Closing solutions for purchases, refinances that eliminate need for in-person document signing through duration of COVID-19 crisis

Fannie & Freddie approve use of remote online notarization for conforming loans to designate Power of Attorney who can provide wet-ink signatures on consumer’s behalf

Federal Title & Escrow Co., an independently owned title company in the Capital Region with a reputation of using technology to deliver a seamless closing experience, today announced it has devised a safer solution for homebuyers and refinancing homeowners needing to close transactions during the COVID-19 pandemic.

Recognizing that many states, including Maryland, Virginia and the District of Columbia, have issued stay-at-home orders to help limit the spread of coronavirus and the strain on the health care system, Fannie Mae and Freddie Mac have issued guidance for mortgage lenders that permits consumers to designate a Power of Attorney through remote online notarization for all conforming loans. The POA can be an employee of the title company handling the closing who can then sign essential closing documents on the consumer’s behalf.

“This really is the best solution,” said Joe Gentile, president of Federal Title. “We have diligently advocated on behalf of our employees and our customers for a remote work-around because it eliminates the need for in-person interaction during this crisis, and we are pleased to receive the support of Fannie and Freddie.”

With remote online notarization, known in the industry as RON, consumers can log into a virtual signing room from the safety of their homes. Signers first verify their identity through knowledge-based authentication, which includes questions that are similar to the ones asked when applying for a home loan or credit card online, such as addresses where they have lived or details of previous loans. They then verify their identification through the web cam on their smart phone, tablet or computer.

Once the verification steps are successfully completed, the signer enters a virtual signing room where he or she may grant an Attorney-in-Fact POA to a designated employee at the title company or an independent attorney. This type of POA is only valid to complete a specific purchase or refinance transaction for a specified property.

As Attorney-in-Fact POA, the designated employee can then provide a wet-ink signature on the essential loan documents, which satisfies the requirements of banks and the secondary market, and complete the closing transaction.

RON is a technology that’s been around for years and is allowed in Virginia and 21 other states. Maryland passed legislation allowing for RON that was due to take effect in October, but Maryland Gov. Larry Hogan has issued an Executive Order that took effect March 30, temporarily authorizing remote closings for the duration of the COVID-19 emergency.

An emergency legislative solution is currently in the works in the D.C. Council and could be passed as soon as next week.

The pandemic has helped to push mortgage rates down to near-historically low levels, and the demand for refinancing in particular has soared as Americans look to lower monthly payments. The logistics of accommodating closings in a world of social distancing has been challenging and at times nerve-wracking.

“We’ve received hundreds of calls from concerned real estate agents and consumers, who are demanding a safer alternative,” Gentile said. “People are scared to leave the safety of their homes and many are nervous about inviting mobile notaries into their homes. We are improvising in this crisis to help them as best we can.”

While consumers are accustomed to applying for home loans and shopping for real estate online, in the majority of states the home loan closing process still requires signers to sign the promissory note and deed in the presence of a licensed notary.

Several third-party vendors offer RON closing-platforms that include security measures to verify the signer’s identity and identification before he or she is able to proceed through the closing document-signing process. RON has the added benefit of eliminating the risk of a missing signature, initial or date, which can sometimes delay a closing and require a signer to return for a second in-person meeting.

Local governments that are hurting from lost revenues and record jobless claims can also benefit from the permitting of RON closings because every home loan closing requires the payment of transfer and recordation taxes. In addition, real estate purchases produce new homeowners who pay property taxes.

“We have weathered many storms throughout our company’s 25 years of service to the Capital Region,” Gentile said. “We’ve never been prouder of the professionalism and all-hands-on-deck effort of our team. And we are grateful for the support from bankers and investors that allows us to provide some respite to homeowners, buyers, agents and lenders during this unprecedented public health crisis.”

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