This year, Maine will become the 40th state to allow remote online notarization (RON). The new state standards take effect in July 2023.
The American Land Title Association (ALTA) supports this move. ALTA is backing remote online notary legislation at the national level, too. It’s pressing for the SECURE Notarization Act, which would establish an interstate and nationwide RON norm. The goal? To empower people and businesses to sign, witness, and notarize legal documents using computers and audiovisual communication software.
Wherever RON is not adopted, people must still sign with a notary physically present. Could this practice be obsolete soon? Having a standardized, digital process for every mortgage closing would support security, transparency, and efficiency, ALTA believes.
Digital Tools Help Cut Mortgage Costs.
Any little price cut for a mortgage could help borrowers, if the savings are passed on. And we all know buying a home and affording a mortgage desperately needs to be easier, not harder.
When people lack access to mortgages, life is harder for the mortgage lenders as well as would-be borrowers. ALTA cites a survey from the Mortgage Bankers Association that shows a mortgage loan costs more than $9,000 just to produce. Digital tools that make this whole process more cost-effective could reduce the work needed at the lender’s end, and bring down the expense of mortgage loan originations.
The time-honored tradition of signing at the notary’s desk is time-consuming, and often inconvenient. It can make long-distance transactions impossible. And sometimes, it puts people’s health or well-being at risk.
So, will the entire mortgage industry embrace digital closings to become more efficient, more accessible, and less resource-costly? As it turns out, yes. They can pivot.
☛ Ever since the Covid-19 pandemic disrupted on-site transactions, real estate professionals have accepted that home purchases and mortgage agreements can take place from a distance.
Having surveyed its RON fans, ALTA reports that remote online notarization has shaved time off the process in most cases. It allows people to sign their documents in advance, making closings more efficient and better informed. Sometimes, it saves on costs, as it makes things like printing and postage less important. it cuts down on the number of people handling the documents. It can catch missing signatures and other information, get things done quickly, and, ideally, get everything right the first time.
As Long as It’s Fraud-Proof…
We could get used to this. Yes, people are warming up to the idea of remote transactions. Yes, these platforms are now considered a benefit — or, at least, an option the consumer should have. Some mortgage companies are equipped for hybrid closings with eNote, as well as the fully remote option.
Why, after all, should mortgage companies feel out of place using high-tech communications? People expect less and less paperwork when we do business in other aspects of our lives. And the other financial institutions are keeping up with current consumer expectations for websites, online platforms, and apps.
Yet before the pandemic, mortgage professionals would say in-person presence was simply essential in notarization. Remote signings could bring risks. The fully digital transaction, they felt, just couldn’t offer a legitimate notary process.
As it turns out, RON securely tracks anything that legally impacts a document. This means an authorized RON platform can provide enhanced fraud-resistance for notarizations. RON software can flag unexpected activity, potentially averting deed fraud. In state after state, the title industry has affirmed the technology. And people are adjusting.
Because it requires less time in agents’ offices, the digital closing makes the mortgage process more accessible. This means more potential customers. So, the industry can’t help but shift in a digital direction. Nevertheless, as remote title and settlement work keeps rising, there are still some questions about how fully electronic and interconnected the mortgage business will (or ought to) be.
So, Who’s Leading the Way to Digital Mortgages?
A minority of states do not work with remote notarization methods. This creates inefficiencies at the lenders’ end. How could we get consistency and shared standards?
One high-profile answer comes from the industry itself. The American Land Title Association worked with Freddie Mac and the Mortgage Industry Standards Maintenance Organization (MISMO) to create a single source of title and settlement data for professionals. Snapdocs is the company that produced financial technology to connect everyone – the MISMO e-Eligibility Exchange platform.
The e-Eligibility Exchange’s knowledge base powers the digital closing. It’s store of information includes e-notarization standards, county deed recording rules, and the legal requirements governing settlements and underwriting. It will enable remote transactions, ALTA says, by “shifting to e-note and RON, and increasing these benefits for every participant involved in a mortgage loan’s life cycle.”
ALTA has witnessed adoption by investors, mortgage specialists, and courts. Diane Tomb, ALTA’s chief executive offer, calls the continued shift to digital closings a “crucial” responsibility of title insurers.
How can title insurers and mortgage professionals get involved? They can join the ALTA Registry.
Ask the Experts: The Industry Has Embraced Crowdsourcing.
The e-Eligibility Exchange is a growing store of data on title companies and settlement services. It crowdsources this information. ALTA quotes MISMO president Seth Appleton:
The MISMO e-Eligibility Exchange serves as a resource for the entire industry and its success relies on the quality and accuracy of the contributed data.
This suggests that as the exchange accumulates data, mortgage lenders can better find settlement professionals who offer digital closings. The system constantly keeps up with the latest in remote closing criteria. There is no fee to sign up.
Also noteworthy is ALTA’s posting in late 2022, noting that Snapdocs now partners with American BancShares, BeSmartee, and others to offer digital closing support. Independent lender AnnieMac is also on board. In a press release, the firm explains the partnership in customer-service terms. Closing day is a borrower’s “last impression of AnnieMac,” says the lender. On the Snapdocs platform, “the eClosing experience is always excellent,” it says, so “we exceed our customers’ expectations.”
Snapdocs has brought more than 120 lenders into the digital closing fold — some case-by-case, some totally shifting their closings to remote.
Congress, It’s Your Move.
Who knew there’d be exciting news from the title insurance industry, just waiting to be known? But things are hopping over there. Sounds like ALTA, Snapdocs, and a whole host of mortgage people are nudging the country along to digital closings.
The speed of the title industry’s RON shift shows us just how rapidly online platforms are transforming the mortgage industry. Digital tools will make buying a home easier, no doubt. If they can also make transactions just that much safer, cost-efficient, and accessible, OK. Let’s see what ALTA’s hoped-for legislation can do.
Supporting References
American Land Title Association (ALTA): Maine Becomes 40th State With RON Legislation (May 5, 2022).
American Land Title Association (ALTA), Title News: Journey to the True Digital Mortgage (citing consumer preference research from J.D. Power and other sources; Jun. 2022).
ProNotary.com: Opinion: How Digital Closings Can Help With Housing Affordability (Jun. 2, 2022).
AnnieMac Home Mortgage via PRNewswire.com: AnnieMac Home Mortgage Selects Snapdocs to Scale Digital Mortgage Closings (Oct. 12, 2022).
Deeds.com: Remote Online Notarization Wins Home Buyer Confidence (Oct. 18, 2021).
And as linked.
Photo credits: Andrea Piacquadio and Jonathan Borba, via Pexels.