Record demand for mortgages combined with the reduced availability of qualified notaries is causing delays in real estate transactions, Forbes reported this week.
The homebuying process in the U.S. has increasingly shifted to the digital realm since the COVID-19 outbreak began, and both temporary and permanent legislation has been introduced to allow for more remote online notarization to take place.
But, as home sales rebound and refinancing increases due to lower interest rates, some lenders are struggling to cope with the increased business. The problem is that many lenders still don’t allow online notarizations which means home buyers must use in-person services as a sale cannot close without a notary in most states.
The problem is being compounded because some notaries are charging higher fees from title companies to perform the notarization, and that cost is often passed on to consumers. As such, some in the industry are calling for the adoption of digital notarization services as a permanent solution.
“Expediency is critical in loan transactions,” said Max Simkoff, CEO of States Title, in an article in Forbes. “The longer it takes to close a loan, the higher the risk of losing the deal.”
Mortgage software firm Ellie Mae has reported that the average closing time is rising, to 46 days on average for a purchase transaction, and 49 days for a refinance.
Simkoff said the industry should adopt more technology to help close loans faster and improve customer experiences.
Notarize, a remote electronic notary backed by the National Association of Realtor’s investment arm, Second Century Ventures, said it has seen a surge in business since the pandemic. It said its business has grown more than 500% since April 1.
“If 2020 has shown us anything, it’s that digitizing transactions that have traditionally been full of friction, incredibly manual, and inconveniently in-person is not just a nice-to-have anymore – it’s a necessity,” Cristin Culver, head of communications at Notarize, said in a statement.