Remote Online Notarization in Mortgage Loan Closings

Vol. 37 No. 4 April 2021

PRE-PUBLICATION ISSUE



JOSHUA C. PREVER is a partner at Holland & Knight LLP in

the firm’s Financial Services Practice Group. His practice is

focused on litigation, regulatory and compliance issues, and is

resident in the firm’s Fort Lauderdale, Florida office. BRIAN J.

GOODRICH is an associate at the firm’s Dallas office. He is a

member of the firm’s Financial Services Practice and its

Consumer Protection Practice Groups where he concentrates his

practice on regulatory investigations, compliance, and litigation

matters. Their e-mail addresses are joshua.prever@hklaw.com

and brian.goodrich@hklaw.com brian.goodrich@hklaw.com.

INSIDE THIS ISSUE

●

xx 2021 Page 1

REMOTE ONLINE NOTARIZATION

IN MORTGAGE LOAN CLOSINGS

Remote online notarization (“RON”) provides added efficiencies and safety for parties to

mortgage closings in the COVID era. In this article, the authors provide a step-by-step

description of how RON works, its growing legal acceptance, and a variety of subjects in

its risks, rewards, and practical changes. They conclude with the benefits of a remote

online closing of a residential Florida mortgage transaction and a case study involving a

challenge to the enforcement of electronic notes and loan documents.

By Joshua C. Prever and Brian J. Goodrich *

Millions of mortgages close each year and, for most,

each closing involves the in-person involvement of a

dutiful notary public. In many cases, the notary helps

facilitate the loan closing, and sits across from the

borrower as the note, mortgage/deed of trust, and other

documents are executed. At the end, each party to the

transaction is given paper copies of the documents

evidencing the loan. The original wet-ink note — the

borrower’s promise to pay — is presented to the lender

or its agent for safekeeping, and a wet-ink version of the

mortgage/deed of trust or a copy (where electronic

recording is available) is sent to the clerk’s office for

recording.

This, however, is not the only way a loan can be

closed. Nor does it have to be the preferred way of

doing so. And given the digital age we have entered,

and the need in some cases to provide remote options,

we can tread down an alternative path that offers some

important improvements on the way things have

generally been done.

RON offers that alternative, allowing documents that

require notarization to be done remotely and providing

lenders with a completely digital record of the loan

transaction. The desire to move away from paper, and

the pervasive need for virtual services and operations,

has cemented and accelerated the need for new solutions

like RON. Importantly, RON presents potential

synergies and efficiencies for all parties to loan closings,

as well as market opportunities for added conveniences

for business units and consumers looking to authenticate

April 2021 Page 2

documents when a notary cannot, or the parties feel that

it is unnecessary for the notary to be physically present.

While RON offers many advantages, current and

future mortgage lenders need to have an understanding

of how RON works and the landscape that it occupies.

RON exists against a complicated backdrop of state laws

and regulations related to notarization, electronic

signatures, and document recordation.

In addition to

the opportunities that it presents, RON presents risks —

primarily in the form of the potential for fraud and

practical barriers to implementation, such as limits on

electronic recordation. And, as with any emerging

technology in a highly regulated environment, many

aspects of its implementation remains untested in the

courts and by regulators.

The purpose of this article is to provide an overview

of RON and how it works; the momentum behind its

continued adopted by state legislatures; the risks and

benefits that it presents; and the steps and controls that

may be used to mitigate those risks. This article also

presents a vision for a remote online mortgage closing

involving RON. Ultimately, this article strives to go

beyond the theoretical, posing practical solutions and

considerations related to the use of RON in order to

assist those familiarizing themselves with this critical

tool, which is on its way to becoming an important

option for mortgage closings.

I. RON: HOW WE GOT HERE

Notaries are public officers of the state, empowered to

authenticate important documents that convey property,

money, and rights. For decades, states commissioned

notaries to conduct traditional notarial acts, where the

notary and signer are face-to-face, an ID is presented,

and the signer presents and then physically signs the

document after the notary confirms the signer’s

awareness of the document. The process for RON

follows almost the same step-by-step process as

traditional notarization, with the key difference being

that the signer and notary are located in different places

————————————————————

Laws and regulations governing RON are quickly evolving.

This article captures the legal requirement as they exist as of

12/22/20.

and are interacting via and confirming identity through

technology.

Given that the notary and signer are in two different

locations simultaneously signing the same document,

RON inherently involves the need for electronic

signatures. Thus, in order to understand when and how

RON may be used, lenders must have a basic

understanding of the laws applicable to electronic

signatures.

A. Electronic Notarization: The Precursor to RON

In the early 2000s, some states passed legislation

permitting notaries to utilize electronic signatures in

connection with the notary process.

This process,

called “electronic notarization” or “e-notarization,”

follows a similar process to traditional notarization, the

key distinction being that the notary and the signer affix

their electronic signatures (and the notary his or her

electronic seal) as a means of authenticating the

document as opposed to signing with paper and pen at

the same location.

Electronic notarization was made possible by most

states’ adoption of some form of the Uniform Electronic

Transactions Act (“UETA”) over the last 20 years.

essence, UETA provides that electronic signatures carry

the same legal validity as wet-ink signatures.

However,

each state’s version of UETA identifies certain subsets

of documents to which UETA’s mandate does not apply.

————————————————————

For example, in 2007 the Florida Legislature permitted

electronic notarization in Florida by enacting Chapter 2007-257,

later codified as Fla. Stat, § 117.021. Other states amongst the

first wave of states to pass statutes permitting electronic

notarization include Arizona, Minnesota, and North Carolina

(all 2005). Today, almost all states permit electronic

notarization.

In addition to states’ adoption of UETA, the passage of the

federal E-SIGN Act, 15 U.S.C. § 7001, et seq., which provided

that electronic signatures carry the same weight under federal

law as wet-ink signatures, also facilitated the adoption of

electronic notarization.

See, e.g., TEX. Bus. & Comm. Code, Title 10, Sec. 322.007

(“(a) A record or signature may not be denied legal effect or

enforceability solely because it is in electronic form.”).

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April 2021 Page 3

Most state UETAs contain a clause resembling the

excerpt below:

Sec. 322.003. SCOPE. (a) ... [T]his chapter

applies to electronic records and electronic

signatures relating to a transaction. (b) This

chapter does not apply to a transaction to the

extent it is governed by: (1) a law governing

the creation and execution of wills, codicils, or

testamentary trusts; or (2) the Uniform

Commercial Code, other than Sections 1.107

and 1.206 and Chapters 2 and 2A.

While there are many nuanced variances between the

versions of UETA adopted by each state, most states’

UETAs do not apply to electronic signatures on wills

and other testamentary documents — including powers

of attorney.

Almost all states have adopted some form of UETA.

Only two states have taken different approaches: Illinois

and New York. However, both states have established

regimes that allow for electronic signatures. For

example, in New York, electronic signatures are

permitted if the consumer with whom an individual or

entity is doing business consents to engage in an

electronic transaction.

How a state’s electronic signature laws relate to RON

is important; because RON typically involves the use of

electronic signatures, only documents that may be

electronically signed under the applicable state’s UETA

may be remotely notarized. In other words, in most

circumstances it is a prerequisite to determine that a

document may be electronically signed with the same

weight as a wet signature before a user may notarize a

document using RON. To continue with the example

above, because the Texas UETA does not apply to laws

governing the creation of wills, a Texas notary could not

properly notarize a will, remotely.

————————————————————

Tex. Bus. & Comm. Code, Title 10, § 322.007 (emphasis

added).

E-Sign and New York’s Electronic Signatures and Records Act

(“ESRA”) (New York State Technology Law Article 3).

Due to the COVID-19 pandemic, Texas has provided temporary

authorization to conduct the remote notarization of wills. See

Statement by the Governor of Texas, available at

https://gov.texas.gov/news/post/governor-abbott-temporarily-

suspends-certain-statutes-to-allow-for-appearance-before-

notary-public-via-videoconference (permitting, temporarily, the

use of RON in connection with wills, powers of attorney, and

B. The Difference Between Electronic and Digital

Signatures

With the expansion of electronic notarization,

technology has developed and adopted to meet industry

and signers’ needs. Signers may now use electronic or

digital signatures to execute documents. Both electronic

and digital signatures are binding, but there are critical

differences between these terms.

An electronic signature is any electronic symbol

attached to a contract or other record, used by a person

with an intent to sign. In contrast, digital signatures

guarantee that an electronic document is authentic

because the signer utilizes a personalized signature that

is associated with their authentic documents. In short,

digital signatures embed “Personal Key Infrastructure”

(“PKI”) that include a code that uniquely identifies a

signer. However, both the notary and signer must have a

registered digital certificate from an issuing certificate

authority in order to link the signer and their digital

signature. Thus, while both electronic signature and

digital signature are equally capable of identifying a

signer and capturing legal signatures, many consumers

do not have a digital certificate and are unable to provide

digital signatures, unless that service is incorporated into

the process.

II. DEMYSTIFYING RON: HOW IT WORKS

A. Elements of a Typical RON

The process for RON follows a similar same step-by-

step process to traditional, face-to-face notarization.

Below is a step-by-step breakdown of the typical process

envisioned by the majority of state RON statutes.

Facilitating the Remote Notary Appointment. In

many cases, the parties to the transaction use a third-

party vendor that offers RON services that comply with

applicable state law requirements.

Some vendors allow

you to schedule the signing session, while others provide

on-demand services. This, however, is by no means the

only way. Some lenders have, or are in the process of

footnote continued from previous column…

other testamentary documents not authorized to the notarized

remotely under Texas law).

The vast majority of state RON statutes contemplate the use of a

specialized and secure notary platform. They also by in large do

not contemplate a notary using a generic audio-visual

communication technology, such as FaceTime or Zoom, to

conduct a RON.

April 2021 Page 4

building, their own RON programs, leveraging in-house

trained notaries and building, or incorporating as

necessary, the technology needed to comply with legal

requirements. In doing so, these lenders gain greater

control over the process, integrating the loan closing and

the RON functions into a seamless process and

improving the customer experience.

In either scenario, electronic copies of the documents

are provided to the remote notary. In the case of a

mortgage loan, and the notary is acting as the closing

agent, it would be the entire suite of documents, or if the

notary is only notarizing the mortgage/deed of trust, just

that document. Where the transaction involves

witnesses, the witnesses will receive an invite and attend

the notarization session, as well.

Once the time arrives for the documents to be

notarized, the notary, signer, and other necessary parties

access the notary platform, the notary will appear on the

screen and introduce herself. Again, there are steps that

lenders and third-party vendors can take to incorporate

these elements into the closing process.

Authentication. After the documents are distributed,

the identity of the signer and/or witnesses must be

“authenticated.” In traditional notarization, if the signer

is not personally known to the notary, the signer would

typically provide the notary with state-issued

identification (like a driver’s license). State RON

statutes allow notaries to authenticate identity through a

number of techniques — some requiring more than one.

For example, in Florida, unless the notary has personal

knowledge of the individual’s identity, a remote notary

must authenticate a signer’s identity through the remote

presentation and analysis of an individual’s government-

issued identification credential, combined with identity-

proofing through knowledge-based authentication.

Immediately below we describe the mainstream forms of

authentication set forth by state RON statutes, including

identity-proofing through knowledge-based

authentication.

• Knowledge-Based Authentication (“KBA”). A

majority of states have embraced knowledge-based

authentication, an authentication process that uses

personally identifying information about the signer

derived from a combination of private (e.g., credit

agencies) and public-facing databases (e.g.,

governmental recording offices)

linked to that

————————————————————

Fla. Stat. § 117.265.

See, e.g., Fla. Stat. § 117.265; Tex. Gov. Code § 406.110; Utah

Code § 46-1-2(19); Mich. Stat. § 55.263(h).

person’s social security number.

To authenticate

through this process, signers or witnesses are

presented with a series of multiple choice questions

about themselves that are automatically and

randomly generated from these databases. The

answers are likewise derived from these databases,

and the signers or witnesses must answer the

majority (or a set amount, e.g. four out of five) of

those questions correctly on their computer,

smartphone or tablet. For example, a signer may be

presented with five multiple choice questions. One

of the questions could list the names of five counties

in Florida and ask the signer to identify which

county she has owned a home in. While the signer

answers these multiple choice questions, the screen

is not shared with the notary, so the signer’s

confidential information is protected. If the signer is

unable to answer these questions correctly, then the

notary may be unable to verify their identify.

• Credential Analysis. Some states also require

signers and witnesses to present and provide

credential identifying information from one or more

forms of government-issued identification, such as a

driver’s license or US passport, in order to

authenticate their identity.

• Oath of Witnesses. Like in traditional

notarizations, some states that permit RON permit

an individual’s identify to be authenticated by the

one or two witnesses that will attest to the

individual’s identity.

• Personal Knowledge. If the notary is familiar with

the person, then no additional authentication is

————————————————————

It is worth noting that at this time, the majority of KBA

databases require the signer or witness to provide a social

security number to obtain the information from the private and

public databases to create the necessary questions and answers.

This can make it more difficult to perform a RON for a foreign

national. The RON can still be conducted if the signer is

known to the notary, or through a credible witness (KBA is

done on that individual), where permitted under state law. And

some vendors now have the ability to create KBA questions if

the signer or witness have conducted business in the US. The

title company should be appraised if this situation arises.

See, e.g., Fla. Stat. § 117.265; Ariz. Rev. Stat. § 41-376; Iowa

Stat. § 9B.7; Tex. Gov. Code § 406.110; Rev. Cod. Wash. §

42.45.050; Wis. Stat. § 140.07; Utah Code § 46-1-2(19).

See, e.g., Fla. Stat. § 117.265; 57 PA.C.S. § 306.1; Ariz. Rev.

Stat. § 41-376; Iowa Stat. § 9B.7; Rev. Cod. Wash. §

42.45.050; Wis. Stat. § 140.07; Utah Code § 46-1-2(19).

April 2021 Page 5

needed.

However, a notary/lender may still want

these additional authentication methods.

Recording. The notary will make clear that the

session will be recorded and indicate the purpose of the

session. The vast majority of states require that the

notarization process be recorded.

Signing Ceremony. Once the signer’s and witnesses’

identity has been authenticated, the notary typically asks

the signer to give an oath/acknowledgement and then

“sign” the document that is displayed on the shared

screen. Signers are typically asked to create a signature

at the outset of the process. Typically, the signature can

be a signature drawn with the signer’s cursor, or a typed

symbol, or simply their typed initials.

Sealing the Document and Making it Tamper-

Evident. Next, the notary completes the certificate, and

attaches his or her electronic signature and seal. A

notary’s digital certificate using PKI technology is also

attached. Once this is done the document is rendered

“tamper-evident,” a RON requirement. And this is

critically important, as ensuring there is a definitive

“original” version of the document/agreement is

necessary to show the parties’ intent and to enforce

contractual terms. The document will also contain an

audit trail showing the history of changes made to the

document, as well as details associated with its

execution. Thus, any further changes made to the

document will not align with those memorialized in the

certificate. The signer then receives an electronic copy

of the notarization document, which is typically

considered the “original.”

Notarial Log and Record Maintenance. Throughout

the process, the remote notary will typically narrate what

he or she is doing. The notary is required to record the

entire notarization session, and maintain a copy of the

recording typically between five to 10 years.

Most

————————————————————

See, e.g., Fla. Stat. § 117.265; 57 PA.C.S. § 306.1; Ariz. Rev.

Stat. § 41-376; Iowa Stat. § 9B.7; Tex. Gov. Code § 406.110;

Rev. Cod. Wash. § 42.45.050; Wis. Stat. § 140.07.

See, e.g., Minn. Stat. § 358.645.4; Mo. Stat. § 486.1195; Mich.

Stat. § 55.286b(9); Fla. Stat. § 117.245; 1 Tex. Admin. Code §

87.54(b).

For example, Arizona requires that the recording be retained for

five years (Ariz. Rev. Stat. § 41-374), Nevada for seven years

(N.R.S. 240.1995 – 20), and Oregon for 10 years (O.R.S. § Ch.

12, § 20(6))

notaries are also required to complete an entry in their

notarial log for the notarization. These records are rarely

used, but they provide critical security and

documentation of the notarization should the signer’s

identity be disputed or litigation subsequently ensue.

B. RON Model Statutes

Most states that have adopted RON follow one of two

model laws developed against this backdrop, with the

states that do splitting relatively equally into each camp.

Some states follow the Revised Uniform Law on

Notarial Acts (“RULONA”), which was promulgated by

the Uniform Law Commission (“ULC”). States that

based their RON statute on RULONA include, for

example, Montana, Oklahoma, Iowa, Minnesota,

Washington, and Maryland. The others generally follow

the Model Legislation for Remote Online Notarization

(“MBA/ALTA Model Act”), developed by the Mortgage

Bankers Association (“MBA”) and the American Land

Title Association (“ALTA”). These include, for

example, Texas, Arizona, Michigan and Nevada. Some

states, Virginia and Vermont for example, have RON

statutes that do not follow either model statute.

Key distinctions exist between the two models. For

example, the MBA ALTA model statute allows the

notary to authenticate the notary’s identity through

knowledge-based authentication (“KBA”) — in addition

to through a credential analysis, personal knowledge,

and the oath of a witness.

RULONA, however, does

not include KBA amongst the methods that may be used

to authenticate a signer’s identity.

As another

example, RULONA specifically states that the recording

of the notarization session must be retained for 10

years.

While on the other hand, the MBA ALTA

model statutes requires that the session be recorded, it

does not specify how long the recording must be

————————————————————

Mortgage Bankers Association – American Land Title

Association, Model Legislation for Remote Online

Notarization, § 8, available at https://www.mba.org/

audience/state-legislative-and-regulatory-resource-

center/remote-online-notarization.

Revised Uniform Law on Notarial Acts (2018), § 7, available at

https://www.uniformlaws.org/HigherLogic/System/DownloadD

ocumentFile.ashx?DocumentFileKey=aec212eb-a1e8-183a-

13dd-587c7604666e&forceDialog=0.

See id. at § 14a(f)(stating “[u]nless a different period is required

by rule adopted under subsection (h)(4), the recording must be

retained for a period of at least [10] years after the recording is

made.”).

April 2021 Page 6

retained, leaving that to the discretion of state

legislators.

III. ACCEPTANCE OF RON

A. Brief History of the Adoption of RON and Recent

Expansion in Acceptance

In 2011, Virginia introduced RON to the United

States. Virginia’s RON statute made it the first in the

country to allow commissioned notaries to notarize

documents online via audio-video technology.

Virginia’s law was an integral part of establishing some

of the key principles of RON, such as the definition of

“personal appearance” used in RON statutes (a

definition that permits individuals to appear via

audiovisual technology), how to verify the signer’s

identity and the location of parties, as well as best

practices for digital record keeping. In some ways,

however, Virginia’s RON statute is a complete anomaly.

For example, Virginia is the only state that permits its

licensed notaries to be physically located outside of the

state when conducting remote notarizations.

Virginia

also envisioned the use of biometrics as a method of

verifying identity, which most other states have shied

away from, choosing instead to rely on credential

analysis and KBA questions.

Four years later, in 2015, came Montana. Then, in

2017, Texas and Nevada enacted RON. In 2018, five

more states enacted RON statutes: Indiana, Tennessee,

Vermont, Michigan, and Ohio. In 2019, a waterfall of

14 states joined the flurry of enacting remote

notarization legislation: Arizona, Florida, Idaho, Iowa,

————————————————————

See Mortgage Bankers Association – American Land Title

Association, Model Legislation for Remote Online

Notarization, at § 6 (stating only that “[t]he remote notary

public shall create an audio and video copy of the performance

of the notarial act.”).

VA Code § 47.1-13.

VA Code § 47.1-2 (defining “‘Satisfactory evidence of identity’

as including a valid digital certificate accessed by biometric

data or by use of an interoperable Personal Identity Verification

card that is designed, issued, and managed in accordance with

the specifications published by the National Institute of

Standards and Technology in Federal Information Processing

Standards Publication 201-1, ‘Personal Identity Verification

(“PIV”) of Federal Employees and Contractors,’ and

supplements thereto or revisions thereof, including the

specifications published by the Federal Chief Information

Officers Council in ‘Personal Identity Verification

Interoperability for Non-Federal Issuers.’”).

Kentucky, Maryland, Minnesota, Nebraska, North

Dakota, Oklahoma, South Dakota, Utah, Washington,

and Wisconsin. In 2020, seven more states enacted

RON (Alaska, Pennsylvania, Hawaii, Missouri, Oregon,

Louisiana, and Colorado), bringing the total number of

states that have enacted RON statutes to 29. More are

expected to follow suit.

B. The Pandemic as a Catalyst

The need for providing services virtually has

accelerated the adoption of RON. So much so, that over

20 of the states that have not enacted RON statutes have

temporarily permitted RON via executive order, official

guidance, or statute: Alabama;

Arkansas;

Colorado;

Connecticut;

Delaware;

Georgia;

Hawaii;

Illinois;

Kansas;

Maryland;

Maine;

————————————————————

Fourth Supplemental State of Emergency Proclamation:

Coronavirus (COVID-19).

EO 20-12: Executive Order to Amend Order 20-03 for the

Purpose of Suspending Provisions Requiring In-Person

Witnessing and Notarization of Legal Documents in the State

of Arkansas.

Executive Order D 2020 019: Ordering the Temporary

Suspension of the Personal Appearance Requirement for

Notarization Due to the Presence of COVID-19.

Executive Order No. 7K: Protection of Public Health and

Safety During COVID-19 Pandemic and Response ─ Remote

Notarization, Suspension of Non-Critical Probate and Workers'

Compensation Operations, and Various Public Health

Measures.

Delaware Eleventh Modification: State of Emergency

Declaration.

Executive Order Authorizing the Use of Real-time Audio-visual

Communication Technology to Assist in Notarizing Real Estate

Documents.

Executive Order No. 20-02 and Rules Relating to Notaries

Public.

Executive Order 2020-14: Executive Order in Response to

COVID-19 (COVID-19 Executive Order No. 12).

Executive Order No. 20-20.

Order No. 20-09-29-01: Amending the Order of March 30,

2020 Authorizing Remote Notarizations. While the Maryland

legislature had previously enacted a statute permitting RON

permanently, at the onset of the pandemic the new law had not

yet taken effect, necessitating the need for temporary rules. On

October 1, 2020 the permanent RON statute — Senate Bill 678

— became effective, meaning that RON may now be conducted

in Maryland, indefinitely.

April 2021 Page 7

Massachusetts;

Mississippi;

New Hampshire;

New

Jersey;

New Mexico;

New York;

North Carolina;

Pennsylvania;

Rhode Island;

Vermont;

West

Virginia;

and Wyoming.

Additionally, some states

that had already enacted RON statutes, such as Texas

and Tennessee, issued executive orders relaxing

statutory requirements and restrictions to facilitate the

use of RON.

An Order Temporarily Modifying Certain In-Person

Notarization and Acknowledgement Requirements.

Mass. House Bill No. 4668.

Executive Order No. 1467.

Emergency Order #11 Pursuant to Executive Order 2020-04:

Temporary Authority to Perform Secure Remote Online

Notarization.

New Jersey Assembly Bill 3903.

Executive Order 2020-015: Order Temporarily Permitting

Notarial Acts Through Audio-Visual Technology Under

Certain Conditions.

Executive Order No. 202.7: Continuing Temporary Suspension

and Modification of Laws Related to the Disaster Emergency.

NC Senate Bill No. 704: An Act to Provide Aid to North

Carolinians in Response to the Coronavirus Disease 2019

(COVID-19) Crisis.

PA Senate Bill 841.

Guidance from the Secretary of State on Remote Online

Notarization, available at https://www.nass.org/sites/default/

files/remote%20notarization/Secretary%20Gorbea%20letter%2

0re.%20Remote%20Online%20Notarization%2004.03.20.pdf.

Emergency Rule 20-E18: Emergency Administrative Rules for

Notaries Public and Remote Notarization. While Vermont had

previously passed a bill permitting RON, RON could not yet

occur prior to issuance of the emergency rules because the

Secretary of State had yet to engage in rulemaking, which

Vermont’s RON statute is a prerequisite for RON to occur.

Executive Order No. 11-20.

Guidance on Temporary Remote Online Notarization, available

at https://soswy.state.wy.us/Services/Docs/Guidance-on-

Temporary-Remote-Online-Notarization.pdf.

See, e.g., Statement by the Governor of Texas, available at

https://gov.texas.gov/news/post/governor-abbott-temporarily-

suspends-certain-statutes-to-allow-for-appearance-before-

notary-public-via-videoconference (permitting, temporarily, the

use of RON in connection with wills, powers of attorney, and

other testamentary documents not authorized to the notarized

remotely under Texas law); Tennessee Executive Order 20-26

(same).

Many of these actions temporarily authorize RON in

a similar manner to that which is authorized by

permanent RON statutes, while others, such as New

York, took a more modest approach that does not, for

example, require KBA or credential analysis.

However, these temporary actions typically only last

until the end of the state’s declared state of emergency,

or until a specific date identified in the executive order.

Many states have renewed the temporary authorization

in line with the continuation of the pandemic states of

emergency that have been declared.

Finally, several

states — including Pennsylvania, Alaska, Missouri, and

Oregon, among others — have adopted RON statutes

permanently permitting RON since the onset of the

pandemic.

Ultimately, the result of the acceleration wrought by

the pandemic is that, as of the time of this writing, only

three states do not permit their notaries to conduct RON:

Louisiana, California, and South Carolina. Louisiana

has, however, passed a statute that will permit RON

beginning on February 1, 2022.

At the outset of the

pandemic, California’s Secretary of State issued a

statement on its website encouraging California citizens

in need of notarization services to utilize RON offered

by notaries certified by states that permit RON.

However, after a short period of time (a matter of

months), the Secretary of State removed the statement

from its website and replaced the statement with one that

instead encouraged California citizens to utilize mobile

notaries.

Mobile notaries are individual notaries who

travel to a signer's location to perform notarizations.

————————————————————

New York Executive Order No. 202.7.

See, e.g., Georgia Executive Order Authorizing the Use of

Real-time Audio-visual Communication Technology to Assist

in Notarizing Real Estate Documents (authorizing RON for the

duration of the COVID-19 State of Emergency); Maine Order

Temporarily Modifying Certain In-Person Notarization and

Acknowledgement Requirements (permitting RON until 30

days after the termination of the COVID-19 State of

Emergency); Kansas Executive Order Nos. 20-20 and 20-64

(permitting RON until January 26, 2021).

See, e.g., Connecticut Executive Orders Nos. 7Q and 7ZZ,

extending the temporary authorization of RON initially

authorized by Executive Order No. 7K).

Oregon House Bill 4212; PA Senate Bill 841; AK House Bill

124; MO House Bill 1655.

LA House Bill No. 274, Section 7.

Notary "FAQ" issued by the Secretary of State, available at

https://www.sos.ca.gov/business-programs/bizfile/covid-19-

frequently-asked-questions/.

April 2021 Page 8

It is reasonable to expect that these temporary

authorizations will continue so long as the pandemic

continues. However, these temporary authorizations are

forcing a larger market change. Many individuals,

companies, and professionals are becoming acquainted

with RON for the first time, and the added conveniences

that it can bring. Additionally, these temporary

authorizations have required state recording offices and

other officials to accept remotely notarized documents,

forcing changes in long-standing governmental practices

and procedures. These changes have made a situation

where now that the genie is out of the bottle, there may

be no way to go back to a pure paper, ink, and in-person

method of notarization.

C. Remote Ink-Signed Notarizations

As an alternative to remote notarization, several states

have temporarily authorized Remote Ink-Signed

Notarization (“RIN”). In general, RIN uses solutions

such as GoToMeeting, Microsoft Teams, WebEx, or

Zoom to satisfy the requirement that a document signer

personally appear before a notary. The notary verifies

the identity of the signer based on existing state notary

laws or by methods specified in the temporary order.

Paper documents are signed in pen and ink, and faxed or

transmitted electronically between the signer and

Notary.

New York issued the first authorization to conduct

RIN in an executive order on March 19, 2020.

Many

of the steps to perform a RIN in the temporary orders

and authorizations are generally based on the New York

executive order, the key elements of which are described

below (though these steps vary slightly among states that

permit RIN):

• The notary and signer appear before each other

using a live, real-time video conference solution

such as WebEx, GoToMeeting, or Microsoft Teams.

• The notary identifies the signer using the methods

allowed under the state’s notary laws.

• The signer signs the document and faxes or

transmits electronically the signed document to the

notary during the video conference.

————————————————————

New York Executive Order No. 202.7; Guidance to Notaries

Concerning Executive Order No. 202.7 available at

https://www.dos.ny.gov/licensing/notary/DOS_COVID19_Re

moteNotaryGuidance.pdf; see also New York Executive Order

No. 202.79 (extending Executive Order No. 202.7 to January 1,

2021).

• The notary prints out the document received from

the signer and completes the notarial certificate in

pen and ink during the video conference.

• The notary faxes or transmits electronically the

notarized document back to the signer, generally

during, or immediately following the video

conference.

New York and several other states allow the signer to

physically mail the originally signed paper document to

the notary within a certain number of days of the RIN.

When the notary receives the document from the signer

in the mail, the notary is authorized to notarize that

document using the date of the original RIN and mail it

back to the signer.

RIN has also been accepted by Freddie Mac and

Fannie Mae when conducted in accordance with state

law.

IV. IMPORTANT RON CONSIDERATIONS: RISKS,

REWARDS, AND PRACTICAL CHANGES

As with any new technology, there are important

considerations to evaluate when considering whether and

how to adopt RON. RON carries risk, and changes may

be required to existing protocols in order to ensure

seamless use of RON, and that the risks that it presents

are mitigated. Below we identify and discuss the key

risks and considerations that should be front and center

for any entity considering whether or how to adopt

RON.

A. Ensuring Recognition of Remotely Notarized

Documents

In general, the state where the notary is sitting and

licensed is what governs if a RON can be done in a

given situation. As shown below, this gives loan

originators some intriguing options on how to leverage

RON. Given the federal system, need for interstate

commerce, and interaction between the states, we have

over time developed a system in which documents

notarized properly by a notary commissioned under the

laws of one state are recognized as validly notarized

————————————————————

Fannie Mae, Remote Ink-Signed Notarization (“RIN”): Job Aid

for COVID-19 Temporary Flexibilities, dated April 14, 2020,

available at https://singlefamily.fanniemae.com/media/

22666/display; Freddie Mac, COVID-19 Selling-related

Frequently Asked Questions (“FAQs”), Q1, available at

https://sf.freddiemac.com/general/covid-19-selling-faq#title-

closing-and-notarization.

April 2021 Page 9

under other states’ laws. However, each state decides

under what circumstances it will accept a document

notarized in another state to be valid. Some states

follow the approach of the Uniform Recognition of

Acknowledgements Act, which provides that

“documents notarized by a notary of another state may

be treated as if they were notarized here in our state; the

signature and title of an out-of-state notary is sufficient

evidence that the document was validly notarized in that

state.”

Other states accept a document notarized

within another state if it was done compliantly under the

other state’s laws.

And some are silent on the issue.

This variety and silence presents additional risk

related to the reliance and utilization of RON. A state

that does not permit RON could refuse to recognize

documents notarized remotely. This risk has manifested

before in connection with legislation in Iowa and

Georgia. In 2013, Iowa took an unprecedented step of

refusing to recognize out-of-state notarizations that did

not occur in-person.

Iowa later repealed this

requirement in 2019 when it enacted a law permitting

RON. The state of Georgia considered, but did not

adopt, a similar prohibition to accepting notarizations

done outside of the traditional physical presence of the

notary in legislation considered in 2015 and 2017.

Currently, 22 states, as well as the District of Columbia

and other U.S. territories, have yet to enact legislation

related to the remote notarization of documents. If they

take similar positions to what Iowa and Georgia

previously proposed, then this presents a risk that a

remotely notarized document may not be recognized by

such states.

B Develop RON Functionalities In-house or Use a

Vendor?

Institutions that regularly conduct closings (title

companies, lenders, etc.) may face a choice: develop

RON capabilities in house, or rely on a vendor? There

————————————————————

See, e.g., First Niagara Bank, N.A. v. Pottstown Oasis, Case

No. 03770, 2017 WL 2131038 (Pa.Com.Pl. May 12,

2017)(quoting 57 Pa.C.S.A. § 311).

See, e.g., Bessenyei v. Vermillion, Inc., 2012 WL 5830214 (Del.

Ch. Nov. 16, 2012), aff'd, 67 A.3d 1022 (Del. 2013)(refusing to

accept a document notarized out of state in Pennsylvania but

not in compliance with Pennsylvania law).

Iowa Senate File 2265.

Section 45-17-10(a), as set forth by Georgia HB 120 (2017);

Section 45-17-10(a), as set forth by Georgia HB 381 of 2015.

are pros and cons to each, and it is important to note that

most states not only have requirements about how RON

may be conducted, but also require that RON technology

and platforms be approved by state regulators before

use. Some states also require notaries to register with

the state regulator before conducting RON.

Careful consideration should be given before a

company takes on RON processes in-house. Doing so,

however, gives the company greater control over the

process, allows it to build it into existing platforms in a

more a seamless way, and has the ability to present its

customers with a better experience. For example, if a

loan originator brings the RON process in-house, the

notary can act as the loan closer. KBA and Credential

analysis can be performed at the onset, the documents

can be explained, executed, and, where necessary,

notarized. And the entire closing can be recorded and

made part of the closing documents, including retention

of the digital originals. And while in-house

development of these capabilities is an exciting

possibility and can leverage vendors for certain services

(i.e., KBA and credential analysis), using a vendor that

already has a tried-and-true method and system has its

advantages as well. Among other things, RON vendors

come equipped with notaries that are registered to

conduct RON, and technology that may also be able to

integrate well with existing loan origination platforms.

And given these considerations, the end result may be

that an organization chooses, at least at the onset, that

using a vendor will reduce the initial burden in adopting

RON.

C E-Recording: Don’t Take It for Granted

Another consideration is that a governmental

recording office may refuse to record a remotely

notarized document. While many such offices are

equipped to accept electronic filings, particularly after

the onset of the COVID-19 pandemic, there still exist

those that are not equipped to do so. Refusal could

prevent or complicate efforts to record land conveyances

and perfect security interests in property. It may also

create problems with selling loans on the secondary

market and with title insurance companies. Getting

confirmation from the recording office early on in the

process, preferably in writing, is highly recommended.

Over time it is expected that the risk that a recording

office will reject a document for recording solely

because it was remotely notarized will decrease.

Moreover, some states’ RON statutes and temporary

executive orders expressly state that documents remotely

notarized pursuant to the temporary authority are to be

April 2021 Page 10

recorded and treated by government recording officials

as validly notarized.

Some jurisdictions, recognizing that e-recording may

not be available, allow for “papering-out” of the

transaction.

This allows the lender or lawyer to print

out the electronic version of the mortgage and record the

printed version.

D. Ensuring Insurance

As with other residential and commercial loans,

obtaining title insurance is an important consideration.

Before deciding to employ RON for the transaction, you

should consult with your title company to ensure it is

willing to insure the transaction.

E. The Extent of the Secondary Market’s

Acceptance of RON

The secondary market has embraced RON as a result

of the pandemic. Fannie Mae announced in March 2020

that it would accept delivery and servicing of loans with

electronic documents, including instruments

electronically notarized remotely using real-time, two-

————————————————————

See, e.g., Delaware Eleventh Modification: State of Emergency

Declaration (“All Delaware governmental offices (including

County and municipal government offices specifically are

directed to immediately waive the requirement of an “original”

wet signature for documents (excluding a Last Will and

Testament). A Recorder of Deeds must accept for recording

any document presented that has been notarized in accordance

with the order or the laws of the state in which the notarial

acknowledgment was taken, including those documents

notarized via remote online notarization, provided the presented

document conforms with all other recording requirements. The

Recorder of Deeds shall accept any document notarized

according to this Modification to the State of Emergency. The

fact that such a notarized document is presented to the Recorder

of Deeds after the State of Emergency has been lifted does not

affect the validity of the document.”).

See, e.g., Fla. Stat. § 28.222(3)(h)(“The clerk of the circuit

court shall record the following kinds of instruments presented

to him or her for recording, upon payment of the service

charges prescribed by law: … (h) Copies of any instruments

originally created and executed using an electronic signature, as

defined in s. 695.27, and certified to be a true and correct paper

printout by a notary public in accordance with chapter 117, if

the county recorder is not prepared to accept electronic

documents for recording electronically.”).

way audio/video communication.

Fannie Mae issued a

“lender letter” in March 2020 and announced updates to

its Selling Guide related to the use of RON.

The

updates to the Selling Guide include a checklist designed

to indicate when RON may be used. These updated

remote online notarization requirements became

effective beginning on March 31, 2020. Fannie Mae has

also issued temporary guidance endorsing and

explaining how RINs may be conducted.

Given the

importance of being able to sell mortgages on the

secondary market, Fannie Mae’s acceptance of RON

serves to reinforce that RON is a workable alternative to

in-person notarizations and closing.

F. Updating Loan Documents to Acknowledge the

Use of Electronic Documents and Signatures

Those that adopt RON should consider updating

template loan documents to include representations and

acknowledgments that the parties agree to utilize

electronic documents and electronic signatures. This

will mitigate the risk that a party will be able to

successfully argue that the documents are unenforceable.

Specifically, documents should contain

representations that all parties agree to: (1) execute the

documents using electronic signatures;

(2) execute

documents in electronic form; and (3) that such

electronic signatures and electronic documents may be

————————————————————

Fannie Mae FAQs: eClosings & eMortgages, Q7, available at

https://singlefamily.fanniemae.com/learning-

center/delivering/faqs-eclosings-emortgages.

Lender Letter (LL-2020-03): To: All Fannie Mae Single-Family

Sellers Impact of COVID-19 on Originations, available at

https://singlefamily.fanniemae.com/media/22316/display; see

also Fannie Mae Selling Guide Announcement SEL-2020-06,

available at https://singlefamily.fanniemae.com/media/

24066/display.

“Remote Ink-Signed Notarization (“RIN”): Job Aid for

COVID-19 Temporary Flexibilities,” Fannie Mae, available at

https://singlefamily.fanniemae.com/media/22666/display.

It is also recommended that documents define the term

“electronic signature” to ensure that both parties are aligned as

to what that term means and what notations are considered by

the parties to be an electronic signature. Furthermore, it is

recommended that the documents indicate that they are being

electronically executed and used in accordance with applicable

laws governing electronic signatures, such as UETA or the

federal E-SIGN Act.

April 2021 Page 11

enforced, recorded, stored, or transmitted as the original,

authentic version of the executed loan — i.e. that the

documents may be used in the same manner and carry

the same validity as if the original documents were

executed in hard, paper copy.

If there are multiple electronic copies of an executed

document, the documents should indicate which are

authentic copies. It would also behoove signers to

indicate whether the document may be printed and used

for certain purposes (e.g., recording), and if so the

expectations for and circumstances under which that

hard copy document may be used in place of the original

electronic document.

Further, to minimize the risk of confusion, those that

store executed “original” copies of documents should —

really must — store the documents in an “electronic

vault.” The term electronic vault is a term used in the

mortgage industry to identify a system where electronic

documents are stored for safekeeping. The “electronic

vault” must be capable of tracking who has “possession”

of the electronic note, any changes that are made to the

document, and of course must be, like all vaults —

secure. Having such a system will help ensure the

integrity of the chain of custody in the event of

subsequent litigation related to the enforcement of the

agreement or documents. Key players in the mortgage

lending space have developed these important tools,

including Mortgage Electronic Registrations Systems,

Inc., Bank of New York Mellon, N.A., DocuSign, Inc.

and others.

G. Developing and Implementing Enterprise-Wide

RON Policies and Procedures

RON policies and procedures memorialized in writing

can ensure consistency across the enterprise.

Developing enterprise-wide policies and procedures will

also give all stakeholders within the enterprise an

opportunity to evaluate any new RON protocols, and

identify any areas where the use of RON may not be

desired or involve wrinkles to their streamlined use.

Finally, such policies and procedures could serve as

helpful evidence in the event of any subsequent litigation

challenging the enforcement of a note or loan document

executed pursuant to these policies and procedures.

V. FACILITATING A NEW TYPE OF LOAN CLOSING:

REMOTE ONLINE CLOSINGS

This next section presents a vision for how RON may

be used in connection with the mortgage closing process.

The majority of loan closings today are generally done

in one of three ways: (1) at a bank, lawyers office, or

title agency; (2) by mail; and (3) at a home closing,

where the closing agent and notary come to the signer.

RON makes possible remote online closings, in which

the parties can be located at the place of their choosing

and where most convenient.

Using a residential mortgage loan as an example

shows how powerful RON can be. A lender based in

Florida creates a “remote online closing office.” The

closing office is based in Fort Lauderdale. Closing

officers are Florida notaries. This centralized, remote

online closing office can take the place of a title

company, lawyer’s office, at-home, or by mail. The

remote online closing office eliminates the borrower or

lender’s agent having to travel to the closing office to

close the loan. It reduces the time and expense

associated with closings by mail and the associated

paper that inevitably follows. When the proper policies

and procedures are employed, loan closing officers

become more efficient and can be more closely

supervised when using RONs. Instead of traveling

across multiple counties, a remote loan closing officer

can be in a single location, increasing his or her

efficiency. Using RON can also reduce the need for a

power of attorney, giving borrowers additional control

and allowing them to stay engaged in the process.

Loans closed using RON through a remote online

closing office located in Florida are also not limited to

those in Florida. Subject to the important caveats and

considerations noted above, a lender, using a Florida

remote online closing office, can remotely close a loan

for a property located in Texas, while the borrower is in

New York and the Florida notary is sitting in Fort

Lauderdale. This can be done in this example, because

the notary laws of Florida govern how the document can

be notarized.

This makes it possible in a remote online closing, for

the notary to be in the state where they are licensed (with

the exception of Virginia), and the signer and witnesses

to be located anywhere in the United States (or in some

cases the world), so long as each individual has access to

WiFi.

The documents would then be presented on a

screen viewable by all parties: the signer/soon-to-be-

property-owner and his or her attorney, the closing agent

or agents, the notary, and any other representatives of

————————————————————

Some state laws contain restrictions on where a signer may be

located at the time of the RON. Generally speaking, the

approach of most states is to allow signers to be located

anywhere in the world should the signer be executing loan

documents related to purchasing or financing property located

within the United States.

April 2021 Page 12

the lender. The lender would then distribute to all

parties the executed, tamper-proof, electronic version of

the executed documents. The lender would then retain

the electronic original in its electronic vault for

safekeeping.

Importantly, this change enables banks and other

lenders to physically locate staff remote notaries and

closing agents in one centralized location, without the

need to use local notaries or closing agents close to the

signer’s location. This ensures that those employees

facilitating the execution of the loan documents can be

the same as those that have been involved in the

transaction since its inception, eliminating risk

associated with utilizing a closing agent or notary

previously unfamiliar with documents.

This section concludes with a case study of a dispute

concerning a 2008 mortgage loan that may serve as a test

case for potentially the largest issue associated with

implementing remote online closings: risks to

subsequent enforcement of electronic, remotely

notarized loan documents. Rivera v. Wells Fargo Bank,

N.A. et al.,

stemmed from a foreclosure action brought

by Wells Fargo against borrowers that involved

enforcement of an electronic note and electronic loan

documents. In Rivera, the borrowers argued without

success at both the trial and appellate level that because

the note was electronic, and the loan documents were

electronically executed, Wells Fargo could not be the

holder of the electronic note and could not enforce rights

associated with possession, and further that the

electronic signatures on the documents lacked both

authenticity and validity.

After examining the issues, the appellate court uphold

the judgment in favor of the bank. The court noted that

the disputed electronic loan documents contained the

statutory UETA language regarding how to manage

possession and transfer of the electronic note — and that

the circumstances reflected the same.

“Applying the

Uniform Electronic Transaction Act here, the bank

————————————————————

189 So.3d 323 (Fla. 4

DCA 2016).

Id. at 327.

Id. at 328.

presented competent, substantial evidence proving that

Fannie Mae owned the e-note and authorized the bank to

pursue the foreclosure. The e-note, on its face, is a

‘transferable record’ because it is an electronic record

that would be a note under [UETA] if it were in writing,

and its issuer expressly agreed on its face that it was a

transferable record.”)(citations omitted). The court also

found that Wells Fargo successfully proved the chain of

custody associated with the electronic documents, as the

bank presented evidence about the system and controls

related to transferring electronic loan documents. “The

bank's evidence proved that Fannie Mae had control of

the e-note by showing that the bank, as Fannie Mae's

servicer, employed a system reliably establishing Fannie

Mae as the entity to which the e-note was transferred.

According to the bank’s evidence, the bank’s system

stored the e-note in such a manner that a single

authoritative copy of the e-note exists which is unique,

identifiable, and unalterable. (citations omitted).

This

holding is especially important because Florida is an

original-document state, i.e. a lender is required to

present the original note to the court before judgment

can be taken.

Rivera serves as a test case of the type of arguments

that borrowers could seek to advance against an entity

seeking to enforce electronic, remotely notarized loan

documents. Given that the bank ultimately prevailed,

Rivera serves as a blue-print for the circumstances and

processes that must exist for entities to be able to enforce

such documents.

V. CONCLUSION

RON is governed by state law, and the regulatory

landscape for RON is rapidly evolving. To date, 28

states have enacted RON statutes, with three of the 28

enactments coming within the past four months. It is

well beyond doubt that RON will play a significant role

in the mortgage industry henceforth, and those in the

industry would be well-served by learning about and

adopting this latest advancement. ■

————————————————————

Id.