Industry leaders are rallying around a federal bill that would permit the nationwide use of remote online notarization.
The Securing and Enabling Commerce Using Remote and Electronic Notarization Act, H.R. 1509, establishes national standards for remote and electronic notarizations. The legislation requires the creation and retention of video and audio recordings, as well as the use of communication technologies such as video chats during remote notarizations. It passed the House on Feb. 27.
Leaders at the Mortgage Bankers Association support remote online notarization on the state and national level. They say the bill’s requirements are consistent with industry standards.
“The bill’s minimum standards for RON are consistent with both the MBA-ALTA model state RON bill and the Mortgage Industry Standards Maintenance Organization RON standards and will help protect against fraud and make the mortgage closing process more convenient for consumers. The bill also complements existing state laws by providing state officials with the flexibility and freedom to implement their own RON standards,” MBA President and CEO Robert Broeksmit said in a statement.
Diane Tomb, CEO of the American Land Title Association, issued a statement after the SECURE Notarization Act passed the House. She said that if it becomes law, the bill will modernize the country’s notarization system.
“Too many Americans are left behind by our current system, which can delay the execution of important documents – such as closing documents for the purchase of a home – simply because someone is unable to visit a notary in person,” Tomb said.
The National Association of Realtors has encouraged the passage of laws, regulations, and standards that advance the interstate adoption and recognition of remote notarization since 2018. They say if the legislation becomes law homeowners and prospective buyers would benefit from nationwide use of remote online notarization technology.
SingleSource Property Solutions employees Chrissy Ziccardi, senior director of title and client relations, and Chris Porto, manager of title and closing operations, recently sat down with Editor Kimberley Haas to talk about remote online notarization.
Haas: I’m hoping you can tell us a little bit about the perspective of a business, but also too, when it comes to the public policy side of it, what you would like lawmakers to understand as they’re considering this piece of legislation.
Ziccardi: I think from a policy perspective, this is the direction that we see as a title company and a title agent. It’s something that started getting a lot of traction during Covid because people were sheltering in place and we still had to keep things going.
Closings were still taking place, and as we were, everyone was trying to maintain social distancing. So a lot of states had implemented remote online notarization to still keep the closings moving. This type of legislation is still active in 43 states.
What’s nice about it is, right now when you do a traditional closing and you’re using a notary or an attorney to do that closing, they are licensed only in that state to conduct that closing. With remote online notarization, an online notary can be used in any state.
For any title company, actually even any homeowner, they know that there are restrictions when it comes to when they can do their closing. That’s because they have to make sure that the notary is able to get to their location. They have to make sure that they have the same amount of time.
As anybody knows in this industry in particular, you run into that month-end crunch. There may be 50 closings taking place the last day of the month because everybody wants to get everything funded on time for that month. Notaries will back their schedules up, they try to fit in as many as possible and we understand that and we work with them and advise them, “Don’t overlap closings because you’re going to run into a situation where you may not be able to get to that next location.”
We do run into that. We’ve seen it especially this year with the freak snowstorms that have been occurring in areas where we haven’t seen them in prior years.
Remote online notarization is going to be able to change all of that. The borrowers won’t have to leave their homes. The notaries won’t have to leave their homes. So those are the kind of advantages that this is going to bring to the table.
Porto: Some of the other benefits, not necessarily for us, but for the consumers are the convenience involved with not having to travel to do a closing, not having to travel to an attorney’s office.
Let’s say if you’re in the military and you’re overseas, or if you’re just traveling for work and you’re out of state, you can still conduct your closing without having to travel back home or having to have a power of attorney drafted.
We do a lot of closings nationwide and we do some closings in Alaska. Some of the counties in Alaska are so rural that it takes a notary several hours to get to the borrowers. A remote online notarization closing would make it so much easier for the borrower and the notary than having to travel.
Another benefit to the consumer is they would have an opportunity to review the closing documents prior to the scheduled closing appointment. That way they have a vested interest in the loan and the closing documents. So they’re going to go through it with a fine tooth comb, making sure that the interest rate is correct, that the middle initials are correct, that the property address is correct. That way there’s an opportunity for them to catch any mistakes.
And it just overall it would be a faster closing process. RON closings typically take about 20 minutes compared to about an hour for a traditional in-person notary closing. So those are the benefits that I could see for a borrower.
Haas: How did this work? During the pandemic were all 50 states allowing for remote notarizations and then some pulled back when things started to open up?
Ziccardi: Not all 50 states were allowing for remote online notarization. That’s when it really started ramping up, allowed in more and more states. There were a few that did pull back afterward.
If you look at the seven states that aren’t permitting remote online notarization, currently five of those seven are attorney states.
Haas: When you say attorney states, what does that mean?
Ziccardi: The closing has to be facilitated by an attorney.
Haas: That’s what I thought. I just don’t want to presume anything. Do you think that the influence of bar associations in those states might be part of that?
Porto: I do think that the state bars have a lot of influence in those states. However, I think if this does pass, the attorneys would still be involved in the closing process and they would be the ones conducting the remote online notarization. It would not replace any of the attorney requirements or any of the attorney states.
Haas: What does that mean for people in your profession? I know that we talked a lot about the benefits to consumers, and I think that our readers will certainly appreciate that, but so many of our audience members are people who are practicing in the field.
What would you tell, for example, your friends when you go out socially? Maybe you meet up at a Chamber of Commerce event and you’re sitting with a group of realtors and lenders. What do you say to them?
Porto: Me personally, I support the act and I think it’s the wave of the future. I think in three to five years it’s going to be the standard real estate closing rather than the in-person notary closing.
Ziccardi: Yeah. I agree with Chris on that. You don’t really see many changes in the title industry from a title and settlement perspective. And I think this is something that we need to embrace as an industry and it’s something that we need to move forward with.
Congressman Kelly Armstrong, R-ND, and Congresswoman Madeline Dean, D-PA, introduced the SECURE Notarization Act of 2023.
“Remote Online Notarization offers consumers a convenient way to safely and securely complete documents. I’m excited to see our legislation receive an overwhelming and bipartisan House vote, and I am hopeful the Senate will agree and pass it to be signed into law,” Armstrong said in a statement.
The bill was received in the U.S. Senate and has been referred to the Committee on the Judiciary.
Bill Anderson, vice president of government affairs at the National Notary Association, wrote in The National Notary Bulletin that they have not taken a position on the bill.
“The interstate recognition provision could be positive for notaries, given legislation currently in California and Connecticut to undermine the acceptance of technology-based notarizations across state lines. On the other hand, the NNA does not support Congress in determining who may perform notarizations and how they are conducted. These matters traditionally have been determined individually by each state,” Anderson said in a post published on Tuesday.
Anderson said they also have questions about how the act will affect notary liability.
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