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Closing

So you want to eClose a mortgage in Virginia?

The state where it all began holds one very important advantage

eClose Virginia

In 2012, Virginia became the first U.S. state to pass legislation allowing for remote online notarization.

However, the use of RON didn’t become widespread in the U.S. until 2020, when COVID-19 forced lenders and title companies to look at new contactless options for closing mortgages and getting families into their homes.

When Virginia first passed RON legislation, it was widely believed that Virginia notaries would take care of RON closings across the entire U.S. That certainly did not end up being the case.

Unlike Texas, which has strict laws for identifying the borrower and is considered the “gold standard” for RON legislation, Virginia’s identity proofing is much less strict. Experts argue the pros and cons of the less stringent regulation, but it does allow notaries in the state much more freedom on the types of mortgages they can close.

“Virginia notaries are permitted to do closings or notarizations outside [the state,]” NotaryCam CEO Rick Triola said. “There are no geographical boundaries, the signers could be anywhere in the world for Virginia notaries.”

Because of this, companies like NotaryCam and others often use their Virginia notaries to oversee closings in New York and other states with much more strict or even non-existent RON laws.

Robo-signing versus eNotarization

Many companies and states are increasingly accepting RON due to qualities such as its virtual elimination of fraud.

“It’s just almost impossible for remote online notary to be a fraud, and if you were, most likely that the picture of you in the video is going to be detected,” Mid America Mortgage President Jeffrey Bode said. “I think fraud is removed with the digital process.”

Triola agreed fraud is much less likely to occur in a RON transaction.

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

And it’s no surprise RON laws are seen as a stop to various types of fraud, since that was the original intent when it passed Virginia legislation. In 2012 when Virginia was considering eNotary laws, robo-signing was a major problem. The Virginia legislation saw eNotarization, where the borrower and notary would need to appear on camera in a recording that would be saved for five years, as a potential solution to robo-signing.

“It [eNotarization legislation] was really to stop Robo signing for that was rampant before 2012,” Triola said.

During the days of robo-signing, many notaries at larger institutions were told to leave their notary seals out on their desk so that anyone could quickly use them to “notarize” what they needed and move on to the next signing.

“That’s how RON really came about, because they really wanted to clamp and stop the fraud and robo-signing from occurring,” Triola said. “They wanted to stop that dead in its tracks.”

A growing acceptance

Virginia legislators began allowing for RON back in 2012, however the eClosing technology could not take off without widespread acceptance from the housing industry. Title companies needed to include it in their offerings, lenders needed to ensure their technology could operate on an eClosing system, and eNotes, the single greatest holdup to RON acceptance, had to be created.

And while the mortgage industry took its time in adopting new tech, RON is starting to become more generally accepted and even trusted as a reliable way to close on a mortgage. And this has paved the way for Virginia notaries to perform more out-of-state mortgage eClosings.

“Most are more comfortable now than they have ever been with allowing any RON notary in any state to perform a RON transaction out of state,” Triola said.

Start off small

Many lenders seeking to break into the eClosing space feel overwhelmed, especially as RON options vary from one state to the next. eOriginal Chief Product Officer Simon Moir explained that he often walks lenders through this process.

From where Moir is based in Arlington, Virginia, he is able to offer his borrowers the options to close via a wet ink signing, iPen (or closing in person using a tablet) and RON. However, in the neighbor state of North Carolina, the options are only wet signing or iPen. Still further south, in South Carolina, the only option is to wet sign.

“For a lender that was in this space, it was difficult, because they thought that they had to do it all one way,” Moir recalled. “And our point was, ‘No, you can do portions of it.’ Basically, do what you can do e[lectronically], and gain from that.”

Now, with the growing acceptance of RON, Virginia notaries have the advantage of time and geography. And as temporary orders expire that allowed borrowers to get a taste of RON during the pandemic, the demand for Virginia notary RON services could grow more than ever.

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