The First-Ever All-Digital Mortgage Closing

Summary

WSJ Your Money Briefing

Episode: The First-Ever All-Digital Mortgage Closing
Date: August 11, 2017
Host: Charlie Turner (Wall Street Journal)
Guest: Robin Friedman (Wall Street Journal Columnist)

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Episode Overview

This episode explores a milestone in real estate: the first-ever fully remote, all-digital mortgage closing. Host Charlie Turner and WSJ columnist Robin Friedman discuss the technology, process, practical benefits, and potential pitfalls of digital mortgage closings, examining how they may shape the future of home buying.

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Key Discussion Points & Insights

What Makes This Closing Different?

• Traditional Closings: Generally occur with all parties (buyers, sellers, notary, lenders, attorneys) physically present in the same room, with many documents signed by hand.
• Previous E-Mortgages:
  • Some allowed digital document signing, but still required a physical notary for authentication.
  • Others permitted remote notaries, but certain “wet signature” documents (like the promissory note) still required ink signatures.
• New Milestone—July 28, 2017 Closing:
  • Every aspect was handled digitally and remotely—no paperwork, no in-person meetings.
  • All parties (borrowers, lender, notary) were in separate states, connected over webcam.
  • Quote:

    “In the past, notary publics were required to be physically in the room with you to authenticate your identity. But in this case, the borrowers kind of authenticated themselves digitally...”
    — Robin Friedman [02:24]

How Did Digital Authentication Work?

• Authentication:

  • Borrowers answered personal verification questions (e.g., past car models, children's addresses).
  • Held up driver’s licenses to webcam for visual confirmation.
  • Signed a piece of paper with pen/ink, held it up to the webcam; image was captured and used to create a digital signature.
  • All closing documents then signed via laptop touchpad, signature applied digitally.

• Quote:

  “They actually used that digital signature to sign all the closing documents, which they effected by just clicking on the laptop’s touch pad.”
  — Robin Friedman [02:54]

Who Offers This Technology?

• Pioneering Company:

  • Closing handled by a company called Notarize.
  • Only a handful of lenders (nine at the time) were participating.

• Expectations for Growth:

  • Other technology providers are developing similar services.
  • Anticipated acceleration and adoption in the coming years.

• Quote:

  “There are other companies...about to start jumping on the bandwagon to do these digital closings.”
  — Robin Friedman [03:46]

Advantages for Consumers

• Accessibility:
  • Physically challenged buyers can close from home.
  • Military personnel overseas can close loans without visiting embassies.
  • Overall, much more convenient, especially for those unable to travel.
• Potential Transformation:
  • “It’s really going to completely transform the real estate industry, I think.”
    — Robin Friedman [04:24]

Potential Pitfalls & Limitations

• Limited Availability:

  • Few lenders support the process so far.
  • Not all banks or lenders have adopted digital closings.

• No Legal Advice from Notaries:

  • Remote notaries can’t offer legal guidance—borrowers must review all documents and have questions resolved beforehand.

• Not for Everyone:

  • Some buyers may be uncomfortable with technology or prefer traditional closings.
  • Experts believe digital closings will become the norm in three to five years but acknowledge a transition period is necessary.

• Quote:

  “Notaries can’t provide legal advice...it’s really incumbent on the borrowers to review all of their documents ahead of time and get their questions answered.”
  — Robin Friedman [05:00]

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Notable Quotes & Moments

• On the significance of this milestone:

  “The advantage of this technology to consumers is just amazing.”
  — Robin Friedman [04:13]

• On future adoption:

  “The people that I spoke with believe that in three to five years everyone will be using this and the technology will be commonplace.”
  — Robin Friedman [05:39]

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Timestamps for Key Segments

• 00:34 — Introduction to the topic: Digital mortgage closings and setting the scene.
• 01:08 — Robin Friedman explains differences between e-mortgage closings and the new all-digital process.
• 02:24 — Details on the three-state, first-ever remote closing and digital identity authentication.
• 03:46 — Discussion of Notarize and other companies entering the digital closing space.
• 04:13 — Real-world advantages for borrowers (mobility, military, convenience).
• 04:46 — Pitfalls: Limited lender adoption, no legal advice, traditional preferences.
• 05:39 — Predictions for widespread adoption and lingering challenges.

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Summary

This episode offers a clear, engaging breakdown of a groundbreaking event in mortgage history—the first completely digital and remote closing. With expert input from WSJ's Robin Friedman, listeners gain insight into both the practical and legal shifts this technology brings, why it's set to revolutionize real estate transactions, and what hurdles remain before it becomes mainstream. The conversation highlights both optimism and caution, making it a must-listen (or read!) for anyone interested in real estate, tech, or personal finance.

Transcript

[A]

This episode is brought to you by Charles Schwab. Decisions made in Washington can affect your portfolio every day, but what policy changes should investors be watching? Washington Wise is an original podcast from Charles Schwab that unpacks the stories making news in Washington right now and how they may affect your finances and portfolio. [e-mail] WashingtonWise. This is yous Money Matters from the Wall Street Journal.

[B]

Welcome to youo Money Matters. I'm Charlie Turner in New York. If you've bought a home in the past, chances are that the mortgage closing involved sitting in a room with other parties to the transaction. There's also been a big rise in electronic mortgages, which are paperless. But last month saw a digital first, the first fully remote electronic closing from start to finish. Let's let's talk about this new frontier for mortgage closings with Wall Street Journal columnist Robin Friedman. Robin E. Mortgages have been around for years, but why exactly is this mortgage closing from last month different?

[C]

You're right, Charlie. E mortgages have been around for years. E mortgages are electronic or paperless mortgages. In the past, though, closings of these E mortgages were done in one of two ways. One way, borrowers would sign closing documents digitally by using a table and a stylus rather than pen and ink. And in those early closings, a notary public was still physically present in the room to notarize everything, even though the documents were being digitally signed. Other closings in the past took place remotely, where the borrowers were in one place and they used an online notary public. But in those cases, not all of the documents were signed digitally. There were a few documents, usually the note that were wet signed, which means signed in ink. The closing that took place on July 28, though, was completely digital and remote. The borrower signed every document digitally on a computer, and the notary public was actually in a different state. This apparently was the first time my sources were aware of this happening.

[B]

Actually, the parties were in three different states, weren't they? The couple was in the Chicago area. I think the lender was from Michigan and the notary public was from Virginia.

[C]

Exactly. It's pretty cool if you think about it. They were all connected via a Webcam on a MacBook laptop. It was a really interesting process because in the past, notary publics were required to be physically in the room with you to authenticate your identity. But in this case, the borrowers kind of authenticated themselves digitally by answering questions that only they would know the answers to. Questions like what kind of A car did you drive 20 years ago? Or give us the address. Identify the address of one of your adult children. After the borrowers authenticated their identities to the notary, they then went through a process where they held up their driver's licenses to the webcam to further prove who they were. And then they actually signed their names with pen and ink on a piece of paper and held up that signature to the webcam so that the signature could be captured digitally. And they actually used that digital signature to sign all the closing documents, which they affected by just clicking on the laptop's touch pad. And every time they clicked, their signature appeared on the digital document.

[B]

I'm speaking with Wall Street Journal columnist Robin Friedman, and you're listening to youo Money Matters. Thanks for listening, everyone. Robin, I assume this is a trend that's going to accelerate. Which companies offer this digital mortgage closing technology, starting with the company that worked on this particular closing.

[C]

Yeah, the one that did this particular company was a company called Notarize. There are other companies that are involved with this technology and are about to start jumping on the bandwagon to do these digital closings. The advantages of these digital closings are pretty amazing. For example, a borrower who might be physically challenged, who can't leave their house, can now close a loan right from their kitchen table. Or a member of the military who maybe is deployed in a foreign country can just log onto a laptop and purchase a home or refinance a mortgage. In the past, they would have to drive to a military base or an American embassy or consulate in order to find a notary who could notarize an American document. So the advantage of this technology to consumers is just amazing. It's really going to completely transform the real estate industry. I think.

[B]

I would guess that there are some potential pitfalls to this, Robin, starting with the fact that there are relatively few lenders that do this.

[C]

Of course, it's very new technology. In fact, Notarized launched their product, their service, with only nine lenders on board. So basically, if you want to use your local bank and they don't participate in this particular program, you can't do your closing digitally. So that's something to be aware of, that not every lender has adapted, adopted this technology. There are some other pitfalls as well. You need to remember that notaries can't provide legal advice. So unlike the past, where you'd be sitting in a big closing room and you have an attorney and a real estate agent, and maybe, depending on your state, a mortgage representative or the lender there. Here, you're literally sitting in your own home looking at a webcam with a notary, who in this case was in Virginia. Notaries can't give legal advice, so it's really incumbent on the borrowers to review all of their documents ahead of time and get their questions answered because they could be in a position where they have a question and the notary can't answer. Also, this technology is not for everyone, although the people that I spoke with believe that in three to five years everyone will be using this and the technology will be commonplace. There are those buyers who prefer paper and just won't feel comfortable with new technology. So it isn't for everybody.

[B]

Wall Street Journal columnist Robin Friedman, thank you very much for joining us.

[C]

Robin thank you.

[B]

And that's yous Money Matters. I'm Charlie Turner at the Wall Street Journal for a new podcast experience.

[A]

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[A]

this episode is brought to you by Charles Schwab. Decisions made in Washington can affect your portfolio every day. But what policy changes should investors be watching? Washington Wise is an original podcast from Charles Schwab that unpacks the stories making news in Washington right now and how they may affect your finances and portfolio. [e-mail] WashingtonWise.