RON In Real Estate Closings
Five years ago, few lenders were eager to add untested remote online notarization to loan document signings. But as more companies successfully tested pilot programs for eClosings using RON, confidence in the process grew, and companies began to see the benefits RON brought to borrowers, eliminating the need for lengthy travel to an office for a loan signing and enabling signers unable to travel long distances to complete real estate transactions through remote technology.
“It’s very much a consumer-friendly thing,” said Rick Hill, Vice President of Industry Technology with the Mortgage Bankers Association. “If you’ve ever closed a loan, historically you have to go to someone’s office to sign all of your documents. With remote online notarization, you no longer have to do that. For example, let’s say that a husband and wife are trying to close on loan, but the wife is serving in the military in another state or country. Previously, the wife would have had to jump on a plane and come home to sign the documents. With RON, they are both able to participate in the closing in a way that was just not possible before.”
However, 2018 and 2019 saw a significant increase in electronic closings. More than half of all loan applications in the past two years included an online or mobile component, according to information published by FISERV. Mortgage Electronic Registrations Systems (MERS) reported that 127,178 eNotes (paperless records of electronic mortgages) were registered in 2019. MISMO®, the mortgage industry’s standards organization, recently announced a new RON certification program for RON providers and mortgage industry participants to increase adoption of RON-enabled mortgage closings.
“Sometimes only part of the process is performed electronically, or you may be signing all your documents electronically with a remote Notary,” Hill said. “In the past year and a half, we’ve migrated from a very small number of electronic closings to 15,000-16,000 eClosings each month, and RON is being used in many of those transactions.”
RON Reduces Errors And Paper Costs In Loan Closing Documents
Another reason RON is gaining popularity is because it reduces document errors during a loan document signing.
A mistake or missed signature on paper loan documents can sometimes go unnoticed until after a signing. With remote online notarization, if required information is accidentally left blank or incorrectly entered, the system will not allow the notarization to be completed until the errors are corrected.
“Errors are a huge hidden cost, and resolution of those errors is also costly,” Hill said. “There are companies with whole departments that solely deal with post-closing error issues. All those costs — from fixing errors and chasing down why information is incorrect — start to go away with RON.”
The reduction of document errors using RON also helps Notaries, Hill said, because they do not have to go back to visit the signer to correct errors or obtain missing signatures on loan documents.
Also, because real estate and mortgage transactions require printing and distributing dozens or even hundreds of pages of paper documents at a time, use of RON provides a significant savings in printing and other paper-related costs, said Pem Guerry, Executive Vice President with RON technology provider SIGNiX.
“Even for smaller companies, copying and distributing multiple copies of hundreds of pages of paper is a huge cost,” Guerry said. “RON means faster and generally less expensive transactions for signers.”
Notaries benefit because of the additional security procedures used for RON, Guerry added. “Instead of being stored in a briefcase or file cabinet, the documents are encrypted and stored electronically. You can prove there has not been a single change to the document of any kind with RON,” he said.