RON: The mortgage industry’s Field of Dreams
In August 2021, Major League Baseball made a lot of dreams come true by building a baseball field in a cornfield and then having the Yankees and White Sox play an actual game. Much like Field of Dreams, remote online notarization has seen its own “If you build it, they will come” moment begin to play out recently.
On January 1, 2020, 10 states had RON statutes slated to go into effect during the year, bringing the total number of states with permanent RON legislation up to 22. This was a tremendous leap from four states that were fully implemented before the end of 2019. Now, less than two years later, RON has reached the tipping point as 38 states have passed permanent legislation.
It cannot be ignored that during the Covid-19 pandemic in early 2020, 48 states and the District of Columbia either passed a RON law or issued an executive order regarding remotely notarizing documents; some did both. At the time, several states had permanent legislation in the works but needed an emergency order until the permanent legislation could be passed. Others passed the emergency order in the face of Covid-19 and, after seeing the efficiencies gained by RON, began working on permanent legislation.
Since the first RON legislation was passed by Virginia in 2011, most states have made sure to include the same basic components in their laws. This includes requirements related to identity proofing, e-notary registration, document recording, document security and “papering-out” recording standards. However, each state differs in their specific language and exact requirements.
At the beginning of Covid-19, the Securing and Enabling Commerce Using Remote and Electronic (SECURE) Notarization Act of 2020 was introduced in the U.S. Senate. This bill was supported by both the American Land Title Association and the Mortgage Bankers Association. Unfortunately, it was not signed into law in 2020, but a revamped version of the bill was introduced in the Senate in May 2021. Among other things, the SECURE Notarization Act of 2021 expands the acceptance of RON and establishes minimum standards at the legislative level.
Taking feedback from various states into account, the 2021 bill is viewed as less of a ceiling for them to pass legislation and more of a starting place on which states can build their own RON laws. It still allows states to have individualized guidelines for implementing RON but standardizes some of the variable components to ensure consistency. While interstate recognition of notarial acts has been well established, these standardized components will also provide assurance that properly authorized RON transactions are recognized nationwide.
Some rumblings at recent title industry events, such as NS3, indicate that the updates to SECURE have been well-received by many in the industry. This bill has been passed by the U.S. House of Representatives and is under review by the Senate. As it is tied to a defense appropriations bill, some experts predict SECURE will be passed and RON will be legal in all 50 states within the next year. This would also have implications beyond the mortgage and real estate industries, as indicated by the fact that organizations such as the American Council of Life Insurers, American Retirement Association and the U.S. Chamber of Commerce have all voiced support for RON. However, there is some resistance from several secretaries of state who fear federal legislation will encroach on states’ rights to implement their own RON guidelines.
Within the mortgage industry, companies utilizing and providing RON have long since pushed for standardization. Luckily, MISMO developed a RON Software Compliance Certification Program. This program ensures participants are operating in compliance with MISMO’s RON standards. SECURE also provides support for the MISMO standards.
As state legislators continue to embrace RON and federal legislators push for it, the lingering question of the borrower remains. If lenders build RON technology into their stack, will borrowers come? Data suggests that the answer is yes, borrowers will come walking out of the cornfields for RON.
As RON becomes more prevalent in the mortgage industry, the industry is blessed with actionable borrower feedback and data rather than hypotheticals and predictions of where the future of the industry lies. With 97% of borrowers finding RON to be safe and secure and 95% stating they would recommend RON to others, borrowers are clearly in support of the convenient, time-saving technology.
In Field of Dreams, Kevin Costner’s character hears the phrase “if you build it, he will come,” and thinks he knows who the “he” is. Another character simply says “people will come.” By the end of the movie, “he” has referred to a few different people, but they all came. The same can be said for RON and the mortgage industry. When RON was created, “they” could have referred to any number of players in the transaction – lenders, settlement agents, borrowers or state governments. In the end, they will all come.