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   ARTICLE   |   From Scotsman Guide Residential Edition   |   February 2017

Remote Notarizations Gain Digital Traction

Webcam technology promises to improve mortgage-closing process

 

 Key Points

The benefits of remote electronic notarizations

  • The digital process reduces paperwork as well as manual-processing and distribution demands.
  • The efficiency of a remote transaction saves money for notaries, mortgage professionals and borrowers.
  • Parties don’t have to drive across town to meet with a notary.
  • Remote eNotarizations via webcam can be performed any time all parties have an internet connection.
  • Legal evidence of the electronic signature and notarization is embedded in the document.

The process of notarizing a mortgage document has always been cumbersome. One party must travel to another party’s location for the notarization to occur in person — allowing the notary to physically ensure the person signing the document is authorized to do so. Clients may get stuck in traffic or lose valuable time from their day in the process, but eventually the signed document is notarized.

The good news for mortgage originators is that as technology progresses, manual, outdated processes — like notarizations — take progressive steps forward too. For several years, electronic notarizations (or eNotarizations) have been gaining traction across many industries — the mortgage industry included.

An eNotarization still requires visual in-person confirmation, but the process incorporates digital technology and an electronic signature to notarize documents. This past year, however, also saw a growing trend of a variation of the eNotarization — the remote notarization via webcam. This process  uses video conferencing and electronic signatures to perform the notarization.

Recently, the National Notary Association (NNA) published a white paper focused on what mortgage professionals need to know about eNotarizations and webcam notarizations. With big financial names like Freddie Mac and Quicken Loans showing public support for webcam notarizations, these remote official signings will undoubtedly continue to gain traction in the mortgage industry throughout 2017. That’s because remote webcam notarizations offer more benefits and conveniences for all parties involved than do traditional, or in-person, electronic notarizations.

The webcam difference

Although webcam notarizations and eNotarizations both use electronic signatures and digital technology, the two methods are very different. Electronic notarizations function the same way as paper notarizations, except that the documents are notarized digitally using the notary’s e-signature. This reduces paper, manual processing time and distribution costs, which can be substantial with mortgages in many cases.

The person signing the mortgage document, however, is still required to appear in person before the notary. Depending on state laws, the notary’s seal may be placed on the digital document as a graphic, or the seal credentials could be added to the document.

A remote webcam notarization, however, allows the person signing the document to appear in front of a notary using video technology. Video conferencing allows notaries to witness signatures from all parties involved, and then use digital eNotary technology to notarize documents electronically.

Because webcam notarizations are done completely online, notarizations can be performed anywhere, anytime — even if the notary is across town or state lines or after regular business hours. To prove the signers are who they say they are, the notary will use identity authentication tools, such as knowledge-based authentication (KBA) — which requires the signer to answer personal questions from a database of public records.

It’s important to note that currently only Virginia- commissioned electronic notaries are authorized to broadly perform remote notarizations. There also are certain transactions that Montana notaries can do remotely for other Montana residents, but notaries in the other 48 states aren’t currently authorized to provide remote services. With the rising popularity and benefits of the service, however — along with the continuing improvements in the technology that supports it — the reach of remote notarizations is likely to expand to more states in the near future.

Security and cost savings

In addition to a borrower not having to appear in person, webcam notarizations save money and increase security for notaries, mortgage professionals and borrowers. People requiring documents to be notarized do not need to waste paper or ink supplies by printing out physical copies to have them notarized.

In addition, borrowers instantly recoup gas costs — and time — when they don’t have to drive across town to meet with a notary. The notary and the signer simply need to access a video program on their computers — such as Zoom or RingCentral — that allows the host to record and download the video.

Webcam notarizations are actually safer and more secure than the original method of manually notarizing documents. Because digital-signature technology is leveraged in the notarization, comprehensive, independent audit trails track and record every part of the signing process. The legal evidence of the signature and the notarization is embedded in the document itself. This means that if the transaction or document is ever legally called into question, the authenticity of the signature and the notary process can be easily proven.

The notary is required to keep a copy of the video recording on file — providing further evidence of the signer’s identity and the signing process. That recording also acts as a strong deterrent to committing fraud, given the participants know it exists and can serve as evidence in any investigation. In addition, tamper- sensitive technology immediately detects any changes that are made to a document after each signature has occurred — reducing the risk of fraudulent activity.

Convenience

Another big advantage of webcam notarizations is convenience. With webcam notarizations, there is no need for borrowers to travel to unfamiliar places to meet with people they don’t know. Instead, each party can participate in the notarization from wherever is most convenient — on the couch in sweatpants or even at a coffee shop down the street.

Webcam notarizations can be performed at any time as long as all parties have an internet connection. All it takes is the notary and the signer scheduling the meeting. And, because most webcam notarizations take less than 10 minutes to perform, the signer instantly regains a chunk of valuable time compared with an in-person notarization.

Remote webcam notarizations have transformed the traditional notarization process into a secure, digital transaction that simplifies workflow. Adopting webcam notarizations for your closings will maximize the security of your borrower’s mortgage transactions, and they will appreciate the convenience it adds to the mortgage process.


 
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