As more businesses are forced to work remotely due to the coronavirus disease 2019 (COVID-19) crisis, several federal and state governments are moving quickly to enable fully electronic processes to keep businesses operating.<\/p>\n\n\n\n
On March 18, 2020, Senate Bill 3533<\/a>, the Securing and Enabling Commerce Using Remote and Electronic Notarization Act of 2020 (the \u201cSECURE Act\u201d), was introduced as bipartisan legislation to authorize and establish minimum standards for electronic and remote notarizations that occur in or affect interstate commerce. A substantially identical version of the bill was introduced in the House on March 23, 2020 as H.R.6364<\/a>. If the SECURE Act becomes law in its current form, it would authorize every notary in the US to perform remote online notarizations (RON) using audio-visual communications and tamper-evident technology in connection with interstate transactions.<\/p>\n\n\n\n Until adoption of the SECURE Act or similar federal legislation takes place, some federal agencies are implementing relief on a case-by-case basis. On June 3, 2020, the Internal Revenue Service issued Notice 2020-42<\/a> allowing retirement plan participants or beneficiaries during the year 2020 to meet the witnessing requirements for certain participant elections through use of remote notarization, including the spousal consent required under \u00a7 417 of the Internal Revenue Code. Under existing regulations, some participant elections must be witnessed in the \u201cphysical presence\u201d of a plan representative or a notary public. Notice 2020-42 allows the \u201cphysical presence\u201d requirement to be satisfied, in the case of a notary public, by an electronic system that uses remote notarization via live audio-video technology so long as that system otherwise satisfies the requirements of participant elections under 26 CFR \u00a7 1.401(a)-21(d)(6) and is consistent with state law requirements that apply to the notary public. [updated July 31].<\/p>\n\n\n\n Currently, there are 28 states that have enacted some form of remote online notarization (RON) law: Alaska, Arizona, Colorado, Florida, Hawaii, Idaho, Indiana, Iowa, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Missouri, Montana, Nebraska, Nevada, North Dakota, Ohio, Oklahoma, South Dakota*, Tennessee, Texas, Utah, Vermont, Virginia, Washington and Wisconsin. [updated October 22].<\/p>\n\n\n\n UPDATE [November 5] \u2013 On October 29, Pennsylvania became the 29th<\/sup> state to enact remote online notarization (HB2370<\/a><\/strong>). The law became effective upon enactment<\/strong>.<\/p>\n\n\n\n The basic components of each state\u2019s RON law are to:<\/p>\n\n\n\n The state RON laws are very detailed and vary with respect to, among other things, authentication, journaling and retention periods. (* The South Dakota RON law differs substantially from the others in that it enables the use of communication technology only “if the notarial officer: … affixes the notarial officer’s signature to the original tangible document executed by the [principal]” and only if the notary personally knows the principal.)<\/p>\n\n\n\n In states that have yet to enact RON or otherwise make their RON law effective, emergency short-term measures are being issued. The below chart reviews each state and any RON law and\/or emergency order enacted in such state:<\/p>\n\n\n\n Moreover, Fannie Mae has issued updated guidance<\/a> to lenders on addressing mortgage origination issues during the COVID-19 event, including authorizing lenders to sell loans with remotely notarized loan documents in certain designates states and under specified conditions. Fannie Mae also issued on April 14 guidance on \u201cRemote-ink notarizations<\/a>\u201d authorized by emergency order [updated April 21], and on July 1 issued a COVID-19 FAQ<\/a> providing updated information on states enacting remote online notarization or other remote notarization implementations during the COVID-19 pandemic [updated July 24]. Freddie Mac issued its own guidance<\/a> to sellers on the impact of COVID-19 on borrowers and the mortgage origination process which includes guidance related to acceptable uses of remote online notarizations, and has issued a COVID-19 FAQ<\/a>. On August 27, Freddie Mac updated its guidance<\/a> to modify the requirements for maintenance of RON recording to the longer of 10 years or the time period specified in the RON laws of the state of the notary\u2019s commission [updated September 5]. All of the above guidance has been regularly updated by Fannie and Freddie in the above-provided hyperlinks [updated November 5].<\/p>\n\n\n\n Additionally, on April 21, MISMO, a mortgage industry standards organization, announced<\/a> a new remote online notarization certification program for RON providers and mortgage industry participants. The cost to obtain certification is $5,000 [updated April 28]. MISMO also developed and released Remote Online Notarization standards<\/a> to promote consistency across mortgage industry practices [updated July 24]. The MISMO RON standards support model legislation<\/a> developed by the Mortgage Bankers Association (MBA) and the American Land Title Association (ALTA) [updated November 5].<\/p>\n\n\n\n Further, Fidelity National Title Insurance Company, Chicago Title Insurance Company, Alamo Title Insurance, National Title Insurance of New York and Commonwealth Land Title Insurance Company released a bulletin<\/a> on March 18 titled \u201cEmergency Exemptions to Remote Online Notarization Procedures\u201d that allows RON to be available, provided certain requirements are met, as an option for properties located in all states and the District of Columbia with a proposed policy amount of $1 million or less (and for higher amounts on a case-by-case basis). This emergency exemption will be available through April 30, 2020.<\/p>\n\n\n\n Additionally, on March 27, the Veterans Benefits Administration issued Circular 26-20-10<\/a> (updated on April 27 by change 1<\/a> [updated July 24]), making VA loans for which electronic notarization was used as a part of an eClosing, including IPEN and RON, eligible for guaranty provided that the notarization is valid and effective under applicable law and regulations.<\/p>\n\n\n\n The Department of Housing and Urban Development has applauded the efforts of the states and other agencies to adopt and implement IPEN and RON during the COVID-19 crisis and, on March 27, requested<\/a> the Conference of State Bank Supervisors to \u201csecure additional flexibilities, wherever possible, to facilitate the full functioning of the real estate mortgage market within the confines of the President\u2019s directives to avoid public interactions whenever possible.\u201d<\/p>\n\n\n\n On May 13, the Consumer Financial Protection Bureau (CFPB) published a compliance aid titled \u201cOpen-End (not Home-Secured) Rules FAQs related to the COVID-19 Pandemic<\/a>\u201d that, in part, addresses engaging with consumers electronically during COVID-19. Specifically, the CFPB states that creditors may be able to expedite consumer communication by using electronic means to deliver required disclosures so long as the creditor complies with ESIGN\u2019s consumer consent provisions. The CFPB notes that ESIGN does not allow a consumer to provide oral consent, but that \u201ccreditors could obtain a consumer\u2019s email address over the phone and contact the consumer through the provided email address to obtain consent by, for example, providing a hyperlink through which a consumer might agree to electronic disclosure.\u201d<\/p>\n\n\n\n Other notarial acts are also being made available on a remote basis using audio-visual communication technology, such as the swearing-in of witnesses (see Supreme Court of Florida\u00a0Administrative Order No. AOSC20-16<\/a>), and the general conduct of court proceedings (see Pennsylvania Supreme Court\u00a0Order dated March 16<\/a>).<\/p>\n\n\n\n Source: https:\/\/www.dlapiper.com\/en\/us\/insights\/publications\/2020\/03\/coronavirus-federal-and-state-governments-work-quickly-to-enable-remote-online-notarization\/<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"As more businesses are forced to work remotely due to the coronavirus disease 2019 (COVID-19) crisis, several federal and state governments are moving quickly to enable fully electronic processes to keep businesses operating. On March 18, 2020, Senate Bill 3533, the…","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"twitterCardType":"","cardImageID":0,"cardImage":"","cardTitle":"","cardDesc":"","cardImageAlt":"","cardPlayer":"","cardPlayerWidth":0,"cardPlayerHeight":0,"cardPlayerStream":"","cardPlayerCodec":"","footnotes":""},"categories":[35],"tags":[37,413],"class_list":["post-143","post","type-post","status-publish","format-standard","hentry","category-industry-insights","tag-remote-online-notarization","tag-ron-laws"],"yoast_head":"\n
Vermont further enacted SB114<\/a> on April 28, enabling the witnessing of a power of attorney to be conducted under the emergency administrative rules and filed in land records and enacted SB316<\/a> the same day to enable execution of self-proving wills using remote notarization; and Vermont enacted its RON law effective July 1, 2019; however, RON is not yet implemented due to the failure of the Vermont Secretary of State to issue regulations and guidance [updated October 5];<\/li>