If real estate closings were dances, RON would be the bell of the ball right now. That’s remote online notarization, which has become the talk of the town in the real estate, title, and mortgage industry since stay-at-home orders made the task of real estate closings precarious for some professionals.
In the interest of protecting the health of consumers and professionals alike, many title companies, law firms, and notaries are beginning to offer this option. But before you dive in, there are some things to know and do beforehand.
Getting Started with Remote Closings
Here are five tips for title professionals who want to offer safe but secure closing options for their customers and professional partners.
1. Understand the difference between RON and RIN
At the moment, twenty-three states have passed specific Remote Online Notarization(RON) laws while other states are allowing for pen and ink signings of documents, some that the notary will later sign and affix their stamp to, via video conferencing software under emergency orders. The latter type of closing has been dubbed a Remote-Ink Signed Notarization (RIN) by Fannie Mae and others in the title and mortgage industry.
Between the two, RON is considered not only a safe option to protect the health of all parties, but it is also a more secure option due to the cybersecurity requirements that RON vendors must meet. During the American Land Title Association’s webinar series of “Ready, Set… RON!,” Jason Nadeau, Chief Digital Officer at Fidelity National Financial, explained why RON is preferred by underwriters.
“It (RON) is the preferred method versus the RIN process,” Nadeau said. “As the underwriter, it’s the preferred method because in the states where RON is approved, we have very clear laws and we have very clear guidelines from the secretary of state on how to go about these transactions. We have, as an underwriter, become more comfortable with these processes and become more comfortable that these are transactions we can insure.”
These cybersecurity measures that give both underwriters and lenders more certainty to approve RON transactions, are some of the reasons why the industry is pushing to pass the SECURE Notarization Act. Unlike temporary emergency orders, the SECURE Notarization Act would provide consistent minimum guidelines to every notary, loan signing agent, and closing agent across the country.
Nadeau also points out that while RIN emergency orders do affect real estate transactions, the main purpose was to help people in quarantine, in hospitals, and in the infectious units complete end-of-life activities like signing wills and other legal documents requiring a notary. During the COVID-19 crisis, requiring notaries to conduct these activities in such environments in person was unethical and unauthorized by hospitals.
Nationwide guidelines specific to real estate transactions are needed to help clarify legal certainty and create harmony within a global economy by streamlining and standardizing a remote real estate transaction.
2. Help Remove Hurdles to RON
Since the COVID-19 crisis, GSEs like Fannie Mae and Freddie Mac have announced their acceptance of RON. Despite the largest buyers on the secondary market now purchasing these mortgages, many lenders are still hesitant to approve RON closings.
Beyond the psychological hurdle of becoming comfortable with a new process, modernizing internal infrastructure to accommodate a digital closing is no small or cheap task.
The first place to start is to understand the eClosing ecosystem, which includes:
Each party that participates in a remote or digital closing will use different tools and features in order to execute their role successfully. As the coordinator of the closing, you’ll want to communicate with each one early and often.
Because we’re in the early stages of adopting a burgeoning technology, anticipate spending a little more time planning before the closing. Consumers will need to understand the costs associated with a RON transaction compared to a RIN or mail aways. They’ll also need to be prepared with the right devices and high-speed internet.
3. Set up your "digital closing room"
Adopting a RON closing option will be easier for some title companies and law firms than others. Updating hardware and software comes at a cost, but it will be worth it in the long run.
As more lenders recognize the allure of remote closings and begin to lose market share to competitors who offer it, you’ll want to be ready to help them through the process.
Setting up your digital closing room includes:
- The Right Software - test out several RON providers to see which ones work best for your team, your lenders, and your underwriters.
- The Right Hardware - ethernet cables, cameras, microphones/headsets, and tablets will all be important investments to complete successful remote closings.
- The Right Security - RON specific platforms will provide security features like KBA, ID verification, tamper-evident documents, and secure non-public information.
- The Right IT team - Despite the built-in security measures of RON platforms, your network may have other vulnerabilities, so work with a team of experts to prevent any exposure of sensitive data or wire fraud.
With essential technology updates for remote closings in place, you’ll be ready for RON in no time.
4. Train your team
Take your time to do this right. Start with small steps. Danielle Kaiser of NATIC encourages title companies and their teams to start out with hybrid closings first and then work their way up to remote online notarization.
In the meantime, closers in the company or law firm should start the process of becoming RON-certified in their state or start vetting more loan signing agents who have already obtained their RON certification.
5. Become familiar with different RON tools
Oftentimes, the lender in the transaction will lead the decision on what platform and process a title or escrow company will use. Other times, your corporate title and escrow office will decide which vendor to use based on how well it aligns with your current title production process.
eClosing vendors provide different services, features, and products that may or may not suit the current internal processes or infrastructure of a lender, the insurability guidelines of an underwriter, or the current workflow of a title company’s production.
For this reason, closing agents and loan signing agents will need to be flexible and knowledgeable in several platforms. Good working knowledge of the features of each RON platform will mean every closing goes smoothly.
Additionally, demonstrating your awareness of each will help bolster your voice among lenders, underwriters, and the decision-makers within your company when choosing which tool is best for a particular type of real estate transaction.
RON is more than just a phase
There’s no doubt the COVID-19 crisis has pushed adoption of remote online notarization forward by years and maybe even decades. Both mortgage and title industry professionals have noted this, including Eric Fontanot of Patten Title who sees that as a benefit.
As legal certainty and marketability of RON mortgages grow, so too will consumer demand. For professionals who are interested in shaping the future of RON as a real estate transaction aid, now is the time to start brushing up on your dance moves because this ball won’t be ending at the stroke of midnight.