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Selling a Home

How COVID-19 Changed the Mortgage Process

2020-07-15

To keep themselves and homebuyers safe during the COVID-19 pandemic, real estate agents, lenders, and investors are making some changes. AAFMAA Mortgage Services LLC (AMS) is committed to updating Members on the new “normal” you can expect, and when and how industry norms continue to evolve during COVID-19.

Home Appraisals

Most mortgage loans, including a VA Loan, require a full residential appraisal, which includes the use of valuation software, driving by the home and comparable (comps) homes, and taking measurements and photos of the home’s exterior and interior – usually every room in the house.

The organizations that regulate appraisal practices and investors/guarantors that work with lenders including the VA, Fannie Mae, and Freddie Mac, will now accept an exterior-only (drive by) inspection or a desktop appraisal under certain conditions.

According to the VA, appraisers are still required to follow the same procedures of the VA appraisal process and are still required to meet Uniform Standards of Appraisal Practice and state requirements, but are allowed the broader use of exterior inspection.

“Considering the health and safety of Veterans and VA Appraiser Fee Panel members during this national emergency, valuations may come in a form of an exterior-only appraisal with enhanced assignment conditions or in limited instances, a desktop appraisal,” the VA said.

According to the VA, the new appraisal rules apply to purchase and refinance loans but are considered to be temporary. The VA noted that it will return to “normal operations after the national emergency.”

Remote Closings

Another big real estate touch-point is the actual closing, when you meet with a signing agent who notarizes your signature (called a wet-ink signing).

Many title and settlement companies are working with fewer people in the office, and are available by appointment only. They’re also using social distancing and other physical protective measures. For instance, they might ask everyone to wear masks and gloves, sit in different rooms (or areas of a room), and establish a neutral place to exchange documents. Some offer drive-through or even curbside closings where the parties remain in their cars to complete the signing.

Twenty-four states allow remote online notarization or “RON” (also called webcam notarization, online notarization, or virtual notarization) for real estate transactions. With RON, you use audio-visual (AV) technology over the Internet to meet with a notary instead of meeting in person. The notary confirms your identity, watches (and records) as you sign, and adds an electronic version of their seal.

State RON laws provide guidance to notaries on how to authenticate the signer’s government-issued identification, and how many years they must retain the video record of the signing. Some lenders also provide guidance on how long to archive recordings.

About a dozen companies offer secure AV technology for RON. Notaries subscribe to their services and receive special training on online notarizations.

There is also the less-secure practice of remote ink signings (RIN), in which the notary uses a platform like Skype or Facetime to witness a signing. The signed documents are then mailed to the notary to add their signature and seal.

During the COVID-19 pandemic, more than 30 states have emergency orders in place to allow notaries to use AV technology. Even so, local government offices must be able to accept electronically recorded documents or be willing to print out electronically executed documents for recording.

Whether or not you can close with RON depends on where you live and the loan type. The Government National Mortgage Association, more commonly known as Ginnie Mae — a U.S. government-owned company that guarantees investors’ purchases of securities based on government-backed loans, such as VA and USDA loans — is in the process of approving the use of remote online notaries for signings. AMS hopes to offer this option in the very near future.

AMS is Here to Help

For more information about how AAFMAA continues supporting the military community during the COVID-19 crisis visit www.aafmaa.com/COVID19.