that eClosings could be legalized across all 50 states by 2022, as that process and remote online notarizations (RON) gain more traction.

An eClosing is the process in which a homebuyer or homeowner refinances or closes their loan electronically, rather than signing physical paper documents. Through this remote notarization, consumers can connect with a notary public online and perform the notarial act from anywhere with a computer, tablet or any device with a camera and audio. Notaries give their notary seal after collecting an electronic signature and proof of identity through various authentication methods such as photo ID, identification questions or other identity proofing.

Currently, RON is legal in 38 U.S. states. However, the bipartisan Securing and Enabling Commerce Using Remote and Electronic (SECURE) Notarization Act of 2021, H.R. 3962 could soon change that. Some experts believe the bill to authorize mortgage transactions to be completed using remote online notaries could pass as soon as this year, or into 2022.

"There continues to be broad, bipartisan support in Congress for the SECURE Notarization Act, and we continue to educate policymakers, alongside a broad coalition of partners, about the importance of expanding access to remote online notarization nationwide with strong standards for its use by all consumers," said Chris Morton, American Land Title Association (ALTA) senior vice president of public affairs. "We continue to seek all available opportunities to advance this legislation toward enactment in this Congress and are hopeful for its movement. 

"Current requirements for a signer to physically be in the presence of a notary are often impractical and sometimes impossible due to social distancing constraints resulting from COVID-19, as well as other barriers, including military service or work travel," Morton said.

Advancements in digital mortgage technology, including electronic notarizations, have made it easier to manage mortgages and refinance options without ever having to leave your home. If you're interested in taking out a home loan or refinancing current loan, visit Credible to start the application online and get preapproved for multiple lenders without affecting your credit score.

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The nationwide acceptance of RON

House representatives are also adding amendments to the National Defense Authorization Act, which would allow servicemembers to use RON to sign for their mortgage while away from home. If the SECURE Act passes next year, it would spur a movement for the SECURE Act to allow all U.S. consumers to use RON, according to Bill Killmer, Mortgage Bankers Association senior vice president for legislative and political affairs.

"It's a little bit different route than real estate-related legislation has to travel, given the different committee jurisdictions, so different cast of characters and different players, but there are multiple paths here," Killmer said. "I think a discussion of this late in 2021 is gonna build momentum for potential discussion in 2022 If we don't get it across the finish line."

If you are interested in taking out a mortgage refinance to save money on your interest rate, visit Credible to choose the best lender that fits your needs. Many mortgage lenders already offer the option of RON, and you could lower your interest without having to leave your home.

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RON gains momentum

RON has been increasing in popularity over the past several years; it grew 547% from 2019 to 2020, according to a survey ALTA conducted of major vendors working in the RON space.

"Our champions in Congress, Senators Cramer (R-ND) and Warner (D-VA), as well as Representatives Dean (D-PA) and Armstrong (R-ND), are working tirelessly to pass the SECURE Notarization Act," Morton said. "Our broad coalition of title, real estate, lender and tech companies is pushing hard to ramp up our cosponsors and supporters to help in this effort. At the same time, states have increased their efforts to align with this congressional effort. Clearly, there is a need and demand for this approach across the country."

The states that currently have legalized RON include: Alaska, Arizona, Arkansas, Colorado, Florida, Hawaii, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Ohio, Oklahoma, Pennsylvania, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin and Wyoming.

Various versions of the RON bill have been presented to Congress before, but all failed to pass. Previous pushback from various states raised concerns that the RON legislation provided too much ceiling on legislation. The new act, Killmer explained, is more of a starting place, on which individual states can build.

"The bill as previously drafted was a little bit too much of a ceiling and constricted states from having the flexibility or the freedom to craft things that were unique to their needs or their particular situations in individual states," he explained. "This bill sets a floor, so it establishes minimum standards that complement existing state laws, as opposed to any perception that they were pre-empting them."

RON law is gaining ground in Congress as lobbyists gather bipartisan support. It is also increasing in popularity among consumers as the digital mortgage becomes advanced. Refinancing while mortgage rates remain below 3% could help borrowers save hundreds on their monthly mortgage payment, and it could now be more accessible than ever through an eClosing. Contact Credible to speak to a home loan expert and get all of your questions answered.

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