Remote online notarizations are a game changer, title industry experts say

However, not everyone is convinced

The U.S. House of Representatives passed a bill in late July creating federal minimum standards, which would allow notaries nationwide to perform remote online notarizations (RON). Title industry experts say it would be a game-changer for the mortgage space, but they expect some resistance.

“Actually, I feel remote online notarizations could streamline the process for larger entities, hedge funds and investor builders,” said Rachel Luna, agency development manager at Patriot Title Co. “I still feel that there’s going to be a lot of pushbacks from the lenders on allowing us to do those virtual notaries because they still are waiting for pen-and-paper signatures.”

According to Luna, RON can also make things more complicated: “We’re going back to multiple logins, multiple approved vendors to be able to do the virtual notaries.” And, she said, “there’s just going to be more hurdles in reference to who’s using what vendor or certifying authorizer.”

So far, Luna said that her company uses RON in specific cases, such as cash transactions or with a sick person in a hospital setting. 

Luna spoke on Tuesday during a session at the 2022 HousingWire Annual event, a conference held in Scottsdale, Arizona.

Pat Stone, chairman and CEO at Williston Financial Group, also expressed some skepticism on how fast RON can be adopted.

Here’s why some lenders choose IPEN over RON

In-person electronic notarization (IPEN) is quickly gaining industry-wide traction with lenders, title agencies and settlement companies due to its convenience, cost savings and improved borrower experience. Learn more here!

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“In the markets where it is currently accepted, we’re experiencing that about 10% to 15% of sellers use it, but about 1% to 2% of buyers use it,” he said. “Buyers are naturally nervous; there’s a lot of people that only buy a home every seven, 10, 12 years, have questions and are just much more inclined to have an in-person interaction.”

Overall, the industry expects that the creation of RON standards across all 50 states will be a key to advancing the universal adoption of a fully electronic mortgage. By July, a total of 41 states had enacted laws enabling the use of remote online notarization. A notable exception is California, which vigorously opposed remote online notarization even during COVID-19 shutdowns.

The House legislation complements existing state laws while providing states the freedom to set their RON standards. The Senate will next take up the House companion bill, S. 1625, introduced by Sens. Mark Warner, D-Virginia, and Kevin Cramer, R-North Dakota.

“If we get a national bill passed, a standard across the U.S., it is a game-changer because the next generation of buyers and sellers are connected via technology,” said Marcus Hunt, co-founder and attorney at South Oak Title and Title Success Solutions. “Also, online notarization is going to be the thing that allows us to do closings any time of the day.”

According to Heather Siegel, account director at Qualia, having a national standard for remote online notarizations makes things more manageable from a software and product innovation standpoint. “We can build faster; we can offer it to consumers faster,” she said during the conference. 

Application programming interfaces (API) can help in developing new technologies and products, she said. “The average lender works with hundreds of title companies over a given month or a year, which is unproductive. API integrations are a fantastic opportunity to change.”

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