The shift toward remote closings
Since the pandemic began, we’ve seen a significant increase in the use of Remote Online Notarization (RON) across the mortgage industry. In fact, most states have now enacted RON laws to allow some form of remote notarization. RON adoption was fairly tepid up until early 2020, but the desire to avoid in-person contact caused lenders to urgently seek ways to conduct real estate closings remotely. To meet these new requirements, many lenders have embraced RON eClosing, which allows a notary to witness a borrower eSigning their closing documents via audiovisual technology. Though this spike in demand was driven by the pandemic, RON eClosing will continue to offer very real value to lenders, closing agents, and borrowers for years to come. The ability to schedule a convenient online eClosing where the borrower doesn’t even have to leave home is a true game-changer.
What’s required for RON eClosing?
Each remote notarization event requires that the interactions between the signer(s) and the notary be recorded through audiovisual technology, saved, and then stored. It’s important to note that this recording doesn’t capture the documents themselves to avoid exposing personal information. This video recording is intended to bolster the legal evidence of the signer’s identity and that the signer was not under duress when signing, which have been basic requirements of the paper notarization process for many years. State laws vary, but these videos are usually the property of the notary and are sometimes considered to be part of the notarial journal they’re required to keep.
The need for centralized RON video storage
Most RON vendors store these videos on behalf of the notaries to ensure that they’re safeguarded and secure. However, this has led to broad concerns among mortgage originators, investors, and servicers. How can they easily know whether a loan was closed using RON? Even more importantly, how can they be assured access to that video years later, should any legal proceedings be necessary on a specific loan? Some states require the RON videos to be stored for only five years after the event, which is obviously not sufficient for the average life of a mortgage loan.
Another challenge is that investors don’t have a reliable way of knowing where to look for a loan’s video because the identity of the RON vendor may not be evident. Even if they do know the RON vendor, what if that company has gone out of business or has purged the video because the state-required term has expired? These concerns have led some mortgage companies to require the RON vendors to push a copy of each video to them for long-term self-storage. Unfortunately, this still does not address how to securely store the video in a centralized location so that all necessary parties can have access to it.
How MERS® can help
Because of its unique role in the industry, MERS® is exploring how it can help the industry solve for many of these concerns. As a well-established, centralized registry for identifying a loan’s primary rightsholder(s), MERS® is collaborating with key industry stakeholders to develop a cost-effective, scalable service for the secure long-term storage of RON videos.
This service will benefit RON vendors by eliminating one-off video uploads. It will also help investors, aggregators, originators, interim funders, and servicers to feel confident that their loans’ videos will be easily available if they ever need them, regardless of the status of the original RON vendor or remote notary. This could further boost the broader industry’s confidence to make the shift towards a fully digital future.
Stay tuned for more news coming soon about the MERS® centralized RON video storage service.