National RON bill falters in Senate over California opposition

As shown by some studies and stopped subscription remote online mortgage notarization, federal legislation which would have codified RON into national law, has hit roadblocks.

The Securing and enabling trade using remote and electronic law, a bill creating federal standards that would also mandate the recognition of remote notarizations across state lines, passed the House of Representatives this 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 senators rejected any possibility of passage this year, according to Kobie Pruitt, the state’s director of governmental affairs. Mortgage Bankers Association.

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Left to right: Brian Webster, Whitney, Vogt, Camelia Martin and Kobie Pruitt discuss the state of RON at the 2022 Mortgage Bankers Association Annual Conference.

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“The California senators are trying to give their own state some time to implement their own RON law,” he said last week during a panel at the association’s annual convention in Nashville, Tenn.

Efforts to introduce federal legislation should continue next year, he noted, with RON proponents potentially including provisions that would still allow California to oversee state-specific laws.

Currently 42 states have passed laws allowing the use of remote online notarizations, with the District of Columbia also passing a bill in early October. Most of the other remaining cases are states requiring closing counsel, but progress has been made in Massachusetts and Connecticut and their issues could be resolved early next year, MBA said.

About 19% of borrowers in a recent Solidifi survey said they would prefer to use RON over attending a closing in person. in research 2022 Among National Mortgage News borrowers, a similar percentage said minimizing the need for in-person meetings would improve their experience, while 29% thought a paperless process would be preferable.

The mortgage industry still faces hesitation about RON within its own ranks, including loan officers with concerns about technology security and regulations, digital closing experts on the panel said. Increased education and communication with loan officers is key, and corporate stakeholders themselves must actively support adoption, they said.

“When the organization doesn’t understand their ‘why’, how do you communicate that to your LOs?” said Camelia Martin, vice president of eMortgage strategy and industry affairs at Snapdocs, adding that the originator’s top priority is efficient loan closing.

If loan officers begin to see remote notarization as an obstacle that will slow down the process or prevent them from getting paid, “you can imagine what they’ll do to get around the RON closing,” she said.

A measured approach to using RON through hybrid closures, rather than an immediate all-in adoption, could serve as a good starting point for companies looking to move in this direction. “You’ll find that you can gradually introduce changes that make it easier to adopt and mitigate the problems you might encounter along the way,” Martin said.

The bar is high when it comes to the knowledge required to implement RON, which requires a thorough understanding of how a company’s digital technology stack works. “We have to be really thoughtful when we want to step up to offer your full RON. It takes four technologies,” said Whitney Vogt, director of strategic initiatives at Guaranteed Rate.

The entire notarization process involves document providers, eVault and eSign, as well as the RON platform. “There’s no dealer 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 for creditors looking to navigate the process, said Brian Webster, CEO of NotaryCam.

“Think about finding a partner who can bring at least three out of four of those things to the table,” he said.

“This is what they do,” Webster said. “If they can bring all that to your table, they can bring those providers. All you have to do is tell them your thoughts.”

Not having the right technology foundation in place risks stalling any previously introduced digital initiatives and opens the door to mistrust creeping into the minds of clients and loan officers, Vogt said.

“You know when your RON has failed? It’s when your loan officer feels like he’s playing tech support now,” Vogt said. “You instantly lost all your credibility and all your hard work.

But when it works right, the benefits of time and money saved, as well as increased agility to allow quick and easy repairs, could send the loan faster secondary market.

“Every single document that is signed is one less document that you have to wait for to come back after closing,” Martin said.

Still, even RON proponents acknowledge that the technology is not—and should not—be a one-size-fits-all approach, but would be welcome for certain types of transactions and clients.

“A first-time homeowner might want that personal experience, but someone buying investment property in Colorado or that really cool ski house in Utah wants RON,” Vogt said.

“RON won’t be for everyone, but it will be a great fit for a strong segment,” Martin said.

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