Paperless mortgages, where all the documents are signed, notarized and executed in digital form, have been around for many years. But the process took a historic new step recently when a Chicago couple closed a refi remotely, without being in the same room as the Notary or loan officer.
The couple simply used their MacBook to log onto a website and sign all the documents, which were notarized online, using webcam technology, according to news reports.
Proof of concept
The $290,000 loan was originated by Michigan-based United Wholesale Mortgage, which used a technology platform provided by online Notary service, Notarize, headquartered in Arlington, Virginia, to close the mortgage. And it was expected to be sold to secondary mortgage company Freddie Mac.
“The days of being bombarded with reams of paper at the closing table are over,” said Mat Ishbia, President and CEO of UWM. “Giving borrowers the ability to close a loan whenever they want, whether it's at 11 a.m. or 9 p.m., will have an incredible impact on the entire experience.”
Online closings could allow mortgages to be delivered to an investor in as little as one day rather than the 29 days it takes on average now, said Samuel E. Oliver III, Vice President of Vice President of Strategic Delivery for Freddie Mac.
Freddie Mac and Fannie Mae — the two main purchasers of mortgages on the secondary market — have both endorsed webcam notarization as a way to streamline the lending process and improve the borrower experience.
The next step
To date, electronic closings involving in-person meetings between the borrower and Notary Signing Agent have been slow to take off. Of the nearly 10 million mortgages closed in 2016, only about 5,000 were closed electronically.
It is unclear how quickly online mortgage closings will take off. Four other lenders besides UWM — Lenda, Mid America Mortgage, Eagle Home Mortgage and WEI — will be using the Notarize platform to offer them to borrowers in Washington, Virginia, Illinois and Montana.
“The industry takes a big step forward” with the closing of the first online mortgage, Oliver said. “With the vast majority of counties now accommodating eRecording of mortgages and more states adopting electronic notarization, we’re seeing a transformation across the industry. Freddie Mac intends to continue to support the digital mortgage space.”
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