According to ALTA survey data published last week, one of the top factors influencing a title company’s timeline to execute on eClosings is the passage of remote online notarization (RON) legislation.
In 2020, 8 states will put RON legislation into effect. One such state, Kentucky, will put RON into action starting January 1, 2020.
At the Kentucky Land Title Association (KYLTA) Annual Convention held last week, Qualia’s Director of Partnerships and Integrations, Max Lamb, joined a panel to discuss RON and eClosings in Kentucky and across the country. Lamb was joined by David Burner, Strategic Planning & Partnership Manager of Notarize, and Mike Lyon, Executive Vice President of Nexsys. The panel was moderated by Elizabeth Berg of Agents National Title Insurance Company. (For background on eClosings and how RON fits in, read our post “Untangling the Complexities of eClosings”)
The panel discussed the value of eClosings for consumers and lenders and the details of Kentucky’s RON legislation.
Benefits of eClosings for consumers
Burner, Lyon, and Lamb discussed the core benefits of digital closings from a consumer perspective and narrowed the list to three: meeting digital expectations, improved security, and reduced errors.
- Meet digital expectations: Lyon noted that many lenders now offer digital loan tools for consumers further upstream in the process. “Everything is done online now. Except for one thing: the closing,” he said. “From a client’s perspective, everything has been really efficient and digitized and then the flow is broken at closing. It’s like we were in the future and now we’re suddenly back in the 1970s at the closing table.” Integrating digital tools at closings makes for a more streamlined and cohesive consumer experience.
- Improved security: The panelists agreed that anything printed is especially vulnerable to interception from people outside of the transaction. “For a consumer, your entire life is printed on about 4-5 pages,” Lyon said of the highly-sensitive information found on closing documents. Digital closings ensure that physical documents are not floating around where an ill-willed person could access them.
- Reduced errors: With digital closings, a signature is never missed because most digital systems are designed to finalize the closing only when all signature blocks have been completed.
Benefits of eClosings for lenders
The panelists also discussed the key benefits of digital closings from a lender perspective including reduced disbursement delays, lowered audit costs, and expedited funding. Lamb noted that title & escrow businesses play a crucial role in helping coordinate the technology and tools needed to ensure lenders benefit from a digital closing.
- Reduced disbursement delays: As mentioned earlier, in an eClosing, a digital platform will alert the user if a signature is missed. These error reductions ensure disbursement happens on time.
- Lowered audit costs: “From a quality control and package audit standpoint, the eClosing process creates tremendous efficiencies,” Burner said. From a cost perspective, any efficiency is valuable. Burner cited a Mortgage Bankers Association (MBA) report that noted it costs a lender $8,500 a unit to put together a mortgage. “Anything lenders can do to create efficiency is a huge win to stay profitable or to get to profitability,” Burner said.
- Expedited funding: “Typical funding on a transaction takes an efficient lender between 9 and 12 days after closing,” Lyon said. “In an efunded process, funding can happen nearly immediately.” For sizable lenders driving high volume, expedited funding is a big win.
Kentucky legislation specifics and the role of technology
To round out the discussion, the panelists demystified a few specifics of the Kentucky RON legislation and helped the audience understand the role of technology for each requirement.
- Credential analysis: This requirement states that a “third person provides confidence as to the validity of a government-issued identification credential through review of public and proprietary data sources.” This means that a eNotary must use software to scan a signer’s ID and corroborate a person’s identity with what’s on their ID. This ensures a safer and more secure transaction.
- Dynamic Knowledge-based authentication assessment: This type of assessment is conducted before an eSigning as another layer to validate each signer’s identity. The signer is asked a series of publicly-available information about him or herself that they must validate. The signer must answer 4 of the 5 questions correctly in order to move forward with an eClosing.
- Tamper-proofing: According to the panelists, this is essentially a digital seal that’s applied to a document so that it’s permanently locked after it’s signed. If anyone attempts to break the lock and change the information on the document, the system sends out an alert to let the transaction party members know the document was tampered with.
- Electronic journal: According to Kentucky’s legislation, RON notaries must keep an online journal for 10 years. The journal must include basic “who” “what” “where” and “when” data. There is also a requirement to keep a video of the signing. The notary is responsible to keep their own journal and most solution providers offer secure cloud storage for a notary to keep their records for a decade or more.
For more on eClosings, download our eGuide which discusses how to evaluate eClosing options for your business.