Jason and Karen Boccardi made history last week when they refinanced the mortgage on their Winston-Salem property. It was not the home that was historical, or anything about the closing paperwork—just the opposite—it was that there was no paperwork. Here’s what happened:
Last Friday, the Boccardis became the first people in North Carolina history, along with their lender, North State Bank, to execute a 100 percent electronic mortgage closing, called an “eClosing.” A few such totally electronic closings have been done around the nation. Government regulators say the North Carolina one is different in that it was not done as just a one-time test, but as the start of a new 21st Century way to do mortgage closings.
“This was our first North Carolina eClosing,” NC Secretary of State Elaine F. Marshall said Tuesday, “it is not our last. We want this to become a regular option for lenders and their customers because of the many advantages eClosing offers versus the slower, traditional paper-based system.”
Secretary Marshall has been a leading advocate for modernizing traditional business practices in North Carolina to better compete at the national and international levels. She and her agency have led the charge along with many North Carolina county registers of deeds to do more paper-free electronic recordings of government-required filings and land records.
As the notary public regulator in North Carolina, the Secretary of State’s office has developed the standards and curriculum for the electronic notary status, often called eNotary. A notary public with this status can attach a digital version of their notary stamp to electronic legal transactions, making them legally the same as paper-based filings requiring a notarized document.
“The eNotary is essential to moving legal filings into the digital age,” Secretary Marshall said. “People and institutions still want to know that a notary was there in the room confirming the signer’s identity even if the filing is moving through cyberspace instead of being a pile of paper.”
The electronic, notarized mortgage was insured by Investors Title Insurance Company of Chapel Hill. DocMagic and World Wide Notary were the electronic solution providers that were used.
Secretary Marshall stressed that eClosings have all of the regular features and safeguards that people see when they execute a mortgage on paper. “For eClosings we require the physical presence of that notary plus the
access to legal expertise—there is zero drop in standards for an eClosing—it is just faster, far more convenient and in my opinion more secure.”
The historic eClosing last Friday featured a test of the different elements by having the event take place in a North State Bank office in Hickory for a property in Winston-Salem, with the attorney for the Boccardis from the Hunoval Law Firm participating via an interactive video link from Charlotte.
“We stress tested the whole thing as hard as we could,” Secretary Marshall said. “It was still far quicker and easier to do than a traditional closing.” Marshall added that many government officials, digital service venders and lenders have worked for years to make sure that the way digital records are recorded in North Carolina is safe, secure and reliable.
“We have actually been electronically recording many filings such as land records this way in North Carolina for years now, and there has never been any security issue,” she said. “We are simply bringing the system to the level where people buying homes and applying for mortgages can use it.”
Marshall said with eClosings now a feature in North Carolina, it put the State in a more competitive business climate compared to areas that only offer paper filings.
“This is a win-win-win scenario,” she added. “The lender gets their work done quick and easy, the borrower gets in and out on a schedule that fits for them, and the land records get recorded instantly at the county register of deeds. There are no couriers or copiers or travel delays.”
North State Bank is currently the only lender to have done a fully paperless eClosing. The bank has been an active participant for the past year, vetting the system as it prepared to do a live closing. North State Bank President Ken Sykes attended the closing on Friday.
“We stand ready to work with all other North Carolina lenders to get them up to speed on this,” Marshall said. “One thing we all noted during this closing was that even though we tried to make it into a real ceremony—it was still so fast and easy that we had a hard time not being finished in just a few moments.”