09/28/2022

RON Use Projected to Increase in 2022

Companies currently offering remote online notarizations (RON) expect these types of closings to increase in 2022, according to ALTA’s latest 2022 Digital Closing Survey.

The survey of 390 title professionals showed that 62% of companies offering RON believe this offering will increase over the next year, while a third reported they don’t anticipate any change.

Meanwhile, according to the 2022 survey, the number of companies offering RON decreased to 30% in 2021 compared to 35% who indicated their company offered RON in 2020. Prior to the health crisis, a 2019 survey showed that 14% of companies offered digital closings three years ago.

“During the COVID-19 pandemic, the title and settlement professionals responded during historic mortgage origination volume to meet customer needs and deliver digital closings to help keep everyone as safe as possible,” said Diane Tomb, ALTA’s chief executive officer. “The desire for digital closings remains, and despite the drop in companies offering RON in 2021 from 2020, the percentage of transactions completed using this closing option held steady at 5%. This is a service industry, and our members will always and provide the customers’ preferred closing method, whether it is online, in person or hybrid in some fashion.”

The survey showed that 77% surveyed believe requests from lenders, real estate agents and consumers to use RON would speed up adoption. Nearly half of title companies offering RON actively market it to customers, but it is not viewed as a competitive issue by those not offering the option. Companies are using various channels to market RON capabilities, including social media, website, direct emails, print ads and verbal communication to customers and clients.

Regarding efficiencies and cost savings, survey results show responses remains fairly split as the industry continues to adopt and get more familiar with the technology.

Based on your experience in implementing RON, do you agree or disagree with the following statements?

Closing survey

Currently, 42 states have enacted laws allowing permanent access to remote online notarization. The ALTA-supported Securing and Enabling Commerce Using Remote and Electronic (SECURE) Notarization Act (H.R. 3962) was passed by the U.S. House of Representatives earlier this year. A bipartisan companion bill has been introduced in the Senate. The bill would permit immediate nationwide use of RON, create national minimum standards for its use and provide certainty for the interstate recognition of RON.

Additional survey highlights:

  • Survey results show that 75% of residential transactions closed via RON were for cash and seller-side only deals. This percentage was nearly the same as results from the 2021 survey.
  • Of companies that offer RON, 64% utilize one RON platform. This is a significant change as more than 50% in the 2021 survey indicated they used two or more vendors. The results indicate that companies are identifying preferred RON platforms to work with.
  • 65% of customers have a positive perception of RON closings. This is up from 60% of customers who had a positive perception of RON closings the prior year.
  • 78% of those surveyed said they are training a team of experts versus training their entire staff to support RON closings. This is up from the 2021 survey, where 64% indicated they trained a team of experts.
  • Also highlighting that companies are focusing on having RON experts on staff, the survey showed that companies employ fewer RON notaries. 87% of companies that offer RON have one to five RON notaries on staff, compared to 59% in 2020. Conversely, this year’s survey showed that only 4% of respondents employ more than 25 RON notaries. This compared to 12% that had more than 25 notaries who could perform RON on staff in 2020.

09/22/2022

Fannie Mae: Housing Expected to Cool Further as Mortgage Rates Move Higher

Economic growth is projected to resume in the second half of 2022, but the combination of high inflation, monetary policy tightening and a slowing housing market is likely to tip the economy into a modest recession in the new year, according to the latest Fannie Mae economic forecast.

Due largely to the higher mortgage rate environment, Fannie Mae lowered its forecast for single-family total home sales in 2022 and 2023 to 5.71 million and 4.98 million, which would represent declines of 17.2% and 12.8%, respectively. While multifamily construction remains strong, Fannie Mae also revised downward its multifamily starts forecast for 2022 to 542,000 units but continues to expect demand for rental units to remain strong because of the single-family market’s relative unaffordability.

“In our view, the recent interest rate surge is due to the market’s recognition of two critical factors: that inflation is indeed not transitory, and that, to tame it, the Federal Reserve will need to be resolute, even at the risk of possible recession,” said Doug Duncan, Fannie Mae’s chief economist. “Inflation’s entrenchment—and the policy action likely required of the Fed—confirms the expectation in our forecast of a moderate recession beginning in the first quarter of 2023. That said, the rise in rates is having the Fed’s desired effect on housing, as house price growth began to slow in June. We expect the slowdown in housing to continue through 2023 as affordability constraints mount for potential homebuyers, and considering, too, that refinance activity has been significantly curtailed by the rise in mortgage rates.”

The Federal Reserve on Sept. 21 raised benchmark interest rates by another three-quarters of a percentage point and indicated it will keep hiking well above the current level. In its quest to bring down inflation running near its highest levels since the early 1980s, the central bank took its federal funds rate up to a range of 3%-3.25%, the highest it has been since early 2008, following the third consecutive 0.75 percentage point move.

Home Sales

Existing home sales fell 5.9% in July to an annualized pace of 4.81 million, in line with our expectations. On an annual basis, sales were down 20.2 percent. With the exception of the initial COVID shutdowns in early 2020 and hurricane-related disruptions in 2015, this was the slowest pace of sales since 2014. Mortgage application data point to further sales declines in the near term, and with mortgage rates rising again, Fannie Mae downwardly revised its existing home sales outlook through 2023. It now projects 2022 total year existing sales to decline 16.5% from 2021, followed by a further decline of 13.3% in 2023. We will release our quarterly forecast update of the Fannie Mae Home Price Index in October.

SEPT Home Sales
Source: Fannie Mae

New home sales and construction continue to come in weaker than anticipated. New home sales fell 12.6% in July and were down 32.3% from a year prior. The temporary pull back in mortgage rates last month may lead to some stabilization in the August new home sales number, but Fannie Mae expects further softening moving forward. At the current sales pace, the months’ supply of new homes on the market was 10.9 in July, up from 9.2 in June. This was the highest level since 2009. To this point, homebuilders do not appear to be offering incentives sufficient to move growing inventories, however, many publicly traded homebuilders continued to report historically elevated gross margins through the second quarter, suggesting room for greater discounting in the future. Homebuilders may have been reluctant to do so until recently as supply chain bottlenecks and labor shortages have resulted in an elevated share of homes for sale still being under construction compared to the historical norm. Currently, comparatively few finished homes are on the market, which may limit the need for builders to price more aggressively. However, over the past couple months, this number has begun to move upward, suggesting homebuilders may soon offer greater price concessions to drive sales.

Econoutlook092022d
Source: Fannie Mae

Multifamily housing construction continues to be strong. However, Fannie Mae revised downward its forecast for multifamily starts in 2023, due to a higher interest rate outlook. Fannie Mae expects activity will slow in 2023 along with a slowing economy, but demand for rental units should remain comparatively strong. As single-family home purchase affordability reaches lows not seen since 2006, many households will likely remain in a rental unit longer than they otherwise would, according to Fannie Mae.

Mortgage Originations

Fannie Mae’s forecast for 2022 purchase volumes remains at $1.7 trillion, essentially unchanged from last month. It’s now expected that purchase volumes will fall about 1.5% in 2023 to just under $1.7 trillion, a downward revision of $17 billion from last month’s forecast.

In the refinance market, higher mortgage rates have significantly lowered the expected market size for 2022 and beyond. Fannie Mae projects 2022 volumes to total $731 billion, $38 billion lower than last month’s forecast. Fannie Mae expects refinance volume to decrease further in 2023 to reach $490 billion, down $102 billion from last month’s forecast.

08/25/2022

ALTA Good Deeds Foundation Helps Deliver Personalized Bedroom for 7-year-old Cancer Survivor

BedroomA grant from ALTA’s Good Deeds Foundation (AGDF) helped make a new bedroom for a young girl in Massachusetts a reality.

In March, the AGDF awarded a $6,000 grant to Room to Dream Foundation, which is dedicated to helping children with chronic illnesses. The Room to Dream Foundation recently stepped in using the AGDF donation to give Ellie, a 7-year-old cancer survivor, a new personalized bedroom.

For the past two years, Ellie has undergone a treatment plan for Acute Lymphoblastic Leukemia, a type of blood and bone cancer. She is now in remission.

The Room to Dream Foundation looks to create healing environments in bedrooms for children facing chronic illnesses. The remodel features two ways for Ellie to get into her bed—either by ladder or a rock wall.

The Room to Dream Foundation was one of 20 organizations that received $6,000 grants from the AGDF. To date, the AGDF has raised nearly $1 million and given $428,000 to 70 organizations.

The Foundation will announce its next round of grants during ALTA ONE, which will be held Oct. 11-14 in San Diego.

Click here to make a donation. 

08/11/2022

Good Deeds: Fathers Walk for Families

TJS_9359
Glen Stout and his dog, Stanley Guido, with Daniel Stenz, the father of a child Stout met at the Akron Ronald McDonald House.

Glen Stout wasn’t relaxing this past Father’s Day. Doma’s assistant vice president and regional agency manager walked 33 miles in support of fathers and families of ill and injured children.

To date, Stout has raised nearly $11,000 for the Ronald McDonald House Charities of Northeast Ohio. The walk from the Akron to the Cleveland Ronald McDonald House took nearly 12 hours.

“When you see what these families are going through, it puts your own challenges in perspective,” Stout said. “What was most amazing about the walk for me was that the first person to arrive at the Akron Ronald McDonald House at 7:30 in the morning was Craig Wilson, CEO of Ronald McDonald House Charities of Northeast Ohio.”

The trek also was meant to raise awareness for Ronald McDonald House Charities’ upcoming “2022 Steps,” which will be held Aug. 28.

Ronald McDonald House Charities of Northeast Ohio was one of the initial organizations to receive a grant from the ALTA Good Deeds Foundation, which is nearly $1 million in donations since being formed in 2020.

Share Your #GoodDeeds

ALTA wants to know how your company supports your communities and local markets. Send your stories and photos to communications@alta.org.

08/09/2022

Survey: Consumers Believe Time to Close Should Be Shorter

ProcessConsumers are placing great value on speed across the mortgage process, but especially during closing, according to a survey conducted by Arizent.

The survey showed three weeks is the upper limit of how long many consumers feel a mortgage transaction should take. Nearly three fourths said they think the process should take no more than 21 days from initiation of the application to closing, with 64% indicating one to three weeks is a sufficient amount of time, and 10% saying it should occur in even less time.

The survey group consisted of 503 respondents who took out a new purchase mortgage and 511 participants who refinanced an existing loan within the previous 12 months. The respondents were spread evenly across baby boomers, Generation X and millennials.

The type of mortgage made little difference, with an equal share (64%) of purchase and refinance customers agreeing transactions should close within a three-week window. According to the survey, consumers going through the mortgage process for the first time with their particular type of transaction are even more likely to believe it should proceed more rapidly than those who had obtained a mortgage previously.

These expectations deviated from reality. According to ICE Mortgage Technology, the average time to close a purchase was 51 days, while it took 49 days to close a refinance.

Overall, 49% of borrowers said faster closings would have resulted in a better experience for them, far outpacing other factors, such as paperless transactions at 29% and enhanced technological efficiencies at 21%.

SpeedThe Arizent survey showed that the younger the consumer, the more likely they are to expect to close in three weeks or less. Only 52% of Generation X respondents were satisfied with the amount of time their transactions took to close. This is a possible reflection of those age groups growing up accustomed to a digital world where business decisions come quickly and orders are frequently turned around with just a few taps. On the flip side, 64% of baby boomers said they are very satisfied with the amount of time their transactions took to close.

Much of the time involved in mortgage processing is baked into the process of a complicated, highly regulated transaction, with delays sometimes inevitable to ensure that all parties comprehend the detail of the transaction, according to Woody Fowles, vice president, operations services at Mphasis Digital Risk, a technology-based originations and compliance solutions provider.

The industry could increase satisfaction surrounding closing times by keeping customers better informed about the intricacies involved.

“There’s a lot of scrutiny that’s around that to make sure the customers understand what they’re signing,” Fowles said. “You have to educate the first-time homebuyer a little bit. Part of their frustration is they don’t understand the regulations around what to do.”

For the most part, consumers are embracing mortgage technology at all stages of the loan process and are looking to streamline transmission of information sent to lenders if it results in faster closings. They also are willing to share and grant electronic access to personal identifiable information, despite the cyber risks.

“The lender of the future has to be nimble, has to automate, has to be able to anticipate,” said Matthew Moosaroparambil, director of banking, insurance and capital markets at management consulting firm Guidehouse.

07/12/2022

Alert: Spoofed Email Appears to Come from ALTA

Spoofed Email- WL

ALTA is alerting its members to delete a phishing email with the subject line “ALTA Secure Closing Policy" 

Like title and settlement companies, email from ALTA staff can be spoofed. In the latest scheme, a phishing email appears to come from Whitney Larman, asking recipients to fill out the attached form, sign it and send it back. 

Do not open the attachment or click any links in the email. In addition, you should contact your IT department and block the domain of the email or the IP address that it is coming from. Once the scammers catch on, they will likely switch email domains.

It's recommended to use extra precaution when reviewing email on smart phones as it can be difficult to see the actual email address behind the sender's name.

You can be sure that your information is safe. This is a phishing email and our system was not breached.

06/30/2022

ALTA Welcomes New Members

Membership map

ALTA is pleased to announce new and associate members, as well as real estate attorneys, who have recently joined ALTA. Over the past month, ALTA gained 49 new members, including 30 title agencies and 13 real estate attorneys. So far in 2022, ALTA has 6,111 member companies. Read on to view a map of membership.

Not a member? Click here to join today.

You can check out member benefits here.

06/14/2022

FHFA, GSEs Release Equitable Housing Finance Plans

The Federal Housing Finance Agency on June 8 offered details of the government-sponsored enterprises’ (GSEs) Equitable Housing Finance Plans for 2022-2024.

“The Equitable Housing Finance Plans represent a commitment to sustainable approaches that will meaningfully address the racial and ethnic disparities in homeownership and wealth that have persisted for generations,” said FHFA Acting Director Sandra Thompson. “We look forward to working with the Enterprises, lenders and other housing industry participants to further develop the ideas described in these plans.”

In September 2021, FHFA instructed Fannie Mae and Freddie Mac to develop Equitable Housing Finance Plans that identify and address barriers to sustainable housing opportunities, and include the Enterprises’ goals and action plans to advance equity in housing finance for the next three years. In June, FHFA released the GSEs’ Equitable Housing Finance Plans for 2022-2024.

The 2022-2024 plan activities, which will be updated annually, address barriers experienced by renters, aspiring homeowners, and current homeowners—particularly in Black and Latino communities. These activities include but are not limited to:

  • Consumer education initiatives for renters and homeowners;
  • Credit reporting to help tenants build credit profiles and enable better access to financial services;
  • Expanding counseling services to support housing stability;
  • Deploying technology to improve access to sustainable credit and fair home appraisals; and
  • Special Purpose Credit Programs to address barriers to sustainable homeownership.

“ALTA and its members support expanding affordable and sustainable homeownership opportunities for more Americans across the country,” said Diane Tomb, ALTA’s chief executive officer. “The title and settlement services industry remains committed to strengthening communities, while protecting property rights for all consumers. We look forward to continued engagement with the FHFA, as well as Fannie Mae and Freddie Mac, in a collaborative, transparent and informed process to help provide equitable access to housing opportunities in underserved communities. We appreciate the GSEs’ intent to work with the industry closely throughout the continued development and implementation of its respective plans.”

Fannie Mae

In Fannie Mae’s plan, the GSE reported one of its action items is to execute a special-purpose credit program (SPCP) to support the reduction of borrower closing costs for Black homebuyers via appraisal products, appraisal reimbursements and/or title products. Congress added a provision to the Equal Credit Opportunity Act (ECOA) that allows lenders to create SPCPs that permit loan products tailored to protected groups that might not otherwise meet the lender’s typical standards for eligibility.

  • Description: Construct an offering in connection with one or more of our SPCP pilots to test the use of appraisal reimbursements, appraisal products or title products in certain target geographic markets to reduce borrower closing costs for Black homebuyers.

In another action item, Fannie Mae said it plans to document borrower closing costs and identify opportunities to alleviate the disproportionate closing cost burden on borrowers of color. In its plan, Fannie Mae cited its closing costs study that found black homeowners are more likely to pay higher closing costs and experience biases in the appraisal process that could lead to under-valuation.

Three initiatives are planned for 2022. Actions beyond 2022 will depend on the impact these initiatives have but could include changes to some or all of these initiatives, development of additional initiatives to reduce closing costs, or the decision to not make further investments in reducing closing costs.

Targets and Outcomes:

  1. Closing Cost Research: Initial closing cost research, which includes analysis of closing costs paid by different racial and ethnic groups, was published in December 2021. Additional research on how closing costs impact people of color and low-income populations will be published in 2022. Fannie Mae believes publishing this research will build awareness of disparities in closing costs across racial and ethnic lines, and that stakeholders will be more compelled to act to remedy these disparities once they are measured and documented. Fannie Mae will evaluate stakeholder interest and success by measuring engagement with the research, as measured quantitatively by views/downloads of the research and qualitatively by industry interest in and discussion of the findings.
  2. Attorney Opinion Letter: Update the Selling Guide to encourage lenders to allow borrowers the option to utilize an attorney opinion letter in lieu of traditional title insurance more often, which may be cheaper than traditional title options. Fannie Mae believes more common use of attorney opinions could lead to savings for some borrowers. Fannie Mae said it is looking into how it will be able to utilize internal and/or external data to track usage of this option.
  3. Title Insurance Cost Reduction: Pilot options to reduce title insurance costs to borrowers. Potential options could include coordination of bulk purchase of title insurance, with savings passed to consumers, or a subsidy for qualifying buyers. While the specifics will vary depending on the pilot, Fannie Mae will evaluate success based on the number of borrowers who leverage the pilot benefits and the estimated average savings for each of these borrowers.

Freddie Mac

In its plan, Freddie Mac said title insurance is a significant part of the borrower’s cash-to-close. “The policy premium is usually the largest closing cost, and these costs are disproportionately felt by Black and Latino borrowers,” according to the GSE. Additionally, Freddie Mac said it requires title “policies to be delivered with every mortgage,” however, the GSE said policies are “expensive” and “most consumers do not shop for lower rates.” Freddie Mac also said refinances present less risk “as major title problems should have been cured at purchase and the incremental risk of title defects arising between purchase and refinance is small.”

Freddie Mac said it is working with the industry to determine how it might lower the cost of title insurance, especially for low-balance loans.

Freddie_goals

Pilot Programs

Additionally, FHFA has created a pilot transparency framework for the GSEs to accompany these plans. This framework requires each Enterprise to publish and maintain a list of pilots and test-and-learn activities on its public website. The framework will provide accountability in determining whether such activities are working to address the disparities identified in the Equitable Housing Finance Plans.

What’s ALTA Doing?

ALTA staff and several Board members have met with both GSEs and the FHFA. ALTA shared the industry’s perspective on the plans and asked several questions about their closing cost analysis. ALTA also highlighted the various risks, particularly to lenders, associated with attorney opinion letters in lieu of title insurance, even in limited circumstances.

06/07/2022

ALTA Continues to Educate Consumers About Title Insurance During Homeownership Month

For many Americans, a home is more than just a residence.  It is a place that instills a sense of pride, security, and comfort that, no matter what challenges in life arise, they have somewhere to go and call their own.

National Homeownership Month in June provides an opportunity to amplify the benefits of homeownership and the work that remains to achieve fairness and equity in access to affordable homeownership for all Americans who seek it. This year mark’s the 20th anniversary of National Homeownership Month.

This also is a great time to help your customers understand the benefits of title insurance and how it protects their property rights.

ALTA continues to promote the benefits of title insurance through a digital campaign. Below are some of the examples:

Industry education

The campaign also features the following video, which explains that land title professionals protect more than a person’s home. They protect communities by giving back, hiring locally, volunteering on boards and working to keep neighborhoods safe and secure. The video ends with the tagline, “Our title is, and always has been protection.”

Through the Homeowner Outreach Program, ALTA provides exclusive resources—including PPTs, blogs, educational flyers, print and digital ads, infographics and posters — to help ALTA members explain title insurance and the closing process.

Here are just a few blog posts and videos that you can use to educate your customers.

Blog content

Videos

How do you tell your story? Email your examples to communications@alta.org.

Federal Efforts

In alignment with the Biden-Harris Administration’s commitment to enabling more households to enjoy the stability and wealth creation that is made possible through homeownership, throughout the month, the U.S. Department of Housing and Urban Development (HUD) and the Federal Housing Administration (FHA) will hold a series of events and engagements to amplify the Department’s efforts to support potential homeowners, increase housing supply and affordability, and ensure sustainability for existing homeowners.

“Each June, we mark National Homeownership Month, a time for HUD and FHA to renew our commitment to supporting individuals and families in achieving and sustaining homeownership,” said HUD Secretary Marcia Fudge. “Homeownership is a key source of wealth building and is often the foundation for one’s life. Unfortunately, the lack of affordable housing supply has placed homeownership out of reach for many people with low and moderate incomes, first-time homebuyers, and communities that have been historically and systemically locked out of homeownership. The Biden-Harris Administration has put forth the most comprehensive effort to close the housing supply shortfall in history, and we will continue to take action to address the barriers families are facing in today’s housing market.”

HUD continues to prioritize FHA’s mission through:

  • Taking Action to Increase Housing Supply and Access to Affordable Housing. Under the leadership of President Biden and Secretary Fudge, HUD has taken action to ease the burden of housing costs over time by boosting the supply of quality housing in every community. In May, the Biden-Harris Administration announced an Action Plan to Ease the Burden of Housing Costs. The Plan is a set of legislative and administrative steps aimed at closing the housing supply gap within the next five years. HUD is also making more single-family homes available to individuals, families, and non-profit organizations by prioritizing homeownership and sale to non-profits when disposing of HUD-held assets.
  • Launched a Whole-of-Government Plan for Wide-Ranging Reforms to Advance Equity in Home Appraisals. In March, HUD delivered the Interagency Task Force on Property Appraisal and Valuation Equity (PAVE) Action Plan to President Biden. The PAVE Action Plan is aimed squarely at dismantling racial bias in the home lending and appraisal process and promoting generational wealth creation through homeownership. This Action Plan, when enacted, represents the most wide-ranging set of reforms ever put forward to advance equity in the home appraisal process. The PAVE Task Force, co-chaired by Secretary Fudge and White House Domestic Policy Advisor Susan Rice, is the first-of-its-kind interagency initiative to address racial bias in home appraisals and includes senior leaders from thirteen Cabinet and independent agencies and components of the Executive Office of the President.
  • Serving More First-time Homebuyers and Communities of Color. In November, FHA announced a historically strong Mutual Mortgage Insurance Fund Report showing that, in addition to its emphasis on delivering relief options to homeowners financially impacted by the COVID-19 pandemic, FHA continued to deliver on its mission of enabling homeownership for first-time homebuyers, people with low and moderate incomes, and households of color. The percentage of first-time homebuyers using FHA insurance reached a new high, the share of FHA-insured mortgages made to minority borrowers reached almost 42 percent of all FHA forward mortgage insurance endorsements. According to 2020 HMDA data, FHA served double the percentage of Black and Hispanic borrowers compared to the rest of the mortgage market.
  • Preventing Foreclosures for Borrowers Affected by the COVID-19 Pandemic. HUD and FHA continue to assist borrowers who missed mortgages payments because of COVID-19. For some time now, FHA has offered a number of mortgage options. In April, FHA added a new 40-year mortgage modification option for mortgage servicers to use in conjunction with its partial claim option to assist additional borrowers who are behind on their mortgage payments. As a result, FHA’s seriously delinquent rate has significantly decreased from a high of 11.90%, or 942,000 mortgages, at the end of November 2020 to 5.23%, or 380,000 mortgages, as of April 2022. This improvement is due in large part to the effectiveness of FHA options. Since January 2021 alone, more than one million borrowers have exited forbearance. From January 2021 through April 2022, FHA servicers have completed almost 1.3 million COVID-19 home retention actions through loss mitigation options.
  • Removing Barriers to Homeownership for Those with Student Loan Debt. Last summer, FHA updated its policy on student loan monthly payment calculations to remove barriers and provide more access to affordable single-family FHA-insured mortgage financing for creditworthy individuals with student loan debt, which has disproportionate impact on communities of color. The new policy bases the monthly payment on the actual student loan payment a borrower pays, rather than a percentage of the balance, more closely aligning FHA policies with industry standards.
  • Affirmed the Use of Special Purpose Credit Programs. More than 50 years after the passage of the Fair Housing Act, access to security and wealth provided by homeownership remains persistently unequal. Part of the solution to that problem has to be for lenders and others to find creative ways to extend credit to communities that desperately need it to start building equity. In December, HUD made clear that the use of certain Special Purpose Credit Programs (SPCPs) to help address inequities in barriers to credit and homeownership is lawful under the Fair Housing Act. A Special Purpose Credit Program is a tool that allows lenders to meet the specific needs of historically disadvantaged groups. On January 26, Secretary Fudge convened a virtual meeting with the Consumer Financial Protection Bureau, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, Federal Reserve, Federal Housing Finance Agency (FHFA), and National Credit Union Association to discuss the roles of HUD and partner agencies in expanding homeownership opportunities for those who have been and continue to be systemically excluded from the housing and credit markets. The group discussed future steps to encourage use of SPCPs as a means of addressing persistent disparities in access to homeownership.
  • Setting the Stage for Increased Fair Housing and Lending Enforcement and Access. Last summer, HUD entered into a first-of-its-kind memorandum of understanding (MOU) with FHFA, marking a historic collaboration on fair housing and fair lending enforcement and oversight engagement with the FHFA-regulated entities including Fannie Mae, Freddie Mac, and the Federal Home Loan Banks. This comprehensive effort will ensure deeper collaboration on fair housing investigations and enable data sharing to help strengthen and affirmatively further fair housing for the mortgage industry.

05/26/2022

Digital Closings Using RON Puts ‘Consumers in the Driver’s Seat’

MicrosoftTeams-image (10)
ALTA member Michael O’Neal, vice president of corporate underwriting
at First American Title Insurance Co.

Remote online notarization benefits and protects consumers by offering them safe and convenient options for executing legal documents online, ALTA member Michael O’Neal said during a virtual legislative hearing May 26 before the U.S. House Energy and Commerce Subcommittee on Consumer Protection and Commerce.

The subcommittee is considering the ALTA-supported Securing and Enabling Commerce Using Remote and Electronic Notarization Act of 2021 (SECURE Notarization Act), which 95 bipartisan cosponsors in the House and Senate. In the House, Reps. Madeleine Dean (D-Pa.) Kelly Armstrong (R-N.D.) have introduced H.R. 3962. Sens. Mark Warner (D-Va.) and Kevin Cramer (R-N.D.) have introduced S. 1625 in the Senate.

The SECURE Notarization Act would authorize every notary in the U.S. to perform RON and create national standards requiring use of tamper-evident technology, multifactor authentication of a signer and retention of an audio-visual recording of the notarial act. The bill would allow signers outside the U.S., such as military personnel and their families, to easily and securely notarize documents. The Secure Notarization Act complements existing state laws, while allowing states the flexibility and freedom to implement their own RON standards. It also follows a similar structure of complementary state/federal legislation, such as the Electronic Signatures in Global and National Commerce Act (ESIGN) and the Uniform Electronic Transactions Act (UETA).

There are 40 states that have enacted permanent statutes that approve the use of RON. However, the lack of national authority makes it harder to provide this valuable flexibility to those that need it the most, like servicemembers, overseas Americans, and underserved communities. O’Neal told the subcommittee that now is the perfect time for Congress to expand this closing option for consumers and bring additional certainty to the law of RON.

“We have the chance to give consumers greater freedom and choice in how to close on their next home sale or purchase, or when they refinance their home mortgage, while enshrining common sense safety and soundness into the closing process,” said O’Neal, who is vice president of corporate underwriting at First American Title Insurance Company, in written testimony submitted to the subcommittee. “When title companies and other financial service providers offer customers a digital closing option using RON, it puts the consumer in the driver’s seat, allowing them flexibility to execute documents based on their schedules without the need to take time off work or find a babysitter.”

Even before the pandemic, the title and lending industries began undergoing a digital transformation to provide consumers with convenient options when buying a home.

"One of these new tools is remote online notarization," O'Neal wrote. "The SECURE Notarization Act is a bipartisan bill that increases access to RON for consumers. Just like it sounds, remote online notarization takes the traditional notarial process and moves it online—allowing a signer to get a document securely notarized over a webcam or smart phone. Americans sign documents and engage in countless e-commerce transactions every day using electronic signatures thanks to Congress’s adoption of E-SIGN in 2000. Now is the time to do the same for notarizations."

Rep. Armstrong added, “The pandemic showed us that this is really something more than advancing technology, but can help people in a real way while still protecting notaries.”

Rep. Armstrong asked O’Neal what groups would benefit from nationwide use of RON. O’Neal said all consumers would benefit, especially those with health issues or need to social distance, anyone travelling and overseas service members.”

"RON saves Americans lost wages, time and travel costs. RON eliminates the need to make appointments, take leave from work, find a babysitter, or drive for miles to find a notary to conduct a real estate closing," O'Neal said. "This flexibility helps improve the closing experience for homebuyers. RON benefits members of the military who are deployed overseas. RON permits servicemembers to finalize important financial documents directly instead of having to rely on finding a military notary or executing a power of attorney before deployment. This lets their families more easily take advantage of favorable refinance or other transactions while deployed."

O’Neal informed the subcommittee that the SECURE Notarization Act would not:

  • Impede consumer choice.
  • Infringe upon state data privacy laws.
  • Impact state law on testamentary wills and trusts or the practice of law.
  • Favor specific technology or restrict the use of new and emerging advancements

The national minimum standards mirror Uniform Law Commission’s Revised Uniform Law on Notarial Acts and has three fundamental requirements:

  1. Remote notarizations would require the use of tamper-evident technology, so that third modified since the time of the notarization.
  2. The remotely located individual must be identified by the notary through personal knowledge, use of a credible witness, or multifactor authentication.
  3. The notary must create and retain an audio-video recording for 10 years unless another time frame (not falling below five years) is stipulated under state law.

O’Neal said these minimum standards make RON safer than traditional paper notarizations and endow them with superior evidentiary value.

He also touched on how the legislation would modernize notarial law ensure that notaries will continue to play their crucial anti-fraud role for future generations

“Notarization is a bedrock of our legal system, and has been for nearly all of American history,” O’Neal said. “The SECURE Notarization Act will help to ensure that this continues to be the case in the 21st century.”

O’Neal closed his oral testimony by sharing a story of how RON helped a service member close his transaction:

  • “I am stationed overseas in South Korea. My closing happened nearly 7,000 air miles away and 13 time zones different. Closing on the house would have been impossible without this option. Our dream house would have slipped away from us had we not been able to execute the buy remotely.”

ALTA CEO Diane Tomb said the association is grateful the subcommittee invited ALTA to testify about the importance of the SECURE Notarization Act. She also thanked O’Neal, one of the country’s leading experts on notarial law and practice, for appearing before the subcommittee.

“As the COVID-19 pandemic demonstrated, so much of what we previously thought had to be done in-person can be done safely and efficiently online—and the closing process is no exception,” Tomb said. “We are encouraged that the subcommittee is considering this important piece of legislation that will allow for immediate nationwide use of remote online notarization technology while also establishing robust minimum standards to ensure consumers are protected.”