On your journey to find better housing that fits your needs and desires, you may come across the growing trend of handling real estate dealings online in a virtual closing. While this method of closing on homes is not relatively new, it still is somewhat escaping what many consider more “mainstream” methods for the home buying process. However, virtual closings continue to grow as an option, often funneling in clients who otherwise would not buy due to the sheer flexibility of being able to do it all online.
Aided by a series of failsafes, such as a network of agents and various identity confirmation methods, virtual closings are a relatively safe alternative way of closing on a home, in comparison to traditional, in-person methods. The primary idea behind virtual closings is flexibility, however, the platform typically speeds up processes while also maintaining an organizational flow comparable to hiring a cleric. This kind of safety, coupled with efficiency, negates a lot of what many might consider an “impersonal” style of real estate dealings.
However, In spite of what some may perceive to be a colder communication style, the pros of virtual closings keep the industry alive and thriving, with some title companies having seen a tripling in mortgages for their businesses in certain years this past decade. Virtual closings are safe, quick, organized, and offer flexibility not seen with traditional signing methods.
Due to an onslaught of criticism that virtual closings may not be as secure as traditional real estate closing methods, title companies that offer these options are constantly jumping through hoops to make the process safer. One broad example of this valuing of safety during online closing procedures is the creation and widespread acceptance by title companies of MISMO, which operates on a federal scale to ensure that payment platforms and online procedures regarding home loans and real estate purchases are properly regulated. Founded in 2001, MISMO is dedicated to overseeing online interviewing processes for loans as well as the closing process.
Regulatory offices aim to ensure that the eclosing processes correctly verify identities, store information, aren’t susceptible to online phishing attacks, and much more. These regulations are generally accepted to be a gold standard of sorts for the emortgage and closing processes, and any online closing you encounter will be beholden to these regulations and guidelines. MISMO as a regulatory organization is, in fact, so stringent about regulatory safety (even at the level of post-closecheck listing) that they don’t typically allow just anyone to access the methodology. This, A. prevents non-committed entities from faking regulatory compliance, and B. guards the regulations, making them, in a sense, more standard. You should feel absolutely safe in the eclosing process, although it was designed first with flexibility in mind, rather than safety; the mechanisms for keeping the method safe are in place and continue to develop alongside the online process.
There are a few different ways to eclose on a home, with some options being hybrid options that mix online services with in-person services. This is due to state regulation, mostly, in which your state may accept one aspect of the online process, but not another; while MISMO regulations are widely accepted as a standard across the country, individual states handle their eclosing processes differently, resulting in a few different methods which will likely remain standing in the foreseeable future.
The main types of eclosing include:
- Hybrid Closing Method – This method allows all parties to esign (with an online signature) any document that would not traditionally require a notary. This is a very common way to eclose, with payments even being made before anybody meets in person.
- Remote Online Notarization (RON) – This is the method that operates entirely online, with even identity verification being done during video chat conferences. Not all states allow this type of eclosing, however.
- In-person E-notarization – This method doesn’t require any “wet signatures” but is still done in person, making filing easier and tidier.
The neat thing about eclosing is that you can truly mix and match the methods in which you make payments and file paperwork. For those who are concerned with paperwork, for example, shopping around for a title company that stores all data on the Cloud in shared files, for example, shouldn’t take any time at all. Many of these entities actually have found that their clients are pleasantly surprised with data storing methods, as files are easily accessible going forward, with virtually no heavy lifting on either end to maintain storage. In contrast, traditional closing methods require paper checklisting, larger folder files of information, and a place to store the information physically on both ends, which just isn’t feasible for those who operate alongside modern technology.
Eclosing also puts up multiple “firewalls” against different scamming or phishing methods used by cybercriminals. You can also easily find lenders who process payments with methods that you find more secure, such as online payment platforms that have security as a business concept in mind. One of the easiest ways closing scammers take advantage of home buyers is by intercepting the closing process, by say, claiming that the payment method has changed through a hacked email address, or by simply stealing financial information online, such as credit card or bank routing numbers. This is actually an area in which eclosing (and the emortgage process, in general) provides a safety net for those who use it. You can always, and should always, request a video chat with your lenders if you feel unsure at any point in the process, especially when the time comes to process large payments.
This includes not only your title company, but all witnesses, payment processing entities, banks, representatives, and anyone who discloses information to you or expects you to disclose information to them. Using trusted sites and payment processing methods is key to an informed, wise, and relaxed decision-making process. For some key insights on just how a secure payment platform can make or break the experience for both title companies and buyers, consider scheduling a demo with our experts!