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Getting Familiar with Remote Notarizations

Wouldn’t it be nice for borrowers to have the option of signing their closing documents online? It’s getting more likely every day, thanks to the recent push behind remote online notarizations.

New innovations have made it possible to conduct secure notary transactions over the Internet, and a growing number of technology companies are now offering these services to the mortgage and title industries. Several states have made remote notarizations legal, and industry groups and government agencies are working on making remote notarizations consistent from state to state.

At this point, there is not much stopping remote notarizations from becoming legal nationwide, which could ultimately revolutionize the homebuying experience for consumers. But how exactly do they work?

In essence, an online notary performs largely the same process as an in-person notary. There are some key differences, however.

In a “typical” remote online notarization—sometimes called RON—the notary and borrower log on to a secure web platform from different locations. Using audio and video, the notary affirms the borrower’s identity and witnesses the borrower’s signature through a secure webcam connection. The entire event is captured electronically, and after signing, the online notary  includes a statement in the loan file stating the notarization was performed online.

Besides being more convenient for the borrower, online notarizations will save significant time and money that’s typically spent on sending paper documents to borrowers and waiting for their return. Online notarizations would also speed up development of digital mortgages, since the entire closing process could take around 15 minutes.

While remote notarizations are technically possible and their benefits seem clear, it may be some time before most consumers will be using them. One reason is that they are currently legal in only a handful of states. But that’s changing fast.

At this writing, more than a dozen states have either made remote notarizations legal or have plans to do so in the near future. Each law gives  remote notarizations the same legal weight as in-person notarizations. Earlier this year, the National Association of Secretaries of State (NASS) adopted guidance for implementing and regulating online notarizations, paving the way for more states to follow.

There are other hurdles to remote notarizations. Document recording processes vary greatly by local jurisdiction, so even in states where remote notarizations are legal a borrower’s access to them could be limited. Also, there is no standard process for lenders, title companies and other mortgage industry participants to incorporate online notarization processes. However, there are efforts to overcome these obstacles, too.

Last year, the Mortgage Industry Standards Maintenance Organization, or MISMO, a subsidiary of the Mortgage Bankers Association, began work creating a standard framework for lenders and others to conduct online remote notarizations. Members of MISMO’s Remote Online Notarization Development Workgroup are also coordinating with groups in other industries as well as state agencies to create consistency between online remote notary transactions.

A growing number of major players in the housing industry are joining the remote notarization trend. They’ve been endorsed by Fannie Mae and Freddie Mac, the two largest suppliers of mortgage funds. And several major lenders have announced plans to offer remote notarization as an option to borrowers.

As one of the mortgage industry’s leading document recording providers, reQuire Holdings fully supports remote notarizations. For more information, contact us today!

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