Keeping Mortgage Closings on Track in the Midst of a Global Health Crisis
In the weeks since the World Health Organization (WHO) declared the fast-spreading coronavirus outbreak to be a global pandemic, life has changed across the country. Massive disruption to Americans’ day-to-day lives has set in. Aside from the devastating effects on human life, the outbreak has had devastating impacts on employment, business, and the supply chain, with an increasingly profound effect on the U.S. housing and mortgage markets.
While the COVID-19 crisis continues, the lives of millions of Americans have been placed on hold. Everything seems to have stopped – including the purchase of a new home or even refinancing an existing mortgage. Even as some states make the tentative first steps of attempting to open back up, general uncertainty in the market and among the public is impacting not only the willingness of homebuyers to transact, but also that of lenders to lend and retain business.
The ripple effect of this pandemic has many in the mortgage industry wondering how to move forward.
As unemployment rates continue to rise, an increasing number of homeowners may look to lower their monthly mortgage payment and/or take cash out by refinancing their loans. A surge of refinance activity took place in early March in response to historically low rates. Black Knight saw mortgage prepayment speeds – a reliable indicator of refinance activity – jump 40% month-over-month in March, the largest single-month increase in 15 years.
Because of this immense refinance boom, lenders are still sitting on a full pipeline of locks from the early March wave and are heavily focused on closing the applications they have. Many loans have not closed yet as the crisis continues to unfold. Compounding the situation is the need for social distancing and shelter-in-place requirements still in effect in many states, which render it difficult to execute traditional face-to-face closings.
But that doesn’t mean the process can’t continue to move forward. The same access powering the now remote working world can also keep loan closing pipelines forging ahead. Technology that enables complete digital closings, for example, takes the need for in-person meetings out of the equation.
The Expansion of Remote Online Notarizations
One of the obstacles to digital closings has been remote online notarizations. Until recently, only 23 states allowed the use of two-way audio-visual communication and/or online notarization to securely execute documents. Because of the COVID-19 crisis, however, a growing number of states have passed temporary emergency measures allowing for remote notarizations to take place. In fact, as of April 15, 2020, 43 states have passed legislation or enacted executive orders allowing the practice.
Additionally, in March, Senators Mark Warner (D-Va.) and Kevin Cramer (R-N.D.) introduced the “Securing and Enabling Commerce Using Remote and Electronic (SECURE) Notarization Act of 2020.” If passed, this bipartisan legislation would permit immediate nationwide use of remote online notarizations.
These steps are essential to removing a primary roadblock that prevented digital real estate transactions. Remote online notarization is no longer simply a “nice to have” functionality, or something that can be put off for future implementation. The technology is key to helping the real estate and mortgage sectors continue to operate in the COVID-19 era.
Comprehensive Fulfillment-Based Software
With today’s critical need for electronic closings, and the favorable conditions for remote notarization, now is the time for financial institutions to implement eClosing technology, so lending – particularly refinance lending – can continue unabated.
Black Knight offers a proven digital closing solution, Expedite® Close, which is quick to implement, easy-to-use and cost-effective. Our fulfillment-based software supports all forms of transactions, including complete digital mortgage closings integrated to remote notarization. This enables loans to close with the utmost social distancing – allowing buyers to remain in their home, while the closing agent is at a different location.
With Expedite Close, lenders can leverage a secure, online portal that manages workflows, includes easy document upload capabilities, and enables all participants to seamlessly interact with each other in the same online “workspace.”
The Expedite Close portal is flexible to meet the unique requirements and needs of each user, including the lender and consumer. There’s no need to change systems or processes midstream, so users can start using it quickly and easily. Additionally, the application has a fast implementation time – it can be up and running in just a matter of weeks.
With its highly intuitive interface, Expedite Close enables consumers to easily view their loan status, review the closing package in advance and e-sign important documents. Interactions between all participants are seamlessly integrated for simple, secure communication, and central access to transaction data and documents.
Black Knight also developed Expedite Close to support the settlement side of the transaction. The solution does not impact the way agents currently do business — there are no new processes for them to adopt and no new technology to purchase or install.
The Norm, Not the Exception
Expedite Close facilitates anytime, anywhere mortgage closings without the need for physical proximity of buyers, sellers or closing officers. In addition, with this technology, lenders can take advantage of a proven eClosing solution quickly and cost-effectively.
The COVID response is already heralding many changes in the way America does business that are likely to extend beyond the crisis’ end. Once it abates, eClosings may well be the norm, not the exception. By implementing a digital closing solution now during this critical time, lenders can not only help keep their business progressing, but also set up their operations for the efficient electronic closings of the future.