Beware the Stampede!
Stampede is a noun and a verb which is our first sign that it is unusual and we should take note of it. As a noun, it means: ‘a wild headlong rush or flight of frightened animals’; as well as ‘a mass movement of people at a common impulse.’ As a verb, it means: ‘to cause to run away in a headlong panic’; as well as ‘to cause (a group or mass of people) to act on sudden or rash impulse.’
Either way, we should take care to avoid it, or be a casualty to it.
For the past few weeks, triggered by lockdowns and shelter-in-place orders and frightened borrowers and signing agents alike, there’s been a stampede toward the ‘remote online closing’ experience. Or it’s close cousins of the hybrid or fully electronic kind. And last week, a dozen or more Secretaries of State, along with Governors, have issued orders relaxing the ‘in the physical presence of’ requirement for notaries to notarize loan documents.
Those alternatives to the traditional closing (an in-person interaction with the exchange of papers needing ‘wet’ signatures) still pose technical, legal and time-to-set up challenges, thereby making them not the immediate ‘silver bullet’ lenders are looking for. Ironically, these previously have been the very reasons for low adoption rates of ‘e-closing’ or ‘remote online notarization closings (“RON”).
However, in its ‘panic or wild headlong rush, or acting on sudden or rash impulse’ the industry is stampeding its way toward e-closing solutions. Last week, we received a call from a lender telling us that in a few short days they were shifting all their closings to a hybrid solution. In their email, they said they were going to ‘flip the switch’ all in an effort to reduce in-person interaction with signing agents and borrowers – and of course, to get their loans closed. In their haste, they overlooked the fact that hybrid closings still involve a signing agent appearing ‘in-person’ and sharing their laptop with borrowers to e-sign as well as the exchange of paper documents needing ‘wet’ signatures. So that would still take a willing signing agent (notary) and borrowers. When we pointed that out, they dialed back their roll out.
It was almost if they said ‘Oh, we didn’t think of that.’
And, ‘never mind!’
Numerous conversations like that, or even more intense, have characterized my past two weeks. It has felt like a stampede! When time is taken for explanations to be given as to ‘how’ they all work and ‘why’, and ‘what’ has to be done to affect them, there is a noticeable pause and the conversation shifts to more realistic and achievable actions. There are many ‘ducks’ that have to get in a row. It is as if suddenly they have removed themselves from the stampede.
Now don’t get me wrong. I am a passionate advocate for e-closings of all types, and firmly believe our current challenges will lead to faster adoption of all versions, especially RON, but they are not all achievable overnight, or, by flipping a switch. To attempt to do so has the same peril as joining a real stampede. And peril awaits us all when the unemployed of today become the bankrupted and foreclosed of tomorrow, who will surely be armed with lawyers sharp enough to challenge the way the loan was closed. Haste makes waste, or in this case something far worse: unsecured loans.
A weekend ago, in some reflective time, the stampede scene in the movie The Lion King came to mind. It made me think of young Simba being caught up in the stampede and the danger he faced. Then I recalled how his father, Mufasa came to the rescue. It made me wonder if there was a symbolic Mufasa among us, able to rescue us from the stampede.
Then, I got word of a Wells Fargo announcement to its settlement agents that they were removing themselves from the stampede: “At this time Wells Fargo does not allow loan closing documents to be signed electronically, and we cannot accept remote/online (RON) notarization of our loan closing documents in any state. We are working quickly to expand options to reduce or remove the need for in person contact, and will continue to keep you informed of any changes that result.” (I added the underline for emphasis).
While it likely stands as a reminder of an existing policy, it is noteworthy in that (a) it is Wells; and (b) they (intentionally or not) are making a big and loud statement about not being part of the stampede; and (c) most importantly, they are giving us all a roadmap to steer clear of it too.
Getting their ducks in a row.
By: Equity National Title April 8, 2020 Uncategorized