ALTA Survey: Digital Closings Increase, but Barriers Slow Adoption

Fully digital or hybrid closings increased to 10% of all transactions last year compared to 7% of all deals closed in 2021, according to a study sponsored by the ALTA Land Title Institute.

The survey included results from 399 title professionals and businesses that operate across 46 states and Washington, D.C. Most of the survey respondents had an average of 75 closings or less each month (57%), with the remainder divided almost evenly between 76 to 250 closings (21%) and over 250 closings (22%).

“Title professionals continue to lead the way by implementing technology to meet customer needs and expectations,” said Diane Tomb, ALTA’s chief executive officer. “Digital closings offer a secure alternative to complete real estate and mortgage transactions and provide an option for people who can’t physically be in the presence of a notary, such as those serving overseas in the military or the elderly. Our members are always meeting the customers’ preferred closing method, whether it is online, in person or hybrid in some fashion.”

While in-person paper closings comprise the majority of transactions, digital and remote closings have become more popular compared to a year ago. Businesses offer a wide range of digital and remote closing options, including different tools like remote online notarization (RON), In Person Electronic Notarization (IPEN) and remote ink notarization (RIN).

In 2022, the survey showed that title and settlement companies offering some type of digital or remote closing increased to 61% in. This increase is largely attributed to transactions using RON. Fully digital closings were still uncommon, accounting for 2.5% of all transactions in 2022 compared to 2.2% in 2021. In contrast, hybrid closings had some growth, increasing from 5% of all transactions in 2021 to nearly 8% in 2022.

Continued Adoption

More than two thirds of the companies surveyed expect the volume of digital closings to increase, however, several barriers hinder growth. Of the businesses that currently do not offer RON, 44% plan to implement it in the future. About 45% of those businesses expect to adopt the technology as soon as it is authorized, another 22% plan to adopt it with in next one to two years.

The top three obstacles to companies expanding or adopting RON are:

• Lack of lender acceptance (84%)
• Insufficient testing with lenders (79%)
• Lack of consumer technology capabilities (78%)

The survey showed that over 76% of businesses currently using RON would expand their use of the technology if they received more requests from lenders. Lender acceptance is a significant hurdle for digital closings. A recent study by SnapDocs found that only 11% of lenders offer full digital closings.

Currently, 44 have passed laws allowing use of RON. At the federal level, the bipartisan Securing and Enabling Commerce Using Remote and Electronic Notarization Act (S. 1212), introduced by Sens. Cramer (R-N.D.) and Mark Warner (D-Va.), has been referred to the Senate Judiciary Committee. The house passed its version of the ALTA-supported SECURE Act by a voice vote in February.

Key Benefits

Businesses that offer RON identified decreased closing time as the greatest benefit of the technology. Companies with larger volume experienced more benefits from RON, indicating efficiencies of scale. Businesses with over 250 closings per month experienced time and cost savings of RON more often than those with smaller transaction volumes. For example, 52% of businesses with larger closing volumes agreed that RON decreased closing time due to the review of documents ahead of time compared to 44% of those with smaller transaction volumes.

“Digital closings provide many benefits to companies, including expense reduction by not having to print documents and time savings by being able to review and sign documents in advance,” Tomb said. “Continued awareness and understanding of how to use the technology will drive further adoption of this technology.”