National RON bill flounders in Senate due to California opposition
As some studies reveal a stalled uptake of remote online notarization in mortgage, federal legislation that would codify RON into law nationwide has run into roadblocks.
The Securing and Enabling Commerce Using Remote and Electronic Act, a bill creating federal standards, which would also mandate recognition of remote notarizations across state lines, passed in the House of Representatives this past summer as part of the National Defense Authorization Act. But the SECURE Act was removed from the final Senate version of the legislation. Opposition from California’s senators nixed any possibility of passage this year, according to Kobie Pruitt, director of state government affairs at the Mortgage Bankers Association.
“California senators are trying to give their own state some time to get their own state-specific RON law done,” he said during a panel at the association’s annual convention in Nashville, Tennessee, last week.
Efforts to bring up federal legislation should continue next year, he noted, with RON advocates potentially including provisions that would still allow California to oversee state-specific laws.
Currently 42 states have enacted laws authorizing use of remote-online notarizations, with the District of Columbia also passing a bill in early October. The majority of other remaining holdouts are states requiring attorney closings, but progress has been made in Massachusetts and Connecticut and their issues could be ironed out early next year, the MBA said.
About 19% of borrowers in a recent Solidifi survey said they would prefer using RON versus attending an in-person closing. In 2022 research of borrowers from National Mortgage News, a similar percentage said minimizing the need for in-person meetings would have made their experience better, while 29% thought a paperless process would have been preferable.
The mortgage industry still faces hesitation about RON within its own ranks, including among loan officers with concerns about technology security and regulations, digital closing experts on the panel said. Increased education and communication to loan officers are key and stakeholders in companies themselves need to actively encourage adoption, they said.
“When an organization doesn’t understand their ‘why,’ how are you going to communicate it to your LOs?” said Camelia Martin, vice president of eMortgage strategy and industry affairs at Snapdocs, adding that the main priority an originator has their eye on is closing a loan efficiently.
If loan officers start to perceive a remote notarization as an impediment that’s going to slow down the process or prevent them from getting paid, “you can imagine what they’ll do to go around a RON closing,” she said.
A measured approach toward using RON through hybrid closings, rather than immediate all-in adoption, could serve as a good starting point for companies wanting to move in that direction. “You’ll find that you can incrementally introduce changes that make it easier to adopt and easier to mitigate issues that you might come across along the way,” Martin said.
The bar is high for knowledge required in RON implementation, calling for a thorough understanding of how a company’s digital tech stack works. “We really have to be thoughtful when we want to take a step up to offer your full RON. It requires four technologies,” said Whitney Vogt, director strategic initiatives at Guaranteed Rate.
The full notarization process involves document, eVault and eSign providers, as well as a RON platform. “There’s no vendor out there that can do all four,” Vogt said.
But settlement and title providers, who have actively pushed for RON adoption, are willing partners and allies to lenders who want to navigate the process, said Brian Webster, CEO of NotaryCam.
“Think about finding the partner that can bring at least three out of four of those items to the table for you,” he said.
“This is what they do,” Webster said. “If they can bring all that to the table for you, they can bring those providers. All you need to do is give them your thoughts.”
Not having the proper technology groundwork in place risks setting back all the digital initiatives previously introduced and opens the door for mistrust to creep into the minds of clients and loan officers, Vogt said.
“Do you know when your RON has failed? It’s when your loan officer feels like they’re now playing tech support,” Vogt said. “You immediately have lost all your credibility and all that hard work.”
But when it works properly, the benefits in time and money saved, as well as the increased agility allowing for quick and easy corrections, could send a loan quicker to the secondary market.
“Every single document that is signed is one less document that you have to wait to get back post closing,” Martin said.
Still, even RON advocates recognize that the technology is not — and should not — be a one-size-fits-all approach, but for certain types of transactions and clients, it would be welcomed.
“A first time home owner might want that in-person experience, but someone buying investment properties in Colorado or that really cool ski house in Utah, they want a RON,” Vogt said.
“RON isn’t going to be the right fit for everybody, but it’s going to be a great fit for a strong segment,” Martin said.
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