The impact of the coronavirus (COVID-19) on real estate and mortgage closings is rapidly evolving. Several new policies and procedures have been established by title insurance underwriters related to the impact over the past 48 hours. These new policies are related to Remote Online Notary (RON), county closures and gap coverage, and industry best practices.
Multiple title insurance underwriters have issued new, temporary underwriting guidance related to the use of Remote Online Notaries in an effort to facilitate the closings of real estate and mortgage transactions during the COVID-19 pandemic. The new policies are expanding the states in which title insurers will insure transactions where RON is utilized, including into some states where no enabling legislation has been passed.
The American Land Title Association (ALTA) is working with Congress to pursue federal legislation that could expand RON availability nationwide to help enable the real estate and mortgage markets to continue functioning in the face of COVID-19 social distancing protocols.
These new policies and the potential national legislation proposed by the title industry related to expanded acceptance of transactions closed utilizing RON could help keep the real estate and mortgage markets moving, however, there are hurdles to full acceptance, including conflicts with current state notarization laws that require face-to-face signatures and a lack of adoption by lenders and other industry members.
County Closures and Gap Coverage
Title insurance underwriters are taking varying approaches to the continued closures of county offices, which in some cases is resulting in an inability to record transfer and lien documents. The period between the county’s current certification date (the date which the county certifies records are current through) and recording is commonly referred to as the “gap period.” The gap period will continue to grow as long as county offices are closed, however, almost all title underwriters have issued bulletins permitting the continued closing and funding of real estate and mortgage transactions in counties where recording is at risk due to county closures, assuming the risk during the gap period, with certain restrictions. For example, where electronic recording is still available in a county that has closed its offices, underwriters are generally requiring electronic recording be utilized. Almost all underwriters have excluded non-traditional, or “hard money” financing from their COVID-19 protocols in counties with closures, and most are not insuring transactions where a title search cannot be performed. Additionally, almost all title underwriters have provided specific, additional language for title policies and sellers affidavits pursuant to their COVID-19 county closure protocols.
These practices aimed at promoting continuity of the real estate and mortgage markets face difficulties due to some mortgage lenders who will not permit loans to close if recording will be delayed as a result of county closures.
The title insurance industry is taking steps to close as many transactions as possible without face-to-face contact, however, for those transactions that are still occurring in person, COVID-19 best practices have been established that are consistent with CDC and state health department guidance aimed at keeping consumers and title company staff as safe as possible. The procedures include, but are not limited to, the following:
- Remote work for employees wherever possible;
- Enhanced employee hygiene requirements such as handwashing between closings, utilization of hand sanitizer and appropriate social distancing, such as sitting at least six feet apart in closings;
- Requiring electronic payment of earnest money;
- Limiting attendees of closings to necessary individuals only;
- Providing hand sanitizer to consumers in lobbies and closing rooms;
- Disinfecting closing rooms between closings;
- Providing new pens to each individual in each closing and asking that the pan be taken with by the individual when they leave;
- If a consumer is ill, they are asked not to come to closing and make alternative arrangements for closing their transaction.