TheMReport — News and strategies for the evolving mortgage marketplace.
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24 | M R EP O RT FEATURE W hat a differ- ence a couple of months can make. Before COVID-19 knocked down the U.S. economy several pegs, less than half of all U.S. states had enacted laws al- lowing remote notarizations. But within several weeks of national social distancing guidelines being implemented, more than 10 ad- ditional states have implemented emergency initiatives allowing remote notarizations. The reasons behind this new push toward remote closings could not be more obvious. Closing agents, notaries, and bor- rowers are all rightfully concerned about the health risks of gathering in an office or in the borrower's home to sign closing papers. And because health experts anticipate the coronavirus will not disap- pear anytime soon, playing it safe when it comes to real estate closings could be our industry's new normal. The good news is that the technologies and partners already exist that can bring remote no- tarizations to life. The bad news is that choosing the right strat- egy—and the right partner—isn't so easy. With so many options to choose from, how do lenders know where to start? Remote Closings Take Center Stage R emote notarizations were already one of the hottest tech trends in the housing industry when the coronavirus pandemic began. By early February, 23 states had enacted laws enabling remote notarizations to take place for real estate transactions. After social distancing guidelines and shelter- in-place orders were implemented, however, several states that had not yet enacted remote online notariza- tion (RON) laws issued emergency orders allowing borrowers to sign their closing papers remotely over the Internet. Holland & Knight issued an alert last month indicat- ing that at least 43 states have authorized notaries to conduct RONs on either a permanent or a temporary/emergency basis. As of this writing, a full three- quarters of the states have legalized remote online notarizations, also known as RONs. In addition, a new federal bill, "Securing and Enabling Commerce Using Remote and Electronic Notarization Act of 2020," is getting support from both sides of the political aisle as well as the Mortgage Bankers Association, the American Land Title Association, and the National Association of Realtors. But legal barriers have not been the only hurdle to RONs. For remote closings to go smoothly, multiple parties to every real estate transaction must be on board— lenders, title offices, investors, and borrowers. The problem is that not all these parties are prepared for RONs. While it's true that Fannie Mae, Freddie Mac, and Ginnie Mae all accept remote notarizations in the states in which RONs are legal, many loan aggregators and inves- tors are not ready to accept eNotes. Because RONs are not yet universally accepted by everyone, lenders are pretty much on their own when it comes to choosing the best strategy. Most currently rely on a piecemeal approach, with different processes and tech- nologies in place for eSignatures, eNotes, eRecording and RONs. There is, however, a better way— one that enables lenders to rapidly implement paperless RONs and fa- cilitate safer, more efficient closings. But in order to get there, lenders need to know whom to trust. Not All Providers Are the Same W ith new social distancing protocols in place, lenders and title companies have been rushing to establish new, safer closing methods that are accept- able to all parties. Amid this mad scramble, a wave of new players has emerged who are heavily advertising their "breakthrough" remote closing solutions. Lenders need to be aware that many of the providers they may be hearing a lot from right now are offering solutions that are neither particularly innovative nor properly tested by the market. Many do not have key alliances in place that would enable them to scale remote closings, while others rely on multiple vendors to conduct remote closings, creat- ing a chain of technologies and services that is no stronger than its weakest link. The reality is that the technolo- gies necessary to facilitate RONs and eClosings aren't new at all. They have existed for years. Which is why lenders that want to implement remote closings the right way should look first toward companies that have experience and a track record in providing eClosings and eNotes, as well as the alliances and partnerships they need to provide remote clos- ings in a scalable fashion. Because eNotes are probably the most critical piece to provid- In a World Gone Remote, Lenders Have a Choice to Make The onset of COVID-19 has not only accelerated the use of remote notarization, it has made it a neccessity. By Paul Anselmo