Digital Closings: Where are we headed?

“eClose” or “Digital Close” have been buzz words for a number of years in our industry. However, it wasn’t until the last few years that these terms have become a reality throughout our country and even in our state, so much so that the American Land Title Association created a digital closing taskforce and in the coming year will host several digital closing boot camps across the country.

Why all the hype about going digital, and how does this trend affect our industry in Mississippi? Let’s define these terms and see how you can have a say in what digital closings look like here in our great state.

Types of Digital Closings

A digital closing is defined as completing the closing process by electronically executing some or all of the loan closing documents. There are three types of digital closings.

• AHybrid Digital Closing is where all parties appear in person to “wet sign” the note and any documents that require notarization, such as the deed of trust and affidavits, and “esign” the remainder of the closing package on a tablet, phone or computer.
• AnIn-Person Digital Closing is where all parties appear in person and all documents are signed and notarized electronically on a laptop or tablet in the presence of a notary.
• Finally, aRemote Online Closing is where one or more of the parties participates in the closing using two-way audio-video technology over the Internet to electronically sign and notarize the documents on a laptop or tablet, with a notary joining via a webcam.

It should be noted that there is a distinction between “electronic notarization” and “remote online notarization.”  Like traditional notarization, electronic notarization requires signatories to appear in person before the notary. The difference between traditional notarization and electronic notarization is that the notary’s seal and electronic signature are placed on the electronic document being notarized. Unlike both traditional notarization and electronic notarization, remote online notarization (RON) allows signatories to appear before the notary via a recorded two-way audio-video conference over the Internet and the signatory’s identity is verified with photo ID and knowledge-based authentication technology.

At present, over 36 states have adopted laws expressly authorizing electronic notarization and some 22 states have adopted Remote Online Notary (RON) laws. Some 19 additional states have pending e-notary and remote notary bills in place for enactment in 2020.

While Mississippi currently has laws in place to authorize electronic signatures, we do not have laws in place that authorize electronic notarization or remote online notarization. Mississippi must adopt laws that allow either an in-person digital closing or a remote online notary digital closing to be performed.

A Digital Revolution

Technology is rapidly changing the way real estate is sold and the way consumers interact and shop. In 2016, Quicken Loans launched Rocket Mortgage and changed the mortgage industry by creating a digital platform that focused on user experience not small interest rate differences. In the last few years, the technology has allowed this digital closing revolution to become a true reality.

Speed (less than 15 minutes per closing, on average), convenience (no more FedEx drop-offs for the title company and less time taken off work for the consumer), security (VPN secured portals) and quality of the closing are the main driving forces of the digital closing revolution, not to mention ever-changing consumer and lender demands. This trend is clearly gaining speed in other states, but what about our title industry in Mississippi?

Mississippi’s stance

The first residential digital hybrid closing in Mississippi was performed in May 2018. Because we currently have no electronic notarization laws in our state, a hybrid closing is all we can offer to our clients today. During the 2018-2019 legislative year, the Land Title Association of Mississippi supported an electronic notarization bill, proposed by the Mississippi Secretary of State’s office, that would authorize electronic notarization (but not remote online notarization) and allow an in-person digital closing. Unfortunately, that bill died in committee.

In 2020, the Land Title Association of Mississippi will again bring the electronic notarization bill (formerly HB 777) forward and asks for your support in helping us get this passed through the state legislature and signed into law by Governor Reeves. For more information on HB 777, see the following prior posts:

SUPPORT: HB 777 – Revised Mississippi Law on Notarial Acts

HB 777 – Revised Mississippi Law on Notarial Acts

For more information on how to prepare your office for digital closings, please visit https://www.alta.org/advocacy/online-notarization.cfm