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So you want to eClose a mortgage in New York?

It’s possible – kind of

eClose New York

Remote online notarizations are currently not permitted in New York, but that doesn’t mean a borrower can’t sign their documents remotely.

About half of U.S. states don’t currently allow for RON, but due to the COVID-19 pandemic and widespread stay-at-home orders, many issued emergency orders to help move remote notarization forward.

New York was one of those states.

In March 2020, New York Gov. Andrew Cuomo issued an emergency order allowing for remote ink-signed notarizations. Similar to RON, RIN allows borrowers to sign documents remotely, but instead of eSigning, they wet sign the document remotely, on video with a notary, and later send the documents back to the notary to be signed and sealed.

Cuomo’s orders allowed for notarial acts to be performed utilizing audio-visual technology under certain conditions. Later, in September, the governor extended those orders, which are now set to expire on Oct. 4, 2020.

Below are the conditions the executive order lays out that must be met in order to use RIN in New York:

  • The person seeking the notary’s services, if not personally known to the notary, must present valid photo ID to the notary during the video conference, not merely transmit it prior to or after
  • The video conference must allow for direct interaction between the person and the notary (no pre-recorded videos of the person signing)
  • The person must affirmatively represent that he or she is physically situated in the state of New York
  • The person must transmit by fax or electronic means a legible copy of the signed document directly to the notary on the same date it was signed
  • The notary may notarize the transmitted copy of the document and transmit the same back to the person
  • The notary may repeat the notarization of the original signed document as of the date of execution provided the notary receives such original signed document together with the electronically notarized copy within 30 days after the date of execution

It’s a start

New York’s current remote notary authorizations are not as advanced as other states, such as Florida, and the orders are temporary, but it’s a start.

NotaryCam CEO Rick Triola pointed out that it is a step in the right direction toward creating a permanent eClosing solution for the state.

“There’s RON legislation pending in New York and there was a committee that was drafting this legislation and reached out to me personally in October, November, so we were working through that [in the] fourth quarter,” Triola told HousingWire.

But while trudging through the creation of RON legislation, which Triola said the committee was modeling based off RON laws in states across the U.S. and based on MISMO standards, the pandemic hit.

When COVID-19 forced emergency orders from the governor, it was all hands on deck trying to figure out how to make these options available to borrowers, lenders and title companies who were now increasingly looking at remote options in order to close their real estate deals.

Despite this shift of focus in New York, Triola says the pandemic will prove to be a positive push for RON adoption overall.

“It opened up the door for conversation so I would believe that in 2021, you’re going to see most of these states approve [RON legislation],” Triola predicted. “If not, as you know, Congress is now looking at a universal or national law around remote notarization.”

The SECURE notarization act is currently making no headway in Congress since its introduction in March, forcing states to take it upon themselves to develop their own policies for RON with the assistance of RON providers. 

However, as emergency orders begin to expire across states and other issues calm, RON could once again rise as a focus for the next Congress.

“Before, it was kind of nice to have but I think most people believe now that this is a must-have,” Triola said, saying this was the silver lining for the pandemic. “You must have this option. If a client does not want to meet and sign loan documents in person in front of somebody, and they’re concerned about the virus, you have to give them options.”

Triola’s bold prediction? All 50 states are about to accept RON.

“This time next year, I would hope that we have a 50-state solution,” he said.

A leap of faith

After Cuomo issued his emergency order, there was a surge of interest in remote closing options. Troila said NotaryCam’s demo requests surged.

Across the country overall, Notarize and Realogy Title Group reported a 200% spike in RON closings. The interest in New York was no different.

After the first couple weeks, however, these requests died off. And that’s because lenders were not ready to make the leap of faith it required to invest in eClosing tech.

Cuomo’s orders are temporary. At first, the orders covered the first two months of the pandemic. This was later extended, but still doesn’t reach even to 2021. Lenders would need to make an investment in tech that they may not be able to use once the pandemic ends.

“They wanted to understand it, did a lot of demos, and they wanted to know the option was there, but they didn’t want to take the leap of faith and go into this because they didn’t know if it was going to be extended at 60 days,” Triola said.

“The way we’re looking at this is that, it’s good news, at least now RON is on the radar,” he contined. “New York is one of those last states that will probably adopt. Coming from New York, that was our position that it was probably one of the last states to adopt RON, so the fact that they were one of the first states with this emergency order was a great positive for a long-term position because now they understand it.”

Rising fraud

As New York looks at next steps, experts in the housing industry have demanded more control over how remote notarizations are performed, such as adding identity proofing.

“A lot of the hearing and feedback from the industry is that you’ve got to put some guidelines, you’ve got to put some identity proofing, you’ve got to meet the standard,” Triola said.

Recently, real estate fraud in New York has surged. In fact, the Grand Jury of the Supreme Court of the State of New York put out a briefing on what it calls an “epidemic” of real estate fraud, proposing legislative, executive or administrative action.

“The epidemic of fraud in the conveyance of residential real estate affects every county of the city of New York,” the report states. “This Grand Jury learned that fraudsters target single family homes and residential buildings with one, two or three units.”

The fair market value of Manhattan residential real estate increased by about $17.5 billion from fiscal year 2017/2018 to fiscal year 2018/2019 with an increase of just a few thousand residential units, according to the New York City Department of Finance. This makes the area a prime target for fraud.

“Residential real estate fraud impacts the economic stability and cultural diversity of this and other counties in New York City, and warrants the issuance of a Grand Jury report proposing much needed reforms,” the New York Grand Jury stated.

The New York Attorney General Letitia James launched the “Protect Our Homes” initiative in January to help inform homeowners in Brooklyn about deed theft and other housing-related scams.

“Homeownership is the cornerstone of every community, but for decades, long-time homeowners in rapidly gentrifying areas have been the prime targets of schemes to steal their homes,” James said.

The initiative consisted of sending more than 100 volunteers into the New York neighborhoods of Bedford-Stuyvesant, Prospect Lefferts Gardens and Flatbush. Volunteers knocked on doors and left informational materials about what deed theft entails, how to spot it, and what to do if you think you’ve been a victim.

Currently in the city, officials are working to clamp down on various types of real estate fraud, including closing identity theft fraud.

“People are showing up and closing and they’re not who they say they are,” Triola said.

However, the use of RON could change that. In traditional closings, a notary looks at a driver’s license and determines if it is, in fact, the person sitting in front of them. A remote notarization, however, runs a quick scan of the driver’s license through a database that determines if there are any hits against the identity. The borrower then has to answer several questions to verify their identity and finally, the closing is recorded and stored for several years.

“The title underwriter and insurance has the confidence that the person is who they say they are, and they have a recording for digital evidence sometime in the future in case clients say, ‘I wasn’t there and I didn’t sign those,’” Triola said.

He also pointed out that eClosing solutions such as NotaryCam and others often stop fraud before it happens: through the driver’s license scan, when the borrower fails to answer security questions correctly or, oftentimes, fraudsters quickly leave the transaction once the camera turns on and they realize it will be recorded.

While New York still doesn’t authorize RON transactions, and isn’t as far along as other states, Cuomo’s emergency actions gave the first push toward what could become the new normal for the state.

And if Triola’s predictions prove true, the state could see full RON adoption as soon as 2021.

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