Twenty years ago today, President Clinton signed into law the Electronic Signatures in Global and National Commerce (ESIGN) Act, which declared that electronic signatures are as legally binding as wet signatures. And ten years ago today, Congress honored that achievement by designating June 30 National ESIGN Day.

eSigning has shot up in popularity since then. According to Statista, between 2012 and 2017 the annual number of eSignature transactions rose from 89 million to 754 million, while DocMagic has processed more than 300 million mortgage-related eSignature transactions.

So on the 20^th anniversary of the day electronic signatures became indisputably legal nationwide, we're sharing five fun eSigning facts you (probably) didn’t know:

1. President Clinton eSigned the ESIGN Act—sort of.

To sign the bill, the president inserted a smart card encrypted with his digital signature through a scanner, typed in his password—“Buddy,” his dog—and a replica of his signature appeared on the screen. But before he did that, he signed the bill the traditional way, with a felt-tip pen. The reason? White House lawyers believed the Constitution requires presidents to actually put pen to paper to approve legislation.

2. eSignatures are tons better for the environment. Literally.

The global production of paper and cardboard is about 400 million tons annually. That translates to over 220 million pounds of toxic pollution released every year, while pulp and paper production is the third largest industrial polluter in the U.S. and Canada. One of the primary reasons we need so much paper: American companies typically print 1.5 trillion pages per year while the average office worker uses 10,000 sheets of paper a year.

We’re not exactly saying that e-signing could save the world, but it sure is a lot better for the environment.

3. You probably eSign something every day.

If you’re online, you’re eSigning. Any kind of consent—from clicking the “Buy Now” button to ticking the Terms & Conditions checkbox to accepting a website’s cookies—is defined as an eSignature. Typing your name in an email also counts.

4. Electronic signatures and digital signatures aren't interchangeable.

They may sound like synonyms, but there are significant differences. An electronic signature is more inclusive, encompassing any electronic consent process (like the checkbox we mentioned) attached to a contract or record. A digital signature is a type of electronic signature that has more security features; it uses algorithms and encryption to prevent tampering, impersonation of a signer, and to verify a document’s authenticity (i.e., confirm that it hasn’t been forged). Both types of signatures are legal.

5. Some transactions still require paper and ink.

Certain transactions still require paper documents and handwritten signatures, such as wills, adoptions, divorces, utility cancellations, insurance cancellations, court orders and official court documents, and, as President Clinton learned, possibly federal bills.

Absent from this list: notarized documents. As much of the mortgage industry knows, you can e-sign notarized documents (in some states, at least).

Now that you know five new facts, celebrate by eSigning something today!

Related Content:

• DocMagic offers free verson of its eSign technology for non-mortgage uses (6/1/2020)
• New AutoPrep tech accepts docs from ANY provider for paperless eClosings (4/3/2020)
• DocMagic Reaches 300 Million Mortgage eSignings as More Borrowers Opt for eSigning and More Lenders Require Proof of TRID Compliance  (1/24/2018)
  

—Update (2/12/2021): RON update: First new remote online notarization law of 2021 passes

The remote online notarization (RON) landscape is still very much in flux. Three states recently passed RON laws and a new survey shows RON usage surged during the pandemic—but a powerful official from one of the country’s biggest states also announced his opposition to any federal law.

In recent weeks Colorado, Louisiana, and Missouri became the latest states to allow RON closings. Louisiana's governor signed his state’s bill on June 11, while Colorado's and Missouri’s bills still await governors’ signatures. But after that happens, 27 states will have permanent RON legislation on the books (as opposed to the spate of temporary orders passed at the start of the pandemic).

The striking thing about all the state action is how fast the momentum is growing; between 2011 and 2017, only four states enacted RON laws. In the 2.5 years since, another 23 states have jumped on board.

On top of that, the pandemic resulted in a 40% increase in title and escrow companies using RON from March to May, according to a Qualia survey.

Yet the same Qualia survey also found that the percentage of title and escrow companies with no plans to use RON rose as well, from 14% to 23%. The survey attributed that to stay-at-home orders ending, states allowing alternatives to RON (such as RIN), and industry stakeholders coming up with socially distanced workarounds such as drive-thru closings.

Lenders should start offering eNotes this year. Learn why.

At the federal level, RON adoption is also uncertain. In March, bipartisan legislation was introduced in the Senate to allow all U.S. notaries to conduct RON. That bill was referred to the Judiciary Committee, which hasn't taken any action on it yet.

On May 19, however, Calif. Attorney General Xavier Becerra (D) sent a letter strongly opposing the bill to the two senators who lead the Judiciary Committee.

“The proposal under consideration appears to be a solution in search of a problem," the letter stated. "The California Legislature has twice considered and twice rejected the implementation of online notarization, instead preserving its long-standing policy to require that notarizations take place in person.”

He concluded, “I urge Congress to abandon any attempts to impose remote online notarization on the states.”

Related Content:

• 3 reasons why underwriters haven't jumped on the RON bandwagon (6/24/2020)
• RON vs. RIN: Why you should know the difference (6/10/2020)
• Amid pandemic, states boost access to remote online notarization (RON) (4/17/2020)

Brian D. Pannell, DocMagic’s Chief eServices Executive, has been named one of the inaugural winners of the Thought Leader Award by the PROGRESS in Lending Association. Only 30 people across the entire mortgage industry received this honor.

One reason Pannell received the honor was due to his forward thinking on eClosings. He has long been a proponent of the digital solutions in the mortgage industry.

Pannell points out that many key barriers to eClosings appear to be coming down. In the past the most restrictive barrier to adoption has been the limited amount of investors and financial support of the eMortgage as a tradeable commodity, but Ginnie Mae and FHL Banks have announced that they’re opening up the market to lenders who didn’t have anyone to sell their eNotes to and will fund them in the secondary market.

Additionally, Pannell notes, there has been groundbreaking movement at the federal and state levels to accept eNotarizations, which is a game changer when it comes to being able to complete the entire eClosing package electronically.

Related Content:

• DocMagic offers free version of its eSign technology for non-mortgage uses (6/1/2020)
• Pandemic leads to growing acceptance of eClosings: News source (5/21/2020)
• New AutoPrep tech accepts docs from ANY provider for paperless eClosings (4/3/2020)

Even as demand for remote online notarization (RON) grows, underwriters and settlement agents are hesitant to fully embrace it. They have some good reasons why.

Jason Nadeau, the chief digital officer at Fidelity National Financial, discussed those reasons during DocMagic’s May 27 webinar, “Road-Tested eClosing Strategies for Today.”

REASON 1: The fog of RON

As coronavirus-related social distancing orders came down in March and April, states issued a flurry of temporary emergency orders to allow remote notarizations. Every day it seemed like a different state or governor would issue a new rule, "and then everything would be out the window, you’d start all over again with what our requirements are,” Nadeau said. "So one of the big complexities right now is just that shifting landscape."

Click here to watch a free recording of the May 27 webinar.

Another impediment to RON is that not every stakeholder accepts it. Even if a state has a permanent RON law, that doesn’t mean that a county recorder or lender will accept a RON closing. Nadeau said the lack of answers has put underwriters and settlement agents in wait-and-see mode.

“It’s like the fog of war,” he said. “It’s too confusing, there are too many variables, there’s not enough certainty.”

REASON 2: The potential for wire fraud

“COVID has blown up wire fraud,” Nadeau said. “Once we started moving everybody from checks to wires, wire fraud exploded significantly over the last couple weeks.”

The issue became worse after companies began requiring employees to work from home. Fintech company FundingShield reported at a April 23 webinar hosted by the Mortgage Brokers Association that during the first two weeks of the COVID-19 outbreak, they saw a 62% increase in various types of wire fraud attempts, such as incorrect and altered wire instruction, phishing attempts, and more.

The American Land Title Association announced that it's taking protective measures during the pandemic to increase education about real estate wire fraud, while the FBI recently warned of increased fraud risk due to more people using mobile banking apps during the pandemic.

REASON 3: RON hasn't survived a court challenge—yet

Underwriters always consider the risk to title. Settlement agents are passionate about home ownership, Nadeau said, and “we never want to put somebody in a home where the chances of them owning that home are at risk because of some technicality around the transaction.”

“Sometimes I get in conversations with people in the industry that say, ‘But this is legal' … Absolutely true,” he said. “And sometimes what’s legal is not what’s acceptable.” 

So while RON laws are on the books in nearly half the states, underwriters are still wary because the practice hasn’t been legally challenged. Many want another company to be the first to insure RON transactions, defend them in court, and then win and set precedent. Nadeau likened it to being on a SWAT team: “You just don’t want to be the guy who’s first through the door.”

Yet the RON future is still rosy

Despite the risk and complexity of RON, Nadeau believes the industry will eventually agree upon a standard RON model and expects that adoption by lenders, county recorders, and other stakeholders will rise. Over the last few months he says he’s seen hundreds of agents get set up for RON.

Additionally, the risk appetite has changed. Before the pandemic, one reason underwriters demurred was because they questioned whether they’d actually conduct that many RON transactions, or whether the risk was worth the potential revenue.

“Now what COVID has brought is, people really want to do this, and there’s going to be demand for this,” Nadeau said. “All of a sudden now there’s revenue tied to it, so there’s reward with that risk, and that’s really changed the scales for underwriters to think about it.”

See Related Content:

• RON vs. RIN: Why you should know the difference (6/10/2020)
• Webinar: How mortgage industry should adapt to COVID landscape (6/3/2020)
• Amid pandemic, states boost access to remote online notarization (RON) (4/17/2020)

When the coronavirus pandemic hit, several states issued emergency orders to allow remote notarizations, joining 23 that already had permanent laws allowing remote online notarization (RON). A number of the stopgap measures, however, didn’t actually allow RON; instead they authorized a decidedly lower-tech alternative called remote ink-signed notarization (RIN).

Like RON, RIN allows notaries to use videoconferencing technology to notarize documents remotely, but it involves wet-signing paper documents instead of using eSign and eNotary. 

How a new lender found success amid the pandemic: Download the MortgageCountry case study

The RON vs. RIN dichotomy adds more confusion to the complex hodgepodge of state regulations. Some states allow RON, some allow RIN, and others allow both. Meanwhile the rules are constantly changing as some emergency orders expire and others get extended.

The Vermont Paradox

Vermont, for example, is in a unique position: It has a permanent RON law, yet at the moment only allows RIN. Though Vermont passed its law in 2018, RON hasn't been implemented because the Secretary of State still hasn't issued formal guidance for it.

But in late March, the Secretary of State did issue a temporary order to allow RIN for the next 180 days—while expressly clarifying that the rule doesn't allow “any form of electronic notarial acts or remote online notarization."

A survey taken in April by the American Land Title Association found that 21% of title and settlement companies respondents offered RON and another 16% provided RIN-style emergency video notarization using FaceTime or Skype. The agents that offered RON used it in 7% of their closings, while those that offered video notarizations used it in 22% of their closings. Fannie Mae and Freddie Mac each also released RIN guidance.

Here are some key differences between RON and RIN:

• Document Format: A RIN document is wet-signed on paper, while RON documents are almost always in an electronic format and are eSigned.
• Meeting Technology: For RIN, notaries and signers can use videoconferencing technology like WebEx, Skype, Zoom, and FaceTime to meet. RON requires a dedicated RON platform such as NotaryCam.
• Signatures: In a RIN, the signer wet-signs signs the document while the notary watches, and then emails, faxes, physically mails, or delivers the document to the notary. The notary then certifies and affixes their seal to it, and then returns the document to the signer. In a RON, the signer eSigns the document and the notary eSigns the notarial certificate and affixes an electronic seal.

There is another major difference: RIN is temporary, while RON, which had been gaining momentum even before the pandemic, is here to stay. When Fannie Mae released its RIN guidance, it pointedly noted that, “We do not expect these temporary governors’ executive orders and authorizations related to RIN to extend beyond the COVID-19 national emergency” and encouraged lenders to only consider RIN if RON wasn’t available.

“RIN is a temporary solution that is acceptable for now. It’s not a long-term solution because the GSEs won’t continue to accept this format,” said Chris Lewis, DocMagic’s Senior Account Executive for Enterprise Solutions. “RON eClosings will most likely usurp every other form of electronic notarization.”

Related Content:

• Webinar Recording: Road-Tested eClosing Strategies (5/27/2020)
• New support for power of attorney (POA) transactions amid COVID-19 (5/7/2020)
• Amid pandemic, states boost access to remote online notarization (RON) (4/17/2020)

For the mortgage industry, a lot has changed in a short amount of time—especially when it comes to remote online notarization (RON), according to the speakers at DocMagic’s May 27 webinar, “Road-Tested eClosing Strategies for Today.”

Click here to watch a free recording of the webinar.

Yet lenders shouldn’t just embark on a mad scramble to immediately implement RON, with its shifting landscape of changing legislation; instead, they should immediately begin doing hybrid closings, said Chris Lewis, DocMagic’s Senior Account Executive for Enterprise Solutions. Even if lenders can’t go 100% digital for awhile, they can still move in that direction by completely cutting paper out of the process except for the recordable documents: the note and deed of trust.

“This is easily scalable, it can be implemented in a very short period of time, and it puts you on the path to that fully digital transactional experience,” Lewis said.

The webinar’s other speakers included:

• Jason Nadeau, the chief digital officer at Fidelity National Financial. He noted that one of the key challenges is that RON technology, while legal in many places, is still risky for underwriters and settlement agents. “We’re talking about all new laws, all new practices, all new procedures—so they’re all untested in court,” he said. “It’s not about what’s legal, it’s about the risk profile.”
• Ben Sherman, president of Synrgo, who cited statistics and challenges for county recorders. “When it comes to the world of county recording there’s a lot of confusion and unknowns,” he said.
• Brian D. Pannell, DocMagic’s Chief eServices Executive, who explained why lenders should begin offering eNotes. Their popularity had been increasing even before the coronavirus crisis, Pannell said, displaying a graph showing that the number of eNotes registered with MERS® jumped from over 100,000 in all of 2019 to over 250,000 in the first quarter of 2020 alone.

Click here to watch a recording of the webinar, including more in-depth background information, recommendations, and the Q&A session.

Related Content:

• Pandemic leads to growing acceptance of eClosings: News source (5/21/2020)
• Improving the Loan Process With eNotes
• Amid pandemic, states boost access to remote online notarization (RON) (4/17/2020)

DocMagic is making an agnostic version of its eSign technology free to help organizations increase productivity and efficiency among work-from-home employees during the coronavirus pandemic—both during the stay-at-home orders and after they are lifted.

Our eSign technology is traditionally used by mortgage lenders to compliantly eSign initial loan document disclosures and closing documents. However, we modified the platform to make it document agnostic, thus allowing important non-mortgage documents such as contracts, NDAs, LOIs, and virtually any other agreement to be electronically signed and legally binding. (Note: Only the agnostic eSign solution is free, not the mortgage-specific eSignings involving our loan document generation service.)

Nearly every company needs to sign documents to conduct business, and signatures are often required from multiple parties. Documents have to printed several times, then faxed or emailed, resulting in a cumbersome process. As the COVID-19 pandemic led to a series of stay-at-home orders nationwide, companies have found signing and securely delivering these documents in a timely manner a challenge.

“As stay-at-home orders began to open up in more states, large numbers of home-based workers in all industries will continue with the telecommute model and thus continue facing challenges with signing and executing documents,” said Dominic Iannitti, DocMagic’s president and CEO.

“Many employees are using makeshift home offices that lack the hardware, devices, and software to facilitate compliant e-signings. Fortunately, DocMagic is in a great position to help with a proven platform used in one of the strictest, most highly regulated industries. Our eSign technology allows companies to circumvent wet signings, back-and-forth emails, and scanning or faxing documents for a proven, highly secure, compliant electronic platform.”

The eSign platform makes it easy to electronically sign documents. It’s 100% web based, requires no installation or maintenance, and can be securely accessed via any device with an internet connection. eSign also captures electronic signatures for all documents stored in the PDF file format. Documents are digitally sealed and access is provided to all parties, with audit trail capabilities, document versioning, tracking, and email notifications.

According to a recent Zillow survey, 56% of employed Americans have had the opportunity to work from home, and a vast majority want to continue. Among those working from home because of the pandemic, 75% said they want to continue doing so at least half the time after the pandemic ends. 

“We believe that even after stay-at-home orders are gradually lifted, there will still be a significant number of businesses that find the telecommute model to be pragmatic, efficient, and cost effective,” Iannitti said. “After the COVID-19 pandemic slowly winds down, we still want to make our eSign technology available for free. It’s our ongoing way of giving back in order to help companies remain as successful as possible.”

DocMagic is the leader in eSign technology within the mortgage industry, having executed more than 300 million eSign transactions and counting.

Interested organizations can learn more by emailing sales@docmagic.com or calling (800) 649-1362.

Related Content:

• Pandemic leads to growing acceptance of eClosings: News source (5/21/2020)
• New support for power of attorney (POA) transactions amid COVID-19 (5/7/2020)
• New AutoPrep technology can accept docs from ANY provider for paperless eClosings (4/3/2020)

The coronavirus pandemic has led to wide-ranging industry acceptance of eMortgages, eNotes, and digital closings, according to a recent article in National Mortgage News (subscription required).

Even before the pandemic, eMortgage transactions were on the rise. In April 2019, the MERS eRegistry saw 8,338 eNotes registered; by March 2020, that number had shot up to 24,519, an all-time high.

To learn road-tested eClosing strategies you can implement now, join our free webinar on May 27.

Since then the momentum has swung even more toward eClosings. Since March at least 20 states have taken emergency action to allow temporary remote online notarization (RON)—considered crucial in the age of social distancing—joining 23 states with permanent RON laws on the books. At the same time lenders are rushing to implement systems that utilize RON and electronic documents. 

DocMagic Chief eServices Executive Brian Pannell noted that DocMagic can have clients set up for hybrid eClosings (including eSign and ancillary documents) in as little as 24 to 48 hours.

“Key to implementing a smooth e-close process is ensuring the lender's workflow is well thought out ... which we hold our clients' hands in doing," he told National Mortgage News. "That includes ensuring all docs are e-enabled and leverages a single-source platform with both hybrid and RON capability. We can implement a completely digital and fully paperless total e-close in 17 days, and e-enabled dynamic docs is critical to that."

To learn more, read the article (subscription required).

Related Content:

• Improving the Loan Process With eNotes
• New support for power of attorney (POA) transactions amid COVID-19 (5/7/2020) 
• Amid pandemic, states boost access to remote online notarization (RON) (4/17/2020)

A recent DocMagic update has made it easier to conduct transactions that involve someone with power of attorney (POA) acting on a borrower’s behalf, especially during the closing event. This is crucial during the current COVID-19 era, helping to reduce the amount of in-person contact needed by borrowers and title companies.

The changes to the eSign Solution, including the eSign Console and the Settlement Agent Portal, allow borrowers to grant POA to an “attorney-in-fact” who can then eSign documents on the borrower’s behalf—a first on DocMagic’s eSign platform. The attorney-in-fact will also be displayed in the eSign Console as well as the Settlement Agent Portal as an additional participant associated with the borrower.

The updates come at a time when more borrowers are choosing to grant POA to an attorney, a closing agent, or a representative of the title company in order to allow the borrower to close a loan remotely.

Such moves are supported by the GSEs. Both Freddie Mac and Fannie Mae issued updated guidance in response to the COVID-19 pandemic that expands powers of attorney and the transaction types that allow for it.

Fannie Mae, for example, confirmed that an employee of the title agency or title insurer can serve as the borrower’s attorney-in-fact. It also introduced new requirements for such transactions: Borrowers must verbally acknowledge they understand the loan terms, and the conversation has to be documented in writing or captured on a recording and saved by the lender.

DocMagic’s recent updates also improve the POA and closing process in a few other key ways:

• The attorney-in-fact gets their own DocMagic login credentials, giving them access to the platform.
• The settlement agent or the closer can upload an executed and notarized POA document to the DocMagic closing platform as proof that a POA has been granted on the borrower’s behalf.
• DocMagic can now generate forms that can be executed by the attorney-in-fact.
• After selecting a POA, the borrower will then have view-only capability in the platform, though they will still receive email notifications to view all documents.
• If the closing continues via a remote online notarization (RON), the attorney-in-fact will also conduct an eNotarization on the borrower’s behalf.

These changes should make the closing process easier at a time when coronavirus-related physical distancing is still needed.

Related Content:

• DocMagic expedites eNotary workflow for settlement service providers (4/27/2020)
• Amid pandemic, states boost access to remote online notarization (RON) (4/17/2020)