Mortgage

The dearth of RON standardization results in confusion within the business

The need for nationwide standards for remote online notaries is becoming clearer day by day. Since the ROZ laws are passed at the state level, each state has a different law, and these laws are interpreted differently from company to company and across state borders.

The lack of RON standardization not only leads to confusion related to the Notaries Act, but can also lead to late closures and financial consequences. The mortgage industry has spent years driving RON adoption and is finally seeing the fruits of that labor. However, as acceptance increases, so should the pressure on standardization.

Leave room for interpretation

In order to avoid this, the state legislators nevertheless managed to leave room for the interpretation of their RON laws. For example, many Texas counties refused to accept remote / digital notarized documents for record, even after the state passed its RON law. To remedy this, Texas changed the law to stipulate that every county is specifically required to accept RON transactions on record, and that the notary public may be required to provide a written statement of the authenticity of the transaction.

However, some circle writers still refuse to "stick out" RON documents. This is just one example of the conflicts that arise between notaries and local officials when a lack of standardization leads to ambiguous RON laws and consumers get caught in the crossfire.

Which law applies?

Another common problem with RON transactions is the perceived lack of clarity in notary law. Notaries are subject to the laws of the state in which they are licensed.

However, when a notary public is employed outside the state, many companies try to apply the laws of the state in which the property is located, resulting in a stalemate as each company tries to convince the other of its authority on the matter.

In addition to the confusion, some companies require the use of a state notary but do not disclose this requirement in advance, causing delays in the eleventh hour. What is missing is the international recognition of remote / digital notarial acts by all parties.

For example, in the paper world, certification by a Florida-based notary is accepted as valid in every state. The same applies to ROZ transactions, but due to the lack of standardization, non-notarial parties to the transaction are often unable to establish this assignment.

Notarial language and the phone game

When states passed the RON legislation, they often used laws passed by other states as a basis for choosing the parts that fit the exemplary state legislatures. This practice resulted in a legislative process similar to the phone game for children. As the language changed hands between states, it was changed slightly each time until it eventually morphed into something entirely different while still resembling the original.

For example, some states only require the digital notary seal to contain the words "electronic notary", others expect the seal to explicitly indicate that it is being used for an RON transaction. Still others require the inclusion of a language indicating that the transaction was "completed using two-way audio and video".

Coupled with the confusion about which state law applies, the linguistic differences can not only cause more work for the notary but also negatively affect the deal by questioning the legality of the entire transaction.

Identify customers

Verifying identity is another aspect of ROZ that lacks standardization. Most, but not all, states require two forms of ID verification: knowledge-based authentication, or KBA for short, in which the customer has to answer questions about their personal data. and analysis of the credentials, usually a security scan of the customer's license or passport. KBA is specifically required in most states but can often trigger the customer and require a second or third attempt at ID verification.

While the Mortgage Industry Standard Maintenance Organization's RON standards allow three ID verification attempts within 48 hours, some states have chosen to view the standards more as guidelines and only allow two attempts within 24 hours.

The main cause of this misguided view is states' preference for certain technologies over technical neutrality and the fact that the door remains open to future and more robust identity verification tools. Rather than allowing the use of technologies that involve verifying the identity of multiple factors, states have mandated notaries with specific, often substandard and outdated requirements for RON technology, leading to delayed closings that frustrate consumers and give lenders extra time and cost money.

The effects of a lack of standardization

The federal RON law has been introduced but not yet passed. By the time federal legislation applies to ROZ, mortgage and real estate experts will have to push for standardization in our respective industries and at state level. Without clear standards that can be applied to every single RON transaction, today's confusion will persist for the foreseeable future.

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