This post is part 4 of a multi-part educational series on remote online notarization. For part 3: “How to Become a Remote Online Notary in your State” click here.
Real estate purchases require buyers and sellers to transmit highly sensitive information. It’s a high degree of trust placed on the professionals handling the transaction. During a remote online notarization (RON) eClosing, this trust can waver for those unfamiliar with technology.
Delivering reassurance that your systems are safe and secure is paramount for a RON transaction, and this confidence starts with investment in the right technology from pre-closing all the way through to post-closing.
One of the benefits of a RON eClosing is the ability to send specific, non-notarized documents ahead of the closing date for buyers to review and sign on their own schedule. These pre-closing documents are executed using e-signing technology that meets the standards of one of the two laws for electronic signatures: The state Uniform Electronic Transaction Act (UETA) or the federal Electronic Signatures in Global and National Commerce Act (E-SIGN). These laws generally hold the same rules for electronic signatures.
The e-signing technology used to sign these pre-closing documents may be a third-party service or the e-signing technology may be built directly into the closing agent’s workflow software. For example, Qualia eSign allows title & escrow agents to electronically edit, send, sign, and initial closing documents directly within their core workflow.
To comply with UETA and E-SIGN standards, the e-signing technology must meet these minimum requirements:
- Intent to sign: The system must collect evidence of the signer’s intent to electronically sign.
- Consent to do business electronically: The platform must provide clear consent with specific disclosures to the signer.
- Authentication: The system must keep an associated record of the process by which the signature was created or generate a text or graphic statement that is affixed to the signed record to prove that it was executed with an electronic signature.
- Record storage: The system must keep record of the signer’s consent and must store the electronically-signed documents for reference by all parties involved.
Some states may have additional requirements for e-signing technology. It’s also best practice to ensure the signatures can be attributed to a record and individual. To achieve this, the e-signature must be authenticated through some form of identification of the signer and be tamper-evident.
During a traditional in-person closing, a signer sits at the closing table to review and sign all of the documents at once. At this time, the signer can ask the closing agent questions about the documents and sort out any misunderstandings in-person. During a remote closing, the signer is not afforded this in-person interaction; however, the right technology can provide a similar customer experience.
Secure communication portals like Qualia Connect allow signers to communicate with all parties involved in the transaction to ask questions ahead of the close date. For all pre-closing documents, signers can receive the coveted face time with their signing agent through features like Connect Video Chat which enables a signing agent to initiate a video call with a customer to answer any questions.
RON eClosing platform requirements
Requirements for RON eClosings vary by state; however, the platform requirements outlined in most states’ legislation generally follow the suggested guidelines established by ALTA. These guidelines are as follows:
- Mandatory disclosure: Requires a disclosure of the fact that RON was used in the notarial certificate.
- Multi-factor authentication: The system must verify the identity of the signers through at least two of the following: 1) government-issued credential analysis (driver’s license, passport, etc.) 2) knowledge-based authentication (the signer answers personal questions to confirm their identity) 3) facial/fingerprint recognition or a retinal scan.
- Audio-visual recording: The system must produce and retain an audio-visual recording of the notarial act.
- Tamper-evident technology: The RON platform must affix tamper-evident electronic notary seals (to indicate the documents were signed by a certified remote online notary) and digital certificates (to verify the identity of the notary who applied the electronic signature and seal). Once the tamper-evident seals are applied, the document cannot be altered without clear indication of the changes.
- The remote notary must maintain an electronic journal: The law may require that instead of a traditional paper journal, the remote notary maintains an electronic journal for RON.
- The audio-video recording and electronic journal must be retained for a defined period: ALTA’s model legislation recommends a 10-year retention period; however, some states use shorter time frames.
- Abide by privacy laws to protect non-public information: The system must include security to prevent unauthorized access during the transaction itself and after the fact.
Post-closing technology for RON
After the documents are executed by the signing agent during the eClosing, some of the most critical components of the RON transaction take place. These include recording the transaction with the county recording office and registering the mortgage with the eRegistry so it can be transferred on the secondary market.
Title & escrow businesses must have a contract in place with an e-recording service to complete the digital transaction. E-recording can take place within a matter of hours and involves the following processes:
- The title or escrow company submits electronic documents through a web-based service (e.g. Simplifile) for recording.
- The county recording office receives the documents electronically (some jurisdictions have not yet adopted technology to receive electronic documents; however, adoption is rapidly increasing).
- The county reviews the documents and records them once approved.
- The county returns the stamped, recorded documents back to the title or escrow businesses electronically.
For RON transactions involving a mortgage loan, technology must be used to execute the electronic version of the promissory note (the eNote). If the title or escrow company’s RON platform does not support eNote creation, the mortgage lender may be responsible for investing in eNote technology. The eNote platform must execute a MISMO XML SMARTDoc eNote that is wrapped with a tamper-evident seal. (For more details on eNotes, click here.)
Regardless of the executor of the eNote, mortgage lenders must have an eVault to manage the storage and transfer of the eNote on the secondary market. The eVault acts as a data warehouse to securely store the eNote and transfer it to other investor eVaults. The eVault is registered with MERS eRegistry so that it can be traced and recorded as it moves from investor to investor. (For more details on eVaults, click here.)
Other tech considerations
To successfully execute a RON transaction, it’s critical that the closing session is not interrupted by slow internet speeds, grainy webcams, or ill-prepared signers. Before the RON eClosing, the following should be considered:
- Internet speed: RON eClosings require a relatively high internet bandwidth. Most RON providers recommend a consistent internet bandwidth of 15 Mbps. You may also consider using ethernet cables during the eClosing to reduce the risk of being disconnected during the session.
- Cameras made for streaming: RON eClosings require that the signer and remote notary can clearly see and hear one another. Investing in cameras and microphones designed for streaming can help ensure this clarity.
- Preparing signers: Consumers should be made aware of the devices they will need to complete a RON transaction. Typically, mobile phones are not ideal for RON signings. (However, the signer may need their mobile phone to take and send a photo of their ID for analysis.) It’s also recommended that a signer tests their microphone, camera, and internet speed before the closing date.
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In part 5 of this series, we will discuss how to prepare homebuyers for a RON signing. To stay up-to-date on the latest content in this series, click below to subscribe.