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COVID-19 and the Impact on Real Estate Closing Processes

Monday, April 6, 2020   /   by Anne Rose

COVID-19 and the Impact on Real Estate Closing Processes

Q & A with Adam Slack and Tara Jones of Guaranteed Rate 

Business as usual doesn’t exist any more, with respect to COVID-19, so what are you doing at Guaranteed Rate to facilitate closings and serve your clients while observing stay-at-home and social distancing restrictions?

Adam: We are really 100% open for business. Even before everything that has happened with COVID-19, our entire office staff was fully setup with home office stations, and secure servers and full size monitors - everything that they have in the office.

This was even before the pandemic happened, so our productivity hasn’t changed at all. adam slack.jpeg

Just like Kirk has said with his COVID-19 updates, for Guaranteed Rate on the financing end, we have the ability to work 100% remotely, so we are not missing a beat on our end. Everything is moving forward smoothly and business is normal.

People are looking for no-contact options in every aspect of their lives right now. Have you done any completely digital closings?

Adam: North Carolina, as of right now, does not allow for a full e-close. Guaranteed Rate as a company has been setup for a full e-close for many years, though. That is only in the states that allow that.

North Carolina is one of the 25 states that has not - as of right now - allowed a full e-close.

So, clients are either going to their attorney’s office, or we are doing a notary closing, or a mail-away closing. Those are the three options in North Carolina: the old-fashioned attorney’s office closing, a mail-away, or a notary.

Guaranteed Rate does a hybrid close in North Carolina, though. North Carolina does not allow a full e-close, but they - Fannie Mae and Freddie Mac - do allow most of the documents to be signed by secure closing package, so Guaranteed Rate has what is called the “FlashClose.”

We came out with the FlashClose about two years ago and we’ve been using FlashCloses even more so now; 95% of the documents are signed by secure closing package, and the buyer only has to websign and notarize a few documents, such as the note and the deed of trust. It’s literally a ten minute closing.
... we are minimizing in-person contact, and being as efficient as possible. 

With the options - attorney’s office, mail-away, and notary - and a “FlashClose,” we are minimizing in-person contact, and being as efficient as possible.

Were you doing “FlashClosings” before COVID-19?

Adam: We were. We weren’t pushing them as much because clients have to opt-in, but we are now actually actively encouraging clients to opt-in, and explaining how it works, and walking clients through receiving and executing a secure closing package.

Then, the attorney’s office only needs to print the few documents that need an in-person signature, and the closing can happen in a matter of minutes. This was the process that we have been using for foreign buyers, or those who couldn’t be physically present for a closing.

It was already a proven method prior to the COVID-19 restrictions, so we have the experience and systems in place to make closings run smoothly with as little contact as possible.

This isn’t a patch created for this health crisis, it is a process that you have had in place, and that you have experience in implementing, isn't that correct?

tarajones.jpgTara: Absolutely, and because we are 100% up and running from our home offices, everyone at Guaranteed Rate is just a phone call away for questions, or to walk a client through every step of a FlashClose.

Is there any relief coming in the form of legislation to allow for full e-closings, to make it even easier for your clients?

Adam: At the state level, Congress is not in session right now, so they are not going to pass a Bill to allow e-close.

But, the Governor could enact an order to allow for that. He is getting some pressure to do that, and some other state that did not previously allow full e-closings have already done that. So, we are watching to see if the Governor will sign an executive order allowing for full e-closings in North Carolina. That may be coming, there is no guarantee, but if things continue to be shelter-in-place, that may come to fruition.

Once - and if - that happens, Guaranteed Rate as a company is doing full e-closes all over the country in states where it is already allowed. So, we are set up to do that immediately in North Carolina, too, if it is enacted.

You are obviously watching for that happen, at the state level.

Adam: Absolutely. If full e-closes are allowed in North Carolina, we would know within minutes. We would let our clients know immediately.

Have you seen a slow down in pre-approvals, or have you seen a change in how people approach the mortgage approval process right now?

Adam: Yes, and no. We have definitely seen a slow down in second home and investment property. That market has gone soft pretty quickly as people are reluctant to invest in real estate with financial uncertainties. Second homes fall in that same category, especially if people were buying with the intention to rent for short-term rentals, or for family vacation use. People have really pumped the brakes on that from what we’ve seen.

That being said, the primary home market is like I have never seen it. My feeling is that the increase we have seen in that market, which tends to happen this time of year anyway, but even more so this year, we’ve seen the volume increase for primary homes.
... my gut feeling is that the primary home market is still strong.
Whether those are clients that were pre-approved a month or so ago and they are getting under contract now, or they are new to buying, we are seeing lots of pre-approvals come through. My gut feeling is that the primary home market is still strong, and will remain so, because people still need to buy homes to live in.

Just a note that the only challenge I’ve seen in the primary home market is with VA loans, where people are relocating, and they have to work within the restrictions of the DOD travel ban.

That’s caused a little bit of a damper on the VA market, but at the same time - because we do a lot of VA business here and we get lots of feedback from military clients - people are still being restationed and relocated, and they will be needing homes.

Tara: It’s very important that people who are ready to start the home buying process know that we are here to advise them and make the mortgage process as smooth as possible.

People hear things on the media, especially about lenders changing their practices, but they should know that Guaranteed Rate is still strong, and still open, and that we are going to make sure that we get our clients closed.

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