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A classic real estate closing can have upwards of 100 pages of documents to sign, and the ability to do this both remotely and electronically is alluring to everyone involved in the transaction––particularly busy homeowners. But, RON (remote online notarization) isn’t available everywhere, so understanding when and where you can utilize it is incredibly important. Check out our 3 steps to determine when and where you can use RON.
RON is a form of eClosing, which is the act of closing a mortgage or real estate transaction electronically. All or some of the closing documents are viewed and/or signed online through a secure digital environment. Depending on the state you live in, you can take advantage of three main types of eClosing options: RON, hybrid eClosing, or in-person eClosing. A RON closing is a digital online closing that occurs where the signers and the notary meet via an audio and video application. The documents will contain an electronic signature and electronic notarization.
There are three methods that most title companies use to figure out where they can offer remote online notary services to clients: state legislation, underwriter requirements, and eVault capabilities.
The first step to determining if RON can be offered on a transaction is to see if the state has passed legislation. To date, 38 states have passed laws allowing remote online notarization. The states that have enacted RON laws are: Virginia, Montana, Texas, Nevada, Indiana, Tennessee, Minnesota, Vermont, Michigan, Ohio, North Dakota, Idaho, Utah, Kentucky, Arizona, Washington, Iowa, Oklahoma, Maryland, Nebraska, Florida, Wisconsin, Pennsylvania, Alaska, Louisiana, Colorado, Oregon, Missouri, Hawaii, Wyoming, West Virginia, Kansas, New Hampshire, Arkansas, New Jersey, New Mexico, Illinois, and New York.
Even if a state has passed RON legislation, title insurance underwriters often have their own requirements for where remote online notarization is available. For example, underwriters have different requirements based on whether the transaction is a refinance or a purchase.
There are also counties in states that have passed legislation who won’t accept RON documents––making underwriters wary of insuring RON transactions.
Lenders who want to offer RON closings to their borrowers will need to facilitate an eNote, which is the digital equivalent of a promissory note. It’s not as simple as just merely scanning a document into a computer and having it signed. To ensure the security of the electronic note, eNotes are created in a special file format and must be stored in an eVault.
An eVault is a repository for managing and transferring electronic documents. If a lender doesn’t have a relationship with an approved vendor, such as Notarize, the closing cannot be done via remote online notarization.
Despite some of the logistical hurdles, eClosing via RON is a winner for everyone involved in the real estate transaction process. We’ve heard from real estate agents and homebuyer’s alike that the use of RON is moving beyond a benefit to an expectation.
For lenders and large-scale investors, it creates a higher level of operational efficiency. For homeowners, it provides much needed flexibility in what can be an extremely stressful process. Rather than having to show up at a specific location at a certain time, consumers can sign documents at a place and time that’s convenient for them. Offering RON closings can be a key differentiator for lenders and can sharpen their competitive edge in an evolving market.
Interested in learning more about how Spruce’s RON closing process? Get in touch with our team here.
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