Though numerous roadblocks are preventing people from closing, many banks are attempting to go about ‘business as usual’ — only there’s nothing usual about the home buying process right now.
The problem is that there are essentially two Americas when it comes to real estate. One America is digitized, and the other is not.
Approximately 2,100 counties across the nation have digitized their archives and document collection process, which means roughly 1,000 counties and county-equivalents haven’t.
For the counties that haven’t adopted an electronic filing process, closing is essentially moving at a snail’s pace. To close, a title search must be done, the deed must be recorded, and county taxes must be paid. However, this is difficult with courthouses limiting the number of people that can be inside at the same time, and obviously made impossible if the courthouse itself is shut-down.
For counties that are online, numerous changes are taking place every day. Here are but a few.
With so many companies temporarily closed down, lenders are unable to verify many loan applicants’ employment. Because of this, the FHFA is allowing lenders to use email verification instead of verbal verification. Additionally, they may also use a recent paystub or proof of a payroll deposit via a bank statement.
The Federal Reserve has recently relaxed standards for home appraisals. Appraisers are now allowed to use a variety of means when appraising a home. This includes using a “property inspection, asset records, photographs, property sketches, and recorded media.” The appraiser will still likely evaluate a home’s exterior, but will not enter the home. However, for many homes, appraisers are simply doing driveby appraisals.
The FDIC, FRB, and OCC have agreed to allow a 120 day delay in appraisals for some loans. This applies to all residential and commercial real estate purchases, but does not include deals revolving around acquisition, construction and development. This means a home purchase may still proceed even if an appraisal has not been performed.
This rule is in effect until December 31, 2020. It may of course be renewed if necessary, but as of now it’s not being openly discussed.
While some states and counties allow for eClosings, many do not. However, this may change in the not so distant future.
Senators Mark Warner and Kevin Cramer introduced the Securing and Enabling Commerce Using Remote and Electronic Notarization Act of 2020. This bill would allow all counties to make use of remote online notarization— meaning many legal processes could take place where the notary and the signer are in two different places.
It sounds great, but it may not pass nationwide. Some states, such as California, feel as if a federal mandate would impede against their state rights.
Currently, only 23 states allow remote notarizations. They are:
States expected to do it in the near future include:
Many title companies still require a ‘wet’ signature— meaning they expect you to sign a document using pen and paper.
For these companies, some are sending people over to the buyer’s and the seller’s address. They are dropping off the document on the person’s porch, going back to their car, and then watching the document be signed from a distance. Technically, they have witnessed the document be signed, so they are a legal notary.
It’s kind of a loophole, but not really. Everything is still technically being done by the books, but in an unconventional manner.
If you live in a state and county that allows electronic notarization, you’re still able to close on your home, but the details are likely very different from what you were expecting.
If you don’t, the home buying process is likely much more difficult. Hopefully all of that will change in the near future. However, even with the Electronic Notarization Act, you will still have problems if your courthouses are shut down due to Covid-19.
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