White Paper Addresses E-notarization Trends, Technology

November 29, 2016

After more than a decade of development legal review and regulatory scrutiny, the process of performing notarial acts in an electronic environment has reached maturity, according to a white paper released by the National Notary Association (NNA).

The white paper cited a report published in 2015 by the Consumer Financial Protection Bureau (CFPB) that concluded electronic closings can benefit consumers and make the process more efficient.

In 2016, Fannie Mae and Freddie Mac announced support of both e-notarization and webcam (remote) notarization systems. In a letter to the National Association of Secretaries of State (NASS), Fannie Mae and Freddie Mac voiced support to remove barriers to electronic notarization.

“Not only electronic notarization in the physical presence of the notary, but also remote electronic notarization, whereby the requirement for the ‘personal appearance’ or the ‘presence’ of the signer is satisfied via a live audio and video connection,” the government sponsored entities said in the letter.

In seeking to make the execution of mortgage closing documents more convenient for borrowers, the GSEs believe that the application of technology to the notary process enables the opportunity to provide a more flexible and convenient borrower experience, while improving the assurance, authentication, security and documentation of notarial acts.

Quicken Loans echoed the same sentiment toward e-notaries in a letter to the NASS, saying the “current climate provides the best opportunity to move the mortgage industry forward by allowing consumers to close their loan electronically, at least in those states that do not require an attorney to conduct the closing.”

According to the white paper, all states—except Illinois, New York and Washington—legalized electronic transactions, signatures and notarizations by enacting the Uniform Electronic Transactions Act (UETA). The Electronic Signatures in Global and National Commerce Act (E-SIGN) is a federal law that applies many of the same provisions as the UETA to interstate and national commerce.

Additionally, notaries in Virginia and Montana may perform webcam notarizations. Virginia law allows anyone in the country or world to request an electronic Notary to perform a webcam e-notarization. In Montana, signers must be residents of Montana and the transaction must meet specific criteria laid out in the law.

Earlier this year, ALTA formed a Remote eNotary Workgroup to examine the benefits and challenges, and to help ensure innovation in this area improves the consumer experience. ALTA is working with the Mortgage Bankers Association, the GSEs and NASS to develop standards regarding remote e-notaries. In order for this practice to be successful, statutes, regulations and standard practices need to exist that recognize and protect remote e-notaries. Also, ALTA believes that, if done right, remote e-notaries can reduce certain fraud risks. For more information on ALTA's Remote eNotary Workgroup, contact Justin Ailes, ALTA's vice president of government affairs.

NNA’s white paper also outlines the benefits of e-notarization and webcam notarization, and highlights challenges and limitations.

“Any business or organization interested in creating efficiencies, cutting costs, eliminating errors and reducing risk should explore e-notarization as a solution,” the paper concludes. “While certain challenges remain, societal acceptance of e-notarization has never been higher or more accessible. As e-notarization becomes more common and the technology improves, companies will be able to focus more on excellent customer service rather than processes and paperwork.”

Contact ALTA at 202-296-3671 or communications@alta.org.