As the COVID-19 (Coronavirus) continues to affect the world, the United States, and the State of Maryland, many Maryland real estate professionals are considered “essential” businesses that can currently remain open and conduct business. Mortgage lenders, real estate agents, title companies, notary publics and appraisers are just a few of the professionals whose lives have been impacted by COVID-19 (Coronavirus). The Maryland courts and executive branches have been quick to address some of the most pressing issues that real estate professionals face.
Virtual Notary Public
Many real estate documents must be notarized by a notary public. A notary public is a sworn public official and must verify the identity of the person who is signing the documents. With social distancing protocols being recommended, many real estate transactions can be delayed because of the laws that a notary must witness a signature.
Maryland law currently allows electronic signature for notaries. Specifically, the Maryland Uniform Electronic Transactions Act provides that “If a law requires a signature or record to be notarized, acknowledged, verified, or made under oath, the requirement is satisfied if the electronic signature of the person authorized to perform those acts, together with all other information required to be included by other applicable law, is attached to or logically associated with the signature or record.” Md. Code, Comm. Law, § 21-110. However, the notary must still physically be present to witness the electronic signature and verify the identity of the person signing. Underwriters are particularly stringent when it comes to having documents properly notarized.
Effective October 1, 2020, Maryland will allow Remote Online Notarizations (“RON”) except for the execution of Wills or Trust Instruments. The Notary Public must 1) have personal knowledge of the identity of the remotely located individual; 2) a witness, who can be remotely located, must verify the identity of the remote located individual and 3) the remotely located individual can prove identity over video chat.
Currently, the Maryland State Bar Association is working with the Governor’s office to pass emergency executive orders to allow RONs sooner than October 1, 2020, but to date, the Governor has not acted. As these developments change daily, we will closely monitor the situation.
Exterior-Only and Desktop Appraisals
An important part of a real estate transaction is the appraisal, which is usually conducted by an on-site visit. Due to social distancing and the risk of catching and spreading COVID-19 (Coronavirus), on March 23, 2020, the Federal Housing Administration has relaxed some interior appraisal requirements to “facilitate liquidity in the mortgage market.” These relaxed appraisal requirements do not apply to new construction or construction-to-permanent loans and those kinds of loans still require a traditional appraisal. If the loan is for a non-new construction / construction-to-permanent loan, Fannie Mae is now allowing desktop and exterior-only appraisals for principal residences and second home investments. Regular second homes still require a traditional appraisal only. For limited cash-out refinance loans, if the loan is Fannie Mae owed, a traditional and exterior-only appraisal are allowed, but if it is not Fannie Mae owned, a traditional appraisal is required. For a cash-out refinance, whether or not Fannie Mae owned, a traditional appraisal is still required.
Maryland Land Records Recordation
On March 18, 2020, Chief Court of Appeals Judge Mary Ellen Barbera issued an Administrative Order addressing instruments that are required to be filed with the Maryland Land Records Department during the COVID-19 (Coronavirus) emergency. First, the clerks shall promptly process all properly filed instruments that are required to be recorded. For jurisdictions that use Simplifile, filings shall be consistent with current protocols. If the to-be-recorded instruments have been executed with electronic signatures that comply with applicable laws, these signatures are to be deemed properly executed and accepted. Finally, the clerks shall provide appointments to land records while maintaining the appropriate social distancing measures.
Lax Employment Verification Requirements
Fannie Mae has issued Lender Letter LL-2020-003 relaxing some of its requirements for new home buyers’ employment verification because “Many lenders are reporting difficulty in obtaining the verbal verification of employment…due to disruption to operations of the borrower’s employer.” Specifically, Fannie Mae permits the lender to obtain written employment verification within the same time frame as verbal verification of employment. Written verification includes email communications that identifies the name and title of the verifier and the borrower’s name and current employment status. Also, Fannie Mae is allowing one year-to-date paystub from the pay period that immediately precedes the note date, and the lender can provide bank statements.
If you are a real estate professional impacted by COVID-19 (Coronavirus) and have questions about the impact on your business, please call Steiner Law Group at (410) 670-7060.