An excited young couple about to close on their first home walk into into the closing attorney’s office. The day before they received via secure email all of the loan documents to review and approve with their personal attorney. The closing attorney arrives without any paper, armed only with a laptop attached to a digital signature pad. The sellers are not present as they have already signed the deed and other documents electronically the day before over the secure electronic closing system. The couple quickly review the closing documents on the attorneys’ laptop, clicking an “I Agree” button acknowledging receipt and review of each document. The couple sign the digital signature pad, and the captured signatures are automatically applied to all of the signature blocks of the documents. The closing attorney electronically notarizes all documents requiring witnessing or notarization. The closing is over in 15 minutes, and the couple walks out with a CD-ROM containing all the signed closing documents and the keys to their new home. The closing attorney then electronically records the deed and mortgage with the registry of deeds, funds the loan, and makes all of the disbursements. The executed loan documents are then electronically transmitted to the lender and digitally archived.
This is not an imaginary scenario. Electronic closings (e-closings) are happening now, and they are the future of real estate conveyancing. I believe that electronic closings will change the way lenders, title companies and closing attorneys do business.
The advantages of an e-closing system are numerous and include:
- More convenient and efficient closing process for home buyers and sellers.
- Automated delivery of electronically signed loan documents directly to post closing – eliminating costs and time. Fund the loans faster, in as little as 48 hours.
- Drastically improve the efficiency of real estate transactions with reduced contract-to-closing times.
- The Green Factor: Eliminates thousands of paper documents. Buyers receive the entire signed closing package on CD.
- Reduce shipping and closing costs.
Electronic closings are very slowly moving into Massachusetts. (Attorneys, who must conduct most real estate closings in Massachusetts, are notorious late adopters of new technology). Since July, without much fanfare, the Middlesex Registry of Deeds in Cambridge, Hampden County Registry in Springfield, and Plymouth Registry of Deeds have adopted electronic recording capabilities. Hopefully, the other registries follow suit.
TitleHub Closing Services LLC, in Massachusetts, is on the cutting edge of e-closing technology.
Electronic closings are a great selling point to customers mortgage lenders, banks and credit unions. Here is a recent article about a credit union in Michigan successfully offering electronic closings.