This post discusses Remote Online Notarization (RON) covering:
- What is RON?
- What is happening with RON legislation?
- How RON and eClosing transactions are taking off during COVID-19
Read on to learn how to get prepared to do RON closings—.
According to the National Notary website, Remote Online Notarization (RON) is the act of performing a notarization remotely using two-way audio-video technology. It is the online equivalent of an in-person, paper-based notarization where every part of the process is done via the internet. Like traditional notarization, RONs begin with the online Notary verifying the signer's identity and ensuring the signer understands the document and is willing to sign it. The signer's wet ink signature is replaced with an electronic signature, and the remote Notary's physical stamp and handwritten signature are replaced with an electronic seal and digital certificate, respectively. Payment is handled at the end of the transaction.
In 2019, Remote Online Notarization (RON) was slowly making its way into state legislation across the nation. Mid-way through the year, Florida made a triumphant announcement that Governor DeSantis signed House Bill 409 that was passed by the Florida Senate. That made Florida the twentieth state in the nation that allowed RON. But at that point, not too many people cared about this or even knew what RON was.
Fast forward to March 2020 and everything changed. COVID-19 made a substantial impact on our day-to-day operations; both from a personal and corporate standpoint. The pandemic forced companies to diversify and think of alternative ways to conduct business. Title companies across the country scrambled to figure out how to effectively and safely close all the open deals in their pipeline. If you drove down any business street during this time frame, chances are you would have seen tables on front lawns, with people spaced 6 feet apart, wearing masks, fumbling through and signing stacks of paperwork. It wasn't a sustainable solution to conduct notarization-based paperwork.
Luckily, the National Association of Realtors® (NAR) had already been actively advocating and pressuring state and federal governments to consider legislation to enable consumers to use remote notary technology. It's unknown how quickly Congress would have acted on this if it wasn't for COVID-19. But Senator Kevin Cramer [R-ND] stepped up quickly and introduced the "Securing and Enabling Commerce Using Remote and Electronic Notarization Act of 2020" (S. 3533, H.R. 6364, the SECURE Act). NAR followed up with a letter to Congress, asking for the bill to be included in any COVID-19 response legislation to allow consumers to safely close their transactions and maintain a functioning real estate market. As of September 2020, this was still stuck in Congress, awaiting to be reviewed by the committee.
In the meantime, states are moving forward, passing their legislation on remote notarization. National Association of Secretaries of State (NASS) reports that 38 states authorize some form of e-notarization, 25 of these states currently have a law that allows for remote e-notarization. However, due to the circumstances surrounding the stay-at-home orders for COVID-19, 48 states and Washington D.C. authorize remote e-notarization either through existing law or emergency action. Some states, such as California, issue guidance on notarization even though they haven't passed any bills through legislation.
Not only are legislators accelerating RON legislation, but underwriters are also modifying their rules to allow for eClosings, and now even Fannie Mae and Freddie Mac allow for RON closings.
This quick move to RON and eClosing is also spawning some great technology innovation and partnerships. Realogy Title Group and Notarize just announced a partnership, and have already seen a 200% spike or 1,600 RONs in the first half of 2020 compared to the 500 closed in 2019. Also, Docutech, a First American company, has seen a similar growth in demand—in 2020 alone, Docutech has already helped lenders to perform over 100,000 eClosings. And DocMagic, who has been doing eClosings for years, has seen a strong consumer demand where they now expect it to be part of the closing process.
To get a pulse of how digital mortgages are trending you can review the MERSCORP Holdings report. The trends show that eNote registrations have grown substantially, which means adoption is increasing rapidly.
eNote Data : Year-over-year growth. Source: MERSCORP Holdings, Inc.
What Does the Future Hold?
According to researchers at Harvard, intermittent social distancing practices could easily stick around until 2022. Computer simulations, conducted by Harvard's research team, modeled various outcomes that highlight how COVID-19 could pan out. In one highly probable scenario, the virus would continue off and on, thus forcing ongoing social distancing orders.
As much as we wish COVID-19 never had a chance to penetrate the fabric of our society, one silver lining is that it pushed the real estate industry into rapidly adopting new technology to make everyone’s lives easier/better. If you’re looking to keep up with the real estate's inevitable move to RON, and you don't have the right technology in place to get you there, consider our SaaS browser-based mortgage loan origination software, LendingQB®.
LendingQB's innovative Open API framework enables companies to seamlessly connect to over 250 vendor partners, including best-in-class document providers that will allow eClosings to help you stay ahead of your competition.
As technology continues to expand into uncharted territory, we're excited to see what the future holds for loan origination software. At MeridianLink, we're always eager to make the process as streamlined as possible for the user, consumer, and back-end.