Things were looking good for the Securing and Enabling Commerce Using Remote and Electronic Notarization (SECURE) Act as of late July after it passed in the House of Representatives as part of a package of bills. However, the bill’s momentum came to a halt in October after the SECURE Act was not included in the package of bills ready to be passed by the legislation.
The bill, which would have created federal minimum standards allowing notaries nationwide to perform remote online notarizations, failed to pass the Senate last month due to opposition from California’s senators, according to National Mortgage News, which broke the story.
“We absolutely thought that the momentum was there to get this over the line. The California Congressional delegation is very tight with their state people and their state people just doesn’t want it to pass,” Mike Ridgeway, the CEO and president of Community Title Network, said. “They think there is a lot of potential for fraud. It is a misperception about the lack of security, whereas these closings can actually help prevent fraud.”
Like Ridgeway, Sarah Perkins, director of strategic accounts at Clear Title of Arizona, also expected the legislation to pass prior to its removal.
“My immediate thought is, that is too bad,” Perkins said. “After COVID and everything the came into being in the last couple of years, and all the positive feedback about RON from my escrow officers, I expected it to go through.”
Had it passed, the legislation would have allowed “a notary publicly commissioned under state law to remotely notarize electronic records and perform notarizations for remotely located individuals,” according to a summary of the House bill, H.R. 3962. “Additionally, the bill requires U.S. courts and states to recognize notarizations — including remote notarizations of electronic records and notarizations of remotely-located individuals — that occur in or affect interstate commerce and are performed by a notary public commissioned under the laws of other states. The bill also allows a notary public to remotely notarize electronic records involving an individual located outside of the United States, subject to certain requirements.”
RON’s competitive advantage in today’s housing market
HousingWire recently spoke with Brian Webster, President of NotaryCam, about how RON can provide a competitive advantage for lenders both in terms of being a digital capstone for customers and a means for attracting and retaining top talent in the current market.
Presented by: NotaryCam
“We will continue to work collaboratively with our bipartisan Senate cosponsors and continue to advocate strongly for this legislation through the end of the Congress given the overwhelming bipartisan support the bill had coming out of the House. The need and desire for digital closings remains,” Diane Tomb, the American Land Title Association’s CEO, wrote in an email.
“Companies currently offering RON expected these types of closings to increase in 2022, according to ALTA’s latest Digital Closing Survey. The survey of 390 title professionals showed that 62% of companies offering RON believed this offering will increase over the next year. This is a service industry, and our members will continue to innovate and provide the customers’ preferred closing method, whether it is online, in person or hybrid,” Tomb said.
James Fulgenzi, Notarize’s director of government affairs and advocacy, also weighed in, urging Congress to find a path forward for the SECURE Act.
“Amid a broad coalition of industry partners, Notarize is actively working with all stakeholders and believes there is still a path forward to pass the SECURE Notarization Act this Congress,” Fulgenzi said. “We urge Congress to seize this opportunity and pass the SECURE Act, which will establish baseline national standards for online notarization while allowing states the flexibility to implement additional measures as needed. This legislation is a unique opportunity to modernize one of our nation’s oldest processes while providing increased security, reduced costs, time savings and positive environmental benefits.”
To date, 42 states have passed legislation enabling the use of RON, but it appears that for now, state-level regulations will have to be enough.
“There are variations from state to state, and it is that quilt of laws that is really the barrier for the secondary market to jump in and have approval,” Ridgeway said. “We are really hoping that the passing of federal legislation would give them the glide path to feel comfortable to make this a nationally followed standard that would really drive significantly more RON closings.”
While RON is the form of digital notarization making headlines, had the legislation moved forward, it would have impacted in-person electronic notarization (IPEN) as well. IPEN is currently authorized in all states except Georgia and Massachusetts, and the SECURE Act would have made it legal nationwide.
“The states have adopted model IPEN legislation, in many cases over 15 years ago, but the federal legislation would have created some uniformity for RON, which is obviously a good thing,” Brendon Weiss, president and co-founder of EscrowTab, said. “As we have seen more states more forward with adoption of RON legislation, they have also been furthering some of their rule writing clarification as it pertains to electronic notarization, in general.”
Looking ahead, both Weiss and Ridgeway are doubtful the SECURE Act, or an updated version of it, will pass this year.
“Having worked in the government affairs space before, there might still be an opportunity for Federal legislation down the road, but I realize that if two senators blocked the bill, then it is not happening this year,” Weiss said. “I think some in the industry will continue to push to have legislation reintroduced at the Federal level again next year, in an effort to continue to see states adopt their own RON legislation.”
“If the Republicans become the ranking party, then I think there is a very good likelihood that this would pass,” Ridgeway said.