The First-Ever All-Digital Mortgage Closing
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What is the main topic discussed in this episode?
This is Your Money Matters from The Wall Street Journal.
Welcome to Your Money Matters. I'm Charlie Turner in New York. If you've bought a home in the past, chances are that the mortgage closing involved sitting in a room with other parties to the transaction. There's also been a big rise in electronic mortgages, which are paperless. But last month saw a digital first, the first fully remote electronic closing from start to finish.
What was notable about the first fully remote all-digital mortgage closing?
Let's talk about this new frontier for mortgage closings with Wall Street Journal columnist Robin Friedman. Robin, e-mortgages have been around for years, but why exactly is this mortgage closing from last month different?
You're right, Charlie. E-mortgages have been around for years. E-mortgages are electronic or paperless mortgages. In the past, though, closings of these e-mortgages were done in one of two ways. One way borrowers would sign closing documents digitally by using a tablet and a stylus rather than pen and ink.
How did e-mortgages previously handle signatures and notarization?
And in those early closings, a notary public was still physically present in the room to notarize everything, even though the documents were being digitally signed. Other closings in the past took place remotely where the borrowers were in one place and they used an online notary public. But in those cases, not all of the documents were signed digitally. There were a few documents, usually the note that were wet signed, which means signed in ink. The closing that took place on July 28th, though, was completely digital and remote. The borrower signed every document digitally on a computer, and the notary public was actually in a different state. This apparently was the first time my sources were aware of this happening.
How was the July 28 fully digital closing executed across three states?
Actually, the parties were in three different states, weren't they? The couple was in the Chicago area. I think the lender was from Michigan and the notary public was from Virginia.
Exactly. It's pretty cool if you think about it. They were all connected via a webcam on a MacBook laptop. It was a really interesting process because in the past, notary publics were required to be physically in the room with you to authenticate your identity. But in this case, the borrowers kind of authenticated themselves digitally and by answering questions that only they would know the answers to. Questions like, what kind of a car did you drive 20 years ago?
What identity-verification steps did borrowers use during the online closing?
Or give us the address, identify the address of one of your adult children. After the borrowers authenticated their identities to the notary, they then went through a process where they held up their driver's licenses to the webcam to further prove who they were. And then they actually signed their names with pen and ink on a piece of paper and held up that signature to the webcam so that the signature could be captured digitally. And they actually used that digital signature to sign all the closing documents, which they effected by just clicking on the laptop's touchpad. And every time they clicked, their signature appeared on the digital document.
I'm speaking with Wall Street Journal columnist Robin Friedman, and you're listening to Your Money Matters. Thanks for listening, everyone. Robin, I assume this is a trend that's going to accelerate. Which companies offer this digital mortgage closing technology, starting with the company that worked on this particular closing?
Yeah, the one that did this particular company was a company called Notarize. There are other companies that are involved with this technology and are about to start jumping on the bandwagon to do these digital closings. The advantages of these digital closings are pretty amazing. For example, a borrower who might be physically challenged who can't leave their house can now close a loan right from their kitchen table.
Which companies power digital mortgage closings and what are the consumer benefits?
Or a member of the military who maybe is deployed in a foreign country can just log on to a laptop and purchase a home or refinance a mortgage. In the past, they would have to drive to a military base or an American embassy or consulate in order to find a notary who could notarize an American document.
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Chapters
7 chapters
1
What is the main topic discussed in this episode?
0:02–0:28
2
What was notable about the first fully remote all-digital mortgage closing?
0:28–1:03
3
How did e-mortgages previously handle signatures and notarization?
1:03–1:49
4
How was the July 28 fully digital closing executed across three states?
1:49–2:25
5
What identity-verification steps did borrowers use during the online closing?
2:25–3:47
6
Which companies power digital mortgage closings and what are the consumer benefits?
3:47–4:44
7
What are the limitations, legal concerns, and who might not adopt digital closings yet?
4:44–6:03
Speakers
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