As the mortgage industry continues to evolve lenders are seeing the importance of digital closings. But one thing that most people don’t know is that there is a middle ground when it comes to closings. This middle ground is called the hybrid eClosing and comes in handy if, for some reason, you are unable to immediately adopt full eClosings.
So, what is a hybrid closing?
A hybrid closing is when traditional, in-person closings are combined with digital closings.
During a hybrid eClosing, a borrower is presented with the option to sign most of the documents digitally, ahead of time. However, they have to wet-sign all the documents that need a witness as well as the notarization documents.
The main aim of taking this approach is to reduce costs, time, and paperwork.
What’s the main difference between a hybrid eClosing and an eClosing?
The main difference between the two is that in a full eClosing, all documents are signed electronically, including those requiring a witness or notarization. This means that there is no need for the physical presence of any parties to the closing.
On the other hand, with a hybrid eClosing, the documents requiring a witness or notarization are wet-signed at closing while other documents are signed electronically. This approach gives lenders the option to offer digital closings without having to completely convert their operations in one fell swoop. It also allows them to expand their reach and offer more convenience to borrowers.
With eClosing software that supports all closing types, both lenders and borrowers can enjoy the great convenience and cost savings of digital closings.
What are the different types of hybrid eClosings?
Hybrid eClosings can be done in various ways. Here are three of the most common:
1. Hybrid closing with a paper note
For this hybrid eClosing, the paper note, and other in-person closing documents are supposed to be ink-signed during the physical closing meeting. Any non-notarized documents can be e-signed before or during the meeting.
2. Hybrid closing with an eNote
For the hybrid eClosing, the eNote and other non-notarized documents are signed electronically. Documents that require a witness or notarization are wet-signed during the physical closing meeting. This method is often used when lenders need to incorporate digital notes into their portfolio but cannot switch to full eClosings yet.
3. Hybrid closing with a paper note and remote closing meeting
This type of hybrid eClosing emerged during the covid-19 pandemic period. It involves eSigning the non-notarized documents and having a closing meeting that happens virtually.
Thanks to audiovisual technology, all participants can be present at the meeting, even if they are not in the same place. All the documents that require a witness or notarization are eSigned and eNotarized during the virtual closing meeting.
There, however, is a challenge with this type of hybrid closing. The paper note is signed outside of the remote closing meeting. That’s because the lender has to print and mail the promissory note which is then wet-signed by the borrower. As such, the borrower may have a disjointed experience as a result of this process.
Which is better – eClosing or hybrid eClosing?
The choice between a full eClosing and a hybrid eClosing will depend on your needs, preferences, and budget. If you are unable to switch to full digital closings immediately, then opting for a hybrid closing may be the smarter choice. It allows you to move the process along with digital closings while still ink-signing important documents.
On the other hand, if your county allows it and you have the resources and technology to support a full eClosing, then this may be the better option for you. That’s because it offers greater convenience and cost savings in the long run.
Ultimately, whichever type of closing you choose will depend on your specific situation. It’s important to do your research and consider all the options before making a decision.
Hybrid eClosings provide an effective way to transition from traditional closings to digital ones without having to adopt everything at once.
By using a combination of wet-signing and eSigning documents, lenders can enjoy the efficiency and convenience of digital closings while still ensuring the security of their transactions.