COVID-19 has brought about significant change to the real estate industry in a short amount of time. Innovation that had previously been stalled due to legislative blockers and coordination challenges is now rapidly accelerating. For example, stakeholders across all parts of the real estate transaction are reevaluating their capabilities to perform or allow fully-remote closings.
During the most recent remote Qualia LIVE events, Perla Aparicio of Qualia’s Industry Relations team joined a number of representatives from North American Title Insurance Company (NATIC) to discuss how title & escrow agents they underwrite with are responding to COVID-19 and beginning to position themselves for what’s ahead.
Susan Stewart, State Manager for the Rocky Mountain Region at NATIC, Chad Hansen, Midwest/Mountain Region Underwriting Counsel at NATIC, Shirley Carroll, State Agency Manager, Louisiana at NATIC, and Karen Bates, State Agency Manager, Mid South at NATIC each shared their insights with Qualia.
COVID-19 as an opportunity to get ahead of the next disaster
COVID-19 pushed to the surface the need for title & escrow agents to evaluate their business continuity plans (BCPs) — a blueprint to restore business operations quickly and reduce downtime in the event of a disaster. “No one could really anticipate a six week health disaster like COVID-19,” Aparicio noted. The scale of COVID-19 shook most businesses; however, many were able to adapt quickly because they had some form of a plan in place.
Each of NATIC’s representatives noted that natural disasters such as floods, fires, hurricanes, and tornadoes are prevalent in their regions—not to mention the prevalence of other disasters such as cyber attacks. The need for business continuity planning has always been present; however, COVID-19 revealed the need for planning for large-scale, national-level disasters.
“I think all agents need to have a disaster recovery plan in place,” Bates noted. “And really if they are following best practices they already had those plans in place.” Bates offered a few BCP fundamentals including:
- Archive files offsite and away from the office in case of a natural disaster that could limit access to those files.
- Store files electronically and in the cloud so that all data can be accessed outside of the physical office.
- Ensure all staff has the capability to work remotely (with the necessary technology).
- Designate a staff member or manager who can take control in the event of an emergency to implement the plan.
Aparicio offered Qualia’s business continuity planning resource as a tool for title & escrow businesses to start thinking about their safety net measures moving forward. (You can find those resources here.)
NATIC’s remote online notarization (RON) guidance signals underwriter innovation and adaptability post COVID-19
COVID-19 also brought forth urgency around RON and digital closing solutions. Each stakeholder in the real estate transaction has responded quickly to the need for low-touch or fully-remote closings. Underwriters including NATIC have adapted with urgency to enable RON transactions.
Carroll noted that since COVID-19 NATIC has “been at the forefront of RON.” On March 17th, 2020 NATIC issued an underwriting bulletin which expanded insurance of RON transactions to 26 states (including states that have not yet issued RON legislation or executive orders) and then added 4 additional states on April 7th, 2020. RON transactions are evaluated on a case-by-case basis due to the legislative differences across jurisdictions. “It’s important to know your local government and your lender preferences because not all lenders are accepting RON transactions,” she said.
Hansen noted that for NATIC to insure RON transactions the following conditions must be met:
- The notary must be a commissioned online notary in a jurisdiction that has authorized RON. In most states the notary must be physically located in the state in which they are authorized to conduct remote notarizations.
- The signer must be located in the US and be a US citizen or permanent resident.
- All parties in the transaction must consent to the use of RON.
- RON must be conducted on a NATIC-approved RON vendor platform. (NATIC does not accept some RON platforms because they are not designed for real estate transactions.)
- County recorder must accept RON electronic documents for recording. (caveat for states that allow for RON documents to be printed for recording.)
Hansen and Bates also discussed NATIC’s acceptance of RIN (a remote closing in which a signer wet ink signs documents with a notary over video and then mails the physical documents for notarization). Fannie Mae and Freddie Mac recently recognized RIN as a viable temporary closing option in states that have passed executive orders allowing for RIN. NATIC is evaluating these transactions on a case-by-case basis. Bates cited Alabama, Kentucky, Mississippi and Tennessee as examples of states that have issued RIN-related executive orders. “We are advising our agents to contact their state underwriting counsel,” Bates noted.
Overall, the coordinated response to enable RON transactions signals a positive future for fully-digital closings. Hansen said that he believes RON will become much more prevalent in the future after COVID-19 and especially once national RON legislation such as the SECURE Act is passed.
If you’re interested in participating in a Qualia LIVE event, submit a request to participate here.