Recently we have heard about states rushing, by way of executive order or rule change (NY, NH, CT) and with hastily passed legislation (NJ), to permit remote online notarization in their states. The motives are clear and the intentions are good: the ability to close loans while limiting human interaction is critical at this time of the COVID-19 health crisis.
However in the rush to do something to help the mortgage industry continue to thrive and close loans, there is some fallout occurring.
First, because the rules and laws are state-determined there is no uniform consent nor uniform approach to how eNotarization, eClosings and RON may occur in each state. Thus lenders who lend in multiple states need to research whether these transactions are permitted where they are lending, whether there are qualified settlement professionals in the state to conduct them, and whether they have the right technology platform to manage the process. With the already disrupted work flow, this is straining compliance departments who are struggling to get up to speed on the legal and operational differences between eNotarization and RON for example, who has the best tool to deliver the documents, and just who is going to manage, supervise and verify that these processes are taking place properly.
Second, because eNotarization and RON impact the legality of important recorded instruments and documents, beyond whether a state will permit the process, title underwriters and their agencies must agree to insure title where electronic and remote notarization occurs. The State of Connecticut’s new rule changes, for example, which essentially “deputizes” “every attorney in that state as a RON seems to have caught many people by surprise, not the least of which are the real estate attorneys themselves who may not even know what RON even means. Furthermore, it is unclear whether title insurers have immediately flipped the switch to allow these professionals to conduct RON on documents they must record and insure in CT.
Third, a key part of the mortgage manufacturing process is the end game of selling loans to the secondary market. This means in states with fast changing rules, investors must be up to speed and also be willing to accept a loan package where deeds, mortgages and notes are executed with non-traditional notarization when they have never seen those appearing in loan packages up to now.
Eventually, as with most things that see drastic change, the people and the processes will catch up and the industry as well as the consumers they serve will be better for it. One thing is certain, when this crisis is over the way lenders close loans will likely change forever.
Here at Secure Insight we remain committed to doing our part to help lenders adapt to these changes. Our staff continues to verify which of the professionals in our nationwide database are eNotries, RON trained and have eClosing experience and that information is being added to our agent profiles. Beginning next week our clients will see these new designations to help them search and locate trained, licensed and qualified people who can assist them as they transition to electronic transactions.
If you are not a client and wish to gain access to our database please reach out.