Over the past year, conversations around remote online notarization (RON) have grown. This increased focus on fully-digital closings was largely in response to consumer expectations for flexible and personalized closing experiences. Now, the conversation is taking on new meaning and intensity in light of COVID-19.
Over the past few weeks, the federal government has urged the public to practice social distancing. Local and federal government officials are encouraging people to stay indoors and away from others in order to curb the spread of COVID-19.
While in-person signings (with added precautions) are still happening in many instances across the country, many industry leaders believe that the availability of RON will greatly protect all signing parties from person-to-person contact (which health experts believe should continue to be limited for the next one to three months at minimum to avoid overwhelming hospitals).
The Race is on for RON
Currently, 23 states have passed RON laws; however (before COVID-19) only 12 of these states had legislation that was fully implemented without limitations. This number is changing quickly as states such as Wisconsin and Washington (among others) enact emergency measures to expedite rule promulgation to enable RON more quickly (Note: in Washington State, the law is effective temporarily through the end of April 26, 2020 as of the publication of this post).
Other states such as New York, Georgia, Connecticut, and most recently Wyoming, that had previously not passed RON legislation have now authorized the use of RON using video services such as Skype, FaceTime or other similar services during the COVID-19 emergency. (Note: ALTA has recently issued a statement that services such as FaceTime, Zoom, and Skype are not adequate for RON closings.) In Wyoming’s case, the state allows notaries to perform RON after “completing training provided by a remote online notarization provider approved by a contiguous state.” The bill continues: “Notaries should use that provider’s technology standards and security features.”
(State contingency plans related to RON continue to develop, for a current list of states enacting emergency action related to RON, click here)
Bill Andreson, VP of Government Affairs at the National Notary Association, believes that the current environment with COVID-19 will encourage local governments to move forward with RON legislation in the months to come. “If a federal bill authorizing notaries in every U.S. state and jurisdiction to perform RONs that affect interstate commerce is enacted, I see the states without I-PEN and RON statutes moving quickly to enact their own state laws,” he said. “It’s similar to the situation that played out when the federal E-SIGN law was enacted in 2000.”
Industry leaders are indeed pushing forward with such a bill to enable the immediate use of RON nationwide. On March 19, Senators Mark R Warner and Kevin Cramer introduced the “Securing and Enabling Commerce Using Remote and Electronic (SECURE) Notarization Act of 2020.” This bipartisan bill, supported by ALTA, the Mortgage Bankers Association (MBA), and the National Association of Realtors (NAR), would permit the “immediate nationwide use” of Remote Online Notarization (RON). Now, less than a week after being introduced in the Senate, a companion of the act has been introduced in the U.S. House of Representatives.
If RON legislation passes, can fully-remote closings take effect immediately?
If RON legislation passes, there are still a few factors that impact the ability of title & escrow businesses to deploy fully-digital closings immediately.
County recording offices’ ability to e-record:
Counties covering over 80% of the US population already have e-recording systems in place; however, there is still a coverage gap that will impact many title & escrow businesses’ ability to complete RON eClosings.
In some counties, officials have responded to the emergency with workarounds that allow an authorized person (as defined by the state’s legislation) to print a copy of the remotely notarized document and attach a certification that is a true and correct copy of the original to present to the county recording office.
Lender adoption of eNotes:
Many lenders have not yet adopted eNotes (electronic promissory notes). eNotes are a critical component of fully-digital closings, and while lenders have not been quick to adopt eNotes, their popularity has steadily increased. At the Future of Real Estate Summit, Erica Meyer, Owner and Publisher of October Research reported that “In a single month—October 2019—there were more eNotes registered than all of 2018.”
These factors, which are necessary for the execution of RON eClosings, may take time but could be accelerated with the passage of local and federal legislation such as the SECURE Notarization Act.
What can title & escrow businesses and mortgage lenders do to get started with RON eClosings
If RON is already available in your region or becomes available due to legislative changes at a local or national level, there are a few first steps you can take to get started with RON.
- For title & escrow businesses: discuss the possibility of RON eClosings with your underwriter and lenders. There are varying guidelines for insuring transactions that are notarized remotely; however, many title insurance underwriters have recently issued new, emergency guidance related to the use of RON.
- For lenders: enable eNotes. Speak with your current LOS or document preparation technology provider as soon as possible to learn about their eNote capabilities and develop a plan to implement this technology.
- For all transaction parties: determine the technology required to complete RON eClosings. ALTA provides a list of technology capabilities the service provider should offer within their “eClosing Readiness Checklist” including e-signature capabilities, registration of eNotary certificate/stamp, video recording and video storage for RON closing, eNote and eVault capabilities, among others. Qualia customers can use Qualia in tandem with any approved RON technology.
To learn more about how your team can leverage Qualia for your RON technology needs to deliver fully-remote closings, click below to schedule a time to speak with a Qualia Specialist.