East Texas Title has executed its first remote online closing in Texas since the state’s remote online notarization law went into effect.

The transaction, which was executed using NotaryCam’s eClose360 platform, was performed on behalf of a couple in Colorado, who were selling their property in Longview, Texas.

“We started conducting remote online closings on the seller’s side first because that was something, we could do immediately without having to wait for the lenders to be ready,” said Celia Flowers, owner of East Texas Title. “What was really important to us was to stop mailing documents because when you’re mailing documents to people, they can get lost. They might not sign in all the right places and then send back incorrectly executed documents, which really holds up the transaction. With remote online notarizations and closings, it’s instant, and the documents are signed correctly.”

In accordance with state regulations, documents were signed, notarized and made accessible to East Texas Title immediately, with the full transaction taking less than one hour.

“Historically, we would have had to ship the documents to sellers in Denver and then wait for them to return the documents before we could complete the closing. By closing remotely with NotaryCam, we were able to complete the seller’s side of the process the same day,” said Flowers. “The sellers thought it was great because they didn’t have to find a notary and could do it all online. The husband had some health issues, so it was nice that he was able to be comfortable at home. The wife came in just as we were starting because she didn’t have to leave work to go find a notary. For them, the convenience factor was a huge plus.”

Texas was the third state to permit notaries to perform remote online notarizations, which is a critical component to completing a remote closing. Also, Virginia, Montana, Nevada, Vermont, Minnesota, Michigan, Indiana, Tennessee and Ohio have all passed some form of remote online notification legislation.

Were the remote option not available, the sellers faced hundreds of dollars in extra expenses, and inconvenience, simply to complete the sale of their home.

“Remote online closings simply are not possible without remote online notarization, and we applaud these states in their foresight to allow their notaries to conduct these transactions not just within their individual jurisdictions, but worldwide,” said Rick Triola, founder of Notary Cam. “Given the size of the Texas real-estate market, the state’s adoption of remote online closings could prove to be a catalyst for more widespread adoption throughout the country.”

According to Notary Cam, it has completed 130, 000 transactions.

Realtors, homeowners and others who ask, "Are we in another house price bubble?" The answer is "No," said Len Kiefer, deputy chief economist for Freddie Mac, who was speaking at the 2019 Florida Real Estate Trends summit during the Florida Realtors Mid-Winter Business Meetings.

"Home prices are up, but that by itself is no indication of a bubble; you need an element of speculation or credit financing involved as well," said Kiefer. "We looked at credit, capacity and collateral. In the mortgage space, credit has not expanded in anything like we saw a decade ago. As a result, the default potential rate is pretty low. And we clearly don't see the types of financing products that pushed the dynamics then."

While incomes are up, they're not matching the pace of rising home prices. Still, mortgage debt payments as a percentage of disposable income has declined significantly, largely due to lower mortgage interest rates.

"In the downturn, people were taking on a lot of debt, which in turn pushed up prices," said Kiefer. "Now, looking at total mortgage debt compared to equity, we're not seeing that kind of speculation or problem. So, when I'm asked about a bubble, I do say, No. But the way I pause before I say no has been extending a bit as home prices continue to rise more than incomes. However, in our view, house prices will moderate as mortgage rates rise."

So, what's ahead for the U.S. economy and housing market in 2019?

"Employment and a little bit of income growth will be key to supporting homebuyer demand," said Kiefer. "Inflation is going to drive the Federal Reserve policy. It's been pretty tame the past few months. We at Freddie Mac expect one to two rate hikes in 2019 as opposed to the four hikes in 2018, though that will be data-dependent."

The economy should experience modest growth, he said, while mortgage interest rates should gradually rise throughout the rest of the year and be somewhere around 5 percent by the end of the year, representing about a 0.5 percentage point rise from the current rate.

"When interest rates rise, the housing market responds pretty negatively and home sales go down," said Kiefer. "But looking ahead to spring, we should see stabilization of home sales and modest growth in the U.S. economy. Our forecast nationally is for housing prices to moderate substantially over the next few years. However, one of the biggest challenges for the overall economy is a lack of new housing supply."

The interest rates on conventional purchase-money mortgages were almost unchanged in December, compared with November December, according to several indices of new mortgage contracts from the Federal Housing Finance Agency.

The National Average Contract Mortgage Rate for the Purchase of Previously Occupied Homes by Combined Lenders Index was 4.83 percent for loans closed in late December, down 3 basis points from 4.86 percent in November.

The average interest rate on all mortgage loans was 4.82 percent, unchanged from November.

The average interest rate on conventional, 30-year, fixed-rate mortgages of $453,100 or less was 4.98 percent, down 1 basis point from 4.99 in November.

The effective interest rate on all mortgage loans was 4.92 percent in December, up 1 basis point from 4.91 in November. The effective interest rate accounts for the addition of initial fees and charges over the life of the mortgage.

The average loan amount for all loans was $318,600 in December unchanged from November.

The market share of adjustable rate mortgages reached 9.2 percent—a high watermark for 2018.

This percentage is up from 8.9 percent the month prior and from the 2018 low of 5.5 percent, according to the December “Origination Insight Report” from Ellie Mae. Also, the share was the highest since Ellie Mae began tracking the data in 2011.

[caption id="attachment_9349" align="alignright" width="198"] Jonathan Corr[/caption]

“With the strong demand for housing and the rapid increase in property value appreciation, more consumers are turning to adjustable rate mortgages to gain additional flexibility when competing for a home,” said Jonathan Corr, president and CEO of Ellie Mae. “This is another key indication of how demand has outpaced supply in the housing market as consumers pursue their dream of homeownership.”

The popularity of ARMs can be correlated to the 30-year rate, which rose to 5.17 percent for all loans closed in December, up from 5.15 percent in the same period one month earlier. For Federal Housing Administration loans, the 30-year rate increased to 5.2 percent, conventional rates increased to 5.19 percent and Veterans Affairs rates increased to 5.01percent.

Other statistics from the report are as follows:

• The time to close all loan types increased to 47 days in December, up from 46 days in November. Time to close a purchase loan decreased to 47 days, while time to close a refinance increased to 44 days.
• The percentage of purchase loans rose to 71 percent of total loans in December, up from 70 percent the month prior.
• Overall FICO scores dropped one point to 726. Loan-to-value remained at 79 for the fifth month and debt-to-income held at 26/39.

The report is based on data from around 80 percent of mortgage applications that were initiated on the Encompass solution.