How Remote Online Notarization Will Disrupt the Real Estate Industry?

The first paperless real estate transaction in the United States took place on 25 July 2000 in Broward County, FL. It involved a property purchase and financing and took less than 10 minutes. The recording was then submitted to the county clerk’s office. It means that any relevant authority could access the document anytime on the county’s website.

Even after two decades, homebuyers, sellers, and realtors still rely on the traditional notarization that required the homebuyer, mortgage lender, and a witness to physically meet at an attorney’s office to sign the documents and swear an oath in the concert of a public notary. The notary then signs the form, indicating that all the involved parties that they are whom they claim to be.

However, the COVID-19 pandemic drastically impacted all industrial sectors, including real estate. Almost three months after the health crisis outbreak, mortgage lenders have had to make unprecedented changes in how they close deals with prospective homebuyers. Almost overnight, an industry that relied 100% on live and physical notarization has now run virtually.

Mortgage Lending: The Digital Migration

Because of the temporary executive orders and social-distancing guidelines to prevent the spread of the deadly coronavirus, parties involved in the notarization process could not meet physically meet in front of a public notary. Remote online notarization (RON) leverages digital technology to allow the participants to sign notary documents without physically meeting. It implies that a mortgage lender can complete a deal with a borrower via RON videoconferencing. Everything takes place online, with the papers dispatched to the relevant authorities digitally [through emails].

Mortgage lenders in the US are adopting remote online notarization at a relatively slower pace because of the legislator disparities in different states. Even in the recent past, residential mortgage transactions took place in person.

COVID-19 has been a catalyzer in the adoption of remote online notarization. Now, mortgage lenders are left with no other option but to use RON to offer contactless mortgage deals. It is only an indicator that mortgage leaders will have to fully digitize their business transactions and processes to provide an enhanced consumer experience and win over the competition.

How RON Legislative Policies is Affecting Mortgage Lending

As reported on The Washington Post, the US Senate and House passed legislative policies that allowed all US notaries to use RON digital technology in March. However, these notaries could only deploy RON after they can confirm that their notarization platforms can track and identify any breaches, uses multifactor identity analysis, and the necessary equipment to record the visual and audio proceedings of the notarization. There are several upsides to this legislation. For instance, US nationals outside the country, such as military personnel, can close mortgage deals while away. Additionally, states could customize their RON policies and statutes to suit their individual real-estate needs and conduct RON between jurisdictions.

Over half the US states (26 states) have passed pro-RON legislations, allowing mortgage deals to take place virtually. Other smaller jurisdictions, such as The District of Columbia and Maryland, allowed temporary RON transactions on an emergency basis. Diane Tomb, the President of the American Land Title Association (ALTA), said that more than 30% of all companies offering title settlement services had adopted some form of virtual mortgage deals to adhere to social distancing requirements. In 2019, only 17% of these companies had already deployed digital operations.

Obstacles in the Adoption of RON Mortgage Lending

As mentioned above, only 26 states in the US have passed bills authorizing notaries to perform RON. Among these, only 14 have laid down the standard procedures and requirements RON use, which means notaries in these jurisdictions are cleared to conduct their businesses remotely. New York is an excellent example of the states that authorize notaries to conduct RON temporarily [in emergencies]. It is such disparities in various jurisdictions that draw back the nationwide adoption of RON.

Another hurdle in the migration toward remote notarization is acceptance by participants. While mortgage lending is the main reason for the exponential growth in RON’s popularity, the parties involved in the process are still reluctant to accept the online system.

Even as the world moves toward obtaining a COVID-19 vaccine [with people no longer having to worry about the vaccine], remote online notarization seems to be a trend that will continue beyond 2021. Social distancing may come to an end, but mortgage lenders will still leverage RON to enhance their consumer support and UX, as well as gain a competitive edge.

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