News: Closings in the Coronavirus Era
Meet RON.
Even with the uncertainty surrounding coronavirus, every day we work with Buyers who want to buy and Sellers who want to sell. Even as the real estate market marches on, for the time being, Social Distancing efforts continue to reshape the way people interact, work, and also close real estate deals.
Coronavirus challenges have amplified the steady rumble of cries for eClosings to a roar as Buyers and Sellers look for a more convenient way to close.
Enter Remote Online Notarization (affectionately called RON).
RON in its simplest form involves the settlement attorney and the parties sitting at their own computers, communicating through video and audio technology, and signing and notarizing documents with electronic signatures. Virginia pioneered the RON concept a few years ago, and there has been a movement to adopt this nationwide. This is much more involved than services such as Docusign.
Here are the barriers and here is where we stand:
State Laws Allowing RON. Maryland adopted a RON Statute that goes into effect 10/1/2020. By Executive Order, the Governor essentially moved this up to right now, so RON is in effect in Maryland. There is no RON statute in DC.
State Laws Allowing RON Signed Documents to be Recorded. The Maryland Court of Appeals issued an Order authorizing recording of RON documents in Maryland. DC, while not having a similar provision, gives full faith and credit to the signing and notarizing laws of other jurisdictions, and DC will record documents signed using RON in Maryland and any other jurisdiction allowing RON.
Title Insurers Agreeing to Insure RON Signed Documents. The two largest title insurers (Fidelity and First American) have agreed to insure Deeds and Deeds of Trust signed using RON in DC and Maryland, with certain restrictions.
The Technology Being Available to use RON. This right now is one of the biggest hurdles.
Online Platforms. All of the RON statutes and the Title Insurers require using an online platform that uses specific secure technology that (1) determines the identity of the signer using authorized technologies; (2) allows for recording the signing session, including both audio and video, and storing a copy of that recording in a secure electronic vault; and (3) allowing for the electronic signing and notarization of the documents. There are only a few companies out there offering these online platforms that have been vetted and approved by the Title Insurers, and right now getting signed up with these companies is an issue with title companies around the country trying to get approved. Paragon Title is ahead of the curve, having already signed up and working daily to expand the number of approved companies we can use.
Title Companies, Buyers and Sellers Having the Right Technology and Ability to Use It. In order to use this technology, both sides need a computer equipped with both audio and video (most laptops have this – but iPads and iPhones, and similar devices, may not work with a number of these companies yet), a compatible web browser and an internet connection. Paragon Title has all of the technology needed on our end, but it still requires the correct technology on the Seller/Buyer end. It also helps if the Seller/Buyer is somewhat tech savvy so that they have the technology working on their end, and can successfully navigate the online platforms which are right now not as user friendly as they will eventually be.
Lenders Approving the Use of RON. Until recently, FNMA and FHLMC (who combined purchase 60% of residential mortgages from lenders), would not purchase RON signed loans. About a week ago, they changed their position and issued regulations allowing for this, and we expect FHA and VA to be not far behind. But lenders still have to deal with other investors getting on board and approving RON, as well as working through changing their own underwriting guidelines. This has been slow moving and uneven. Some lenders go so far as to restrict Seller documents such as the Deed from using RON. So, in every case involving the Buyer obtaining a loan, the first question must always be whether or not the lender will allow RON.
Real property transfers have been around for untold centuries and change is often slow. We tend to hang on to what we know works and look at every change from every possible angle before it is adopted. That’s good for protecting people, but not so good in the current environment, which is forcing change on the industry at a very rapid pace.
All of us at Paragon Title have been working towards RON for a number of years, and have spent many long nights making sure this works and that the appropriate protections are in place. We believe that, in the not too distant future, this will become a preferred technology for conducting real estate settlements, and we are ready for it.
Paragon Unaffected by Closure of In-Person Services at DC Recorder of Deeds
You may have seen a recent announcement that the Recorder of Deeds closed walk in and mail in services for a period of time. DC will continue to process docs recorded electronically. Paragon Title electronically records in DC and all jurisdictions where accepted. For now, our DC recordings are unaffected by the recent announcement.
Essential Paragon Continues Operation following MD Shutdown
On March 23rd, Maryland Governor instituted a state shutdown for all Non-Essential services. Interpretive guidance from the Maryland Office of Legal Counsel confirms that Title Companies are deemed Essential Services and are thus not required to close by the recently issued order. Paragon Title understands the significance of the coronavirus pandemic and the community’s efforts to flatten the curve. We have implemented telework policies for our staff and we continue to deploy the latest tech to take our signing processes online (when allowed). Stay tuned for exciting updates about the modernization of the home closing process.
Paragon Title will continue to follow this developing situation and will operate in accordance with CDC Guidelines, and State/Federal law.
Our Coronavirus Response
Dear Friends of Paragon Title,
The global spread of coronavirus continues to have profound effects on our daily lives. As we navigate these uncharted waters, we do so knowing that we are in this together.
We want you to know a few things.
Your Health is Our #1 Priority Too. The global spread of coronavirus continues to have profound effects on our daily lives. As always, the safety and satisfaction of our agents and customers remains our highest priority. Accordingly, we are taking measures recommended by the CDC and have implemented a plan to allow us to best serve you and your clients under these ever-changing circumstances. Contact us for more information about our efforts to keep our offices clean and safe.
Both DC and MD Recording Offices are open in various capacities.
DC Recorder Of Deeds- You may have seen a recent announcement that the Recorder of Deeds closed walk in and mail in services for a period of time. DC will continue to process docs recorded electronically. Paragon Title electronically records in DC and all jurisdictions where accepted. For now, our DC recordings are unaffected by the recent announcement.
Montgomery County- Recently, a court order was issued requiring that Land Records Office continue to accept documents for recording during the coronavirus emergency.
As of Now, We’re Finding Flexibility, and Settling on Time. This may change upon the issuance of Shelter in Place or similar Orders from State or Local Government.
As of this time, we are fortunate to not be experiencing any operational delays as a result of coronavirus. In this rapidly changing scenario, we remain committed to providing you and your clients with our full range of settlement services. We have telework and business continuity plans in place, and thanks to our dedicated staff, we continue to operate with maximum capacity. We will continue to do everything we can to adapt and provide a flexible closing process as the challenges imposed by coronavirus continue to evolve. As we do, we invite your feedback as we work to build a process around the needs of you and your client.
The circumstances surrounding the coronavirus response are ever changing. States across the country have imposed Shelter in Place and other similar Orders directing the closure of certain types of businesses. If such an Order were to come out, Paragon Title will issue further guidance on any updated options for closing remotely.
Also, recently, GCAAR, MR, and NVAR have all released coronavirus language for use alongside their Contracts. Please feel free to contact us with any questions you may have about that addendum.
Delivery of New Contracts and EMD’s to Paragon Title.
Signatures and Notaries aren’t the only thing going digital. Since much of our staff is working remotely, and because a Shelter in Place Order can come down at any moment, we ask that you submit new contracts to Paragon Title by e-mail to Contracts@ParagonTitle.com. We also ask that you have your Buyers wire us the EMD. For now, our normal procedure will continue that we ask that your client call our office to obtain our wiring instructions. Once we have them on the phone, we will send them the info. We are looking into streamlining the secure sending of wire instructions. We look forward to having an update for you soon.
In Conclusion… For Now…
While we don’t know what the future holds, we will continue to do everything we can to be prepared. We are working closely with our title insurers and have established plans to allow us to continue settlements should a recording office shut down for a time.
To allow for prompt recording even following the closure of a land recording office, we e-record in every jurisdiction we can. Were a recording office to become unable to accept paper and electronic documents for recording, our buyers will have title insurance protection during that gap period. Of course, as with many of these coronavirus related policies, there are requirements and the lender will have to be on board.
We will communicate with you as this evolves. If this coming week, is anything like last week, it promises to be quite a ride, with much more to update.
Please feel free to email us at help@pargontitle.com with any questions that you have.
Your Partner,
Paragon Title