Remote Online Notarization is a hot topic in the real estate title industry for good reason. An ALTA Vendor Survey showed that RON transactions increased by 547% from 2019 to 2020. While the pandemic thrust RON into the mainstream of the industry, many are still wondering how the technology can benefit them and the closing process going forward. Even those who want to buy in are wondering where to start. From understanding the importance of RON in the title industry and discovering the potential business benefits to learning how you can start offering RON closings to your clients, here’s the need-to-know info to get started.
What is Remote Online Notarization?
RON is the notarization of a document completed 100% electronically. The process includes a notary and a document signer using secure audiovisual and digital signing technology to finalize any financial document. In our industry, that often means home closing documents.
How does it improve the closing process?
There are solid reasons why more lenders are opting for tech-driven business solutions. As eClosings become increasingly common, RON offers an additional level of convenience by simplifying the notarization component of home closings. Here’s how RON can help improve your closings.
RON improves security
RON secures the closing process through multi-layer fraud protection comprised of the following:
- Knowledge-based authentication (KBA): Before the process can be initiated, the signer must correctly answer a set of computer-generated questions related to their life, credit, and financial history.
- Credential analysis: RON software uses this technology to scan a signer’s identification.
- Digital seals and encryption: All signed documents and notarial journals are encrypted and digitally sealed once the transaction is completed, making it easy to see if they are modified in the future.
RON saves you money
According to a MarketWise Advisors study, title agents can save up to $100 per transaction and lenders up to $444 per loan with RON. These platforms eliminate human errors like missed signatures as well as human hassles like driving to an in-person closing or printing out hundreds of documents. The result? Title agents save up to 104 minutes per closing and errors are reduced by 31%.
Where can you perform a RON closing?
Right now, 38 states have approved legislation authorizing RON in some capacity. However, twelve states, including California, do not. Several of the other states that have not passed permanent RON legislation are in the South, though many of them enacted temporary orders during the pandemic that allowed – and are still allowing – its use.
Stakeholders and observers are also monitoring a federal bill known as the SECURE Act, which would permit nationwide RON use and bring more uniform rules to the practice. This legislation is supported by multiple real estate trade associations but has remained stalled in Congress for multiple years.
In addition to complying with state laws, you must make a plan on how to train and certify staff and comply with the rules and expectations set by your underwriting and lending partners.
How should you prepare for RON?
There are three primary stakeholders to talk to when preparing to offer RON transactions: RON software vendors, your lender, and your underwriter. Both your lenders and underwriters may have preferred RON vendors or specific rules for those vendors that go beyond your state’s laws, so make sure that the vendor can meet their needs.
What to ask your underwriter
Before you do anything, you should ask your underwriter whether they will insure RON closings at all. If they do insure them, they will vet and approve your RON vendor.
What to ask your lender partners
One of the most important questions to ask your lender partners is whether or not they have an eNote or eVault provider.
eNotes are documents that are tamper sealed and have a special digital signature that guarantees data integrity. eVaults are technology platforms that support the handling, status and storage of eNotes. It’s crucial to verify that your RON vendor can meet whatever eNote or eVault requirements your lender has in place.
What to ask a RON vendor
Ensuring that your RON vendor complies with your state’s laws is imperative when preparing to offer RON.
Since each state has different regulations to consider, your vendor must be able to meet the requirements of your state. Be sure to ask if they provide secure storage of records you are required by law to keep.
How should you prepare internally?
Designate a subject matter expert on all things RON
This person should immerse themselves in the constant developments of RON in the industry. The situation is incredibly fluid, so they should educate themselves constantly and update the team on any significant changes to the laws or industry best practices. That person for the SoftPro team is Leslie Wyatt, director of regulatory compliance. You can reach her via email at [email protected]
“We’ve all heard about RON for years, but this topic is always changing and evolving for title agents and your customers,” Wyatt said. “It’s important to know where you can turn to for the most updated information. SoftPro takes pride in being one of those educational resources for our partners on this innovative subject and so much more.”
How can you prepare a homebuyer for a RON closing?
Provide an overview of the closing
To ensure a successful RON closing, you need to educate your customers on the process. This will likely be a new experience for most buyers so providing as much information as possible at the beginning of the closing process will be key.
Confirm that they have the technology required by your RON platform. This includes:
- A secure email address to receive instructions and notifications
- A strong, stable internet connection
- A webcam
- A web browser and computer or device supported by your RON software
- Capabilities to upload ID through a phone or another approved device
Is RON really here to stay?
The movement toward a remote economy began before the pandemic and will continue afterward. According to a Global Workplace Analytics study, remote work has grown 159% since 2009. As more people work from home, they expect services to meet them where they are, including home closings.
SoftPro wants you to be the best company offering it in your market. Whether you’re already offering RON closings or are looking to add it as an option for your customers, SoftPro has the expertise and resources you need to grow your business in our evolving industry.