DO the RON RON
ISSUE 100 | VOLUME 8 | August 2021
KYLE TYLER joined Virginia-based Champion Title & Settlements 10 years ago, about the same time the state became the first in the nation to pass remote online notarization (RON).
In fact, getting the company positioned to take advantage of digital closings was why Champion Title co-owners Bill and Jackie Reilly hired Tyler.
“The first task Jackie gave me was to understand RON and how to implement it,” said Tyler, whose father owned a title company in Kansas. “The technology in the market at the time couldn’t handle RON, but about five or six years ago, we started seeing platforms being able to accommodate e-signatures.”
That’s when Champion Title launched an e-closing pilot with several credit unions offering the service to its members on equity lines of credit. All the documents but the note were signed electronically. The title company would then mail the note to the member with a FedEx slip. The customer would sign the note and mail it back. This process got the lenders’ feet wet and moved both Champion Title and its lenders closer to a RON closing.
Champion Title still handles many equity transactions this way, but has expanded to refinances and purchases. Tyler said the title company has a 50% capture rate when offering an e-closing solution out of all the title company’s refi orders that can be closed digitally.
“Before the pandemic, we started working more with other lenders on refinances using the same model,” Tyler said. “Our focus has been to get lenders to do full RON. We see the benefits of the borrower experience but also the savings on expenses.”
Survey Says
Champion Title isn’t alone in adopting digital closings. The number of title and settlement companies offering digital closings increased 228% in 2020 compared to 2019, according to ALTA’s Digital Closing Survey.
The survey of 300 title professionals showed that 46% offered digital closings in 2020 during the COVID-19 pandemic. Prior to the health crisis, a 2019 survey showed that 14% of companies offered digital closings.
“Since the onset of the pandemic, title and settlement professionals rapidly adapted their processes to meet the needs of their customers and to continue facilitating safe and secure closings,” said Diane Tomb, ALTA’s chief executive officer. “One of the title industry’s most important tools in this process has been remote online notarization.”
According to the survey, more than 5% of transactions were closed with some variation of RON and 35% of companies currently offer this type of technology to close deals.
Of those surveyed, 64% expect an increase in RON closings during 2021. Lender and consumer requests, along with access to RON providers and changes to state laws, were the top factors that would most likely alter a company’s timeline to implement technology to conduct RON closings.
ICE: Technology Helping Bring Closing Times Back Down
THE TIME TO CLOSE ON A MORTGAGE decreased for the fourth consecutive month, according to the latest report from ICE Mortgage Technology.
ICE reported the average time to close all loan types declined to 51 days during April. This was down from 54 days in October 2020. Despite the decline, the time to close is still taking nine days longer compared to 42 days in April 2020.
According to the report, it took 49 days to close on a purchase. This was down from 51 days in March, but up from 46 days in April 2020. Meanwhile, it took 53 days to close a refinance in April. This was down one day compared to March, but still up two weeks compared to April 2020.
“The decrease in average time to close is not surprising, given the increase we have observed in the adoption of digital transformation tools,” said Joe Tyrrell, president of ICE Mortgage Technology. “This trend also aligns with findings from our 2020 Borrower and Lender Insights Survey, in which both borrowers and lenders noted that digital mortgage technologies are making it faster and easier to close a mortgage loan, thus improving the overall experience for participants.”
The report also showed that April was the second consecutive month of slowdown in share of refinances among total originations. The percentage of refinances dropped to 56% of all closed loans in April, down from 63% in March. However, the percentage of purchases increased to 43% of total closed loans for the month of April, up from 36% in March, reflecting the highest percentage since August 2020.
RON was used the most in transactions involving sellers only (40%) and cash deals (23%), followed by refinances (17%) and purchases (14%).
Of those who took the survey, 52% said closing times decreased utilizing RON due to the number of documents signed ahead of time, while 43% reported cost savings. Implementing RON technology comes with a cost, however. The average expense to implement RON—including software, equipment and training—was just under $30,000 per office, according to the survey.
Tyler said that on average Champion Title’s traditional in-person closings take 30 to 35 minutes. The time to conduct an e-closing last month was roughly 14 minutes—that includes the customers logging into the platform and signing documents.
“There are a couple of things that factor into this,” Tyler added. “Signers can review their documents before the closing and basically we’re just going through and getting signatures. On a lender package that might have 40 documents, the platform we use has the functionality to sign all the documents at once.”
According to ALTA’s survey, respondents said RON provided these efficiencies:
- 37% saved staff time due to fewer errors.
- 42% reduction in staff time due to improved process.
- 43% cost savings.
- 52% decrease in closing time due to the number of documents signed ahead of closing.
On the flip side, some of the top time-consuming aspects are tagging and loading documents, communicating with customers and trouble-shooting technical issues.
Implementing RON isn’t free. Champion Title’s vendor charges a monthly fee, a seat license and a cost per transaction. However, according to Tyler, those three fees are less than a traditional notarial charge.
“We save roughly 50% on notarial fees,” he said. “And we don’t pass on the charges. We realize the benefit of not hiring a notary.”
“The silver lining with COVID was it forced lenders and tile companies to re-evaluate offering a RON or e-closing,” Tyler added. “One of the lenders we had pitched e-closing to well before the pandemic. They came back to us last year and asked what they needed to do to implement.”
ALTA’s survey showed that 62% believe a lack of lender acceptance continues to be the main barrier to RON adoption. Other top hurdles are success with other closing options (50%), insufficient testing (48%) and lack of software integrations (45%).