A home is often the most important asset a borrower will ever purchase, and lenders want to be known for providing a secure, compliant closing experience. Toward that end, a secure and efficient eVault platform is essential for managing eNotes and other electronic assets. Our SmartSAFE^® technology is a comprehensive digital eVault platform designed to streamline workflows and enhance the control, storage, and management of eAssets.

This article showcases the key features and benefits of eVault technology as it facilitates eClosings, ensures compliance and improves operational efficiency for lenders.

The Core of an Effective eMortgage Strategy

The most efficient eMortgage strategy must include a secure, digital repository—or eVault—to retain all electronic artifacts. The system must be capable of receiving input from all aspects of a lender’s workflow and must be integrated into the process to ensure all assets are managed in a consistent, verifiable manner.

Seamless Integration and Streamlined Workflows

A lender’s eVault solution should also integrate with their entire suite of digital mortgage solutions. This integration ensures a cohesive and verifiable management process for lenders. By leveraging eVault technology, lenders gain access to a powerful eMortgage toolbox that enables the design and execution of digital transaction workflows, including hybrid eClosings or fully digital eClosings.

Empowering Digital Mortgage Processes with SmartSAFE

DocMagic’s SmartSAFE offers a robust solution for the control, storage, and management of eNotes and other eAssets. It provides features such as:

• Validation of electronic records: Ensuring the integrity of transferable electronic records
• Tamper-evident seals: Protecting eNotes with tamper-evident seals proving the authoritative copy
• MISMO document classification: Categorizing documents according to MISMO standards
• Direct integration with MERS^® eRegistry: Enabling seamless eDelivery of Category One SMART Doc^® eNotes, documents, and data

In addition to managing eNotes, our SmartSAFE technology offers flexibility in storing and managing other eAssets. Versatile eVault technology accepts various digital assets, including eChattel (such as electronic promissory notes and commercial leases), different electronic file formats (TIFF, Word, Excel, PDF, Cat. 1 SMART Doc, audio files, etc.), and authoritative copies of documents. The eVault maintains an audit trail of electronic events and allows lenders to store data and documentation electronically based on their preferences.

eVault technology also offers flexible solutions that allow lenders to customize their approach according to their business objectives. Lenders can choose the services and technology they need and can easily integrate an eVault into their existing or planned eClosing workflows.

Implementing an eVault for Enhanced Efficiency and Compliance

There are several key benefits to using an eVault that make it an essential portion of any digital closing workflow. Benefits to lenders include:

1. Increased process efficiencies, leading to faster closing times.
2. Ensuring compliance for electronically signed documents throughout the mortgage process, insuring every lender for future audits.
3. Eliminating expenses related to physical document storage, printing, and shipping.
4. Facilitating secure and real-time sharing of digital documents among stakeholders.

DocMagic’s SmartSAFE offers both on-premise and enterprise-level SaaS-based options for secure, customizable, and scalable eVault technology. These options provide lenders with the flexibility to choose the deployment model that best suits their requirements, ensuring the utmost security and efficient management of electronic documents and transferable records.

By utilizing our advanced SmartSAFE eVault technology, lenders can gain a competitive advantage in the digital mortgage landscape with cost reduction, faster processing, and improved collaboration capabilities. Schedule a free demo at any time—our eClosing team is ready to support you through every step of your implementation!

Related Content:

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• DocMagic named 2024 Tech100 Mortgage winner (2/13/2024)
  
• DocMagic’s 2023 in review: Pioneering the future of digital mortgages (1/18/2024)

Digitally competent remote notaries are vital for mortgage lenders completing electronic closings, as they bring expertise, efficiency, and reliability to the eClosing process. The notary-focused DocMagic Agent’s Lounge stands as a crucial eClosing resource, supporting lenders’ use of DocMagic’s eClosing platform by offering a unique blend of comprehensive notary training, community support, and real-time insights. In a recent discussion, our Senior Training Manager, Steve Truitt, shed light on the complexities of eClosing and the crucial role notaries play in the process.

Truitt emphasized, “Completing the eClose process for our customers has to be clean and easy—and that includes the notaries.” An efficient eClosing process will benefit lenders and borrowers alike, and this process includes notaries who may not be employed by a lender but are integral to the success of the electronic closing.

Read on to learn about the importance of notaries and how DocMagic fosters proficiency in this crucial stage of eClosing.

Why Lenders Need Well-Trained Notaries

Trained notaries play a crucial role in the successful completion of eClosings for mortgage lenders. Notaries with expertise in eClosing accomplish the following:

• Ensure compliance: Trained notaries are well-versed in the legal and regulatory requirements surrounding electronic closings. Their knowledge ensures that the eClosing process adheres to all relevant laws, reducing the risk of legal complications for mortgage lenders.
• Enhance efficiency: Proficient notaries contribute to a streamlined eClosing process. Their familiarity with the eClosing software and electronic notarization procedures allows for quicker and more efficient transactions, reducing the time it takes to close.
• Minimize errors: Training equips notaries with the skills to accurately handle electronic documents and navigate the eClosing platform, which minimizes the likelihood of errors.
• Build borrower confidence: Trained notaries instill confidence in borrowers by facilitating a smooth and professional eClosing experience. This positive interaction reflects well on the mortgage lender, fostering trust and satisfaction among borrowers.

Whether the notaries used in eClosings are employed by the lender or are third parties contacted through DocMagic’s vetted eNotary database, their familiarity with eClosing software is an important aspect of the closing process.

The Role of Notaries in eClosing Efficiency

Addressing the different levels of eClosing familiarity among notaries, Truitt acknowledged the importance of eNotaries being proficient in the pertinent software—like the natively-built remote online notarization (RON) functionality of DocMagic’s all-in-one Total eClose™ platform.

“It has been a great challenge in the fact that RON is the last piece of electronic closing that most people have accepted,” noted Truitt, “and so it’s the least talked about and least understood aspect, I believe. And yet, a crucial one.”

Training notaries goes beyond just software knowledge; it involves familiarizing them with accessing the software and understanding its functions.

Truitt highlighted the significance of notaries in the electronic closing landscape, stating that successful remote eClosings rely on seamless RON transactions. He stressed the importance of ensuring notaries, whether employed by the lender or not, are well-prepared. Their performance reflects on the overall success of the process for borrowers and can even impact borrowers’ perceptions of their lender.

Success Within Reach: Training at the Agent’s Lounge

Despite the importance of notaries within the eClosing process, Truitt noted that there are inherent training challenges that come with self-study courses. On the other hand, a guided experience—facilitated by eClosing experts like those at DocMagic—ensure far-reaching comprehension of the processes involved.

The answer? Our exclusive Agent’s Lounge.

Truitt described the resounding success of the Lounge, a live training space where notaries can participate in simulated eClosings and get immediate answers to their eClosing questions.

A variety of notaries join the lounge, ranging from those experienced with electronic closings to newcomers. Truitt noted how the lounge accommodates different learning styles, offering a live, interactive experience that includes troubleshooting and addressing real-time questions.

The lounge is held every Tuesday and Thursday at 10:00am PST and serves as an open forum for notaries, offering a platform to share insights, troubleshoot challenges, and stay updated on the latest developments.

DocMagic eNotaries and Available Resources

Becoming a certified notary in DocMagic’s database involves a meticulous onboarding process, including a comprehensive landing page with resources and encouragement for new notaries to join the weekly Agent’s Lounge sessions.

Truitt added, “You know, we created the product training page, and we created videos and guidebooks, and they all work hand-in-hand together. We also have FAQ pages and hacks and bonus materials”—all designed to support notaries in becoming proficient with eClosing and gaining a place in DocMagic’s database.

The focal point of the materials is the Lounge. It’s primarily attended by notaries, but we’ve even extended invitations to settlement agents and title agents to round out the comprehensive training environment and welcome input from all angles.

In addition, notaries in our database are regularly encouraged to address the complexities of RON eligibility by exploring our comprehensive resource hub. Notably, a dedicated webpage categorizes states based on RON activity, providing clarity on where RON is active, whether DocMagic is an approved provider for notaries, and links to each state’s Secretary of State. This valuable resource is regularly updated to ensure accuracy.

Adapting to the Future of eClosings

Notaries play a pivotal role in eClosing, and we’re engaged in ongoing efforts to ensure their effective integration into the process. RON has revolutionized the notarial process, offering convenience and efficiency; however, the landscape is dynamic, with eligibility varying across states and updates rolling out frequently.

Having access to tech-savvy remote notaries is an important digital transformation element for lenders. These notaries—a large group of which are always available through the database in our Total eClose platform—bring a mix of expertise, efficiency, and reliability to the eClosing process, ensuring it complies with regulations and elevates the overall experience for everyone involved. DocMagic’s Agent’s Lounge takes center stage as a pivotal resource, spotlighting how holistically we support lenders through our eClosing platform.

Related Content:

• DocMagic named 2024 Tech100 Mortgage winner (2/13/2024)

• DocMagic’s 2023 in review: Pioneering the future of digital mortgages (1/18/2024)
  
• Enhanced integration of Empower LOS and DocMagic supports home equity, wholesale channels (12/11/2023)

As we reflect on the milestones that shaped the mortgage industry in 2023, we’re proud to say that our initiatives over the past year continued to support the success of our current and future customers in the digital mortgage space. We were excited to see you all at different industry events throughout the year and look forward to interacting with you further in 2024.

If you’d like to learn more about any of our solutions below, we’d love to chat with you. Next, let’s delve into the key highlights that define DocMagic’s impactful journey throughout the past year.

ADA-Compliant Loan Documents

Our ADA-compliant loan documents initiative marked a significant step toward creating a more accessible mortgage industry, prioritizing equality for individuals with disabilities. These dynamic, data-driven documents feature ADA metadata tags for clear structure and content comprehension.

Widely adopted by major financial institutions, these documents streamline processes, improve customer support, and ensure a measurable ROI. Beyond immediate benefits, ADA compliance aligns with regulatory standards, fostering inclusivity and mitigating legal risks for lenders.

A Game-Changer in Digital Auto Notes: eChattel for Auto Financing

In the auto financing space, DocMagic’s SmartSafe^® eVault solution now includes eChattel functionality, offering a host of advantages for organizations that offer financing for products in addition to mortgages. eChattels are to auto financing what eNotes are to the mortgage space—an electronic purchase agreement.

This functionality allows lenders to efficiently manage and uphold security interests in financed automobiles and other products like large equipment and solar leases, reducing cycle times, enhancing collateralization efficiency, and ensuring compliance for digitally signed documents throughout the loan process.

SmartREGISTRY^® eNote Platform Enhancements

DocMagic’s SmartREGISTRY proprietary eNote registry solution introduced additional intuitive features and enhancements to further streamline functionality in 2023. This platform directly integrates with MERS^® to streamline eNote registration and simplifies secure, expedited eNote transfers, supporting a 100% paperless digital mortgage process.

Aligned with SmartSAFE eVault technology, the SmartREGISTRY solution facilitates access, delivery, storage, and management of electronic loan files in real time. Integrated with our comprehensive eClosing solution, it continues to lead the mortgage industry toward a seamless digital future.

QR Code Technology for Document Management

This past year, we also introduced a groundbreaking enhancement to our document generation capabilities—QR code technology. This innovation unlocks a world of possibilities beyond standard URL information. Our QR codes seamlessly integrate with document generation data, eSignature details, version control, and more.

Our QR codes also bridge the gap between physical mortgage documents and digital records, allowing quick retrieval of selected data through a simple scan. This facilitates document validation and version control and enhances the overall document-related information management process.

Accelerating the Loan Process with Print Fulfillment

In a move to increase unparalleled flexibility, we introduced Saturday and same-day print fulfillment features to expedite document delivery. This has been extremely valuable to print fulfillment clients as they realize that the ability to provide high quality loans is coupled with the propensity to deliver these loans to borrowers efficiently and quickly.

Enabled by our state-of-the-art Print Fulfillment Center, this feature adds a new dimension to the automated print fulfillment process. By allowing specific document packages to bypass the standard print queue, we’ve empowered customers to accelerate the loan process further and meet regulatory requirements with ease.

As we step into 2024, DocMagic stands at the forefront of innovation, reshaping the mortgage industry and leading the way into a digital future.

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• DocMagic Appoints Chris Lewis Director of Sales (11/07/2023)

This post is adapted from a detailed update on the new SB 696 bill in our Compliance Edge publication authored by Gavin T. Ales, Chief Compliance Officer at DocMagic.

On Saturday, September 30th, the California governor signed a bill into law, SB 696, that paves the way for legalization of remote online notarizations (RON) by California notaries. The groundbreaking piece of legislation has stipulations to review the technological requirements for RON, study laws of other states governing remote notarization, and determine appropriate regulations and rules necessary to enable the conduct of remote notarizations.

However, what sets this legislation apart is its forward-looking approach, with its full scope perhaps not becoming effective until years after its passage.

• Ask the eClosing Team: Unlocking the potential of hybrid eClosings (9/21/2023)

• 100% Digital, 100% Delight: eClosing means great customer experiences (9/07/2023)
  
• Compliant IRS transcript requests: Adapting to changes in form 4506-C (8/17/2023)

The Internal Revenue Service (IRS) has recently implemented significant changes to the process of ordering tax transcripts and records, encouraging lenders to move from a manual ordering process to submissions that are Optical Character Recognition (OCR) compliant. As part of this modernization, the IRS has also introduced clean form requirements for the IRS Form 4506-C.

While this transition is expected to enhance efficiency, it’s essential for lenders to adapt their internal procedures for accurately collecting information on this form to prevent a) avoidable errors, b) subsequent rejection of transcript orders, and c) duplicate orders. Lenders must adapt their approach so that they remain in compliance as they submit IRS transcript requests and work alongside borrowers to ensure accurate tax return transcript information.

Top 4 Mistakes On IRS Transcript Request Forms

To ensure a smooth process and avoid rejection using the changed 4506-C, lenders must avoid the following prevalent errors when submitting this important request for an IRS transcript.

Below are some of the most common mistakes that cause form rejection.

1. Not using the updated form

The IRS updated their previous transcript form, the 4506-T, to the 4506-C at the end of 2022. Lenders are now required to use this new form, so ensure all agents have access to the October 2022 version of the form and use it exclusively for requests.

Vendors like DocMagic take care of this issue for you. We ensure you receive the right version of the necessary form based on updates from the IRS, making sure to follow updates as they occur and react accordingly.

2. Making simple errors

Unfortunately, small mistakes in filling out the form itself can result in rejection of your IRS transcript request. Among others, we’ve seen sections 5a and 5d missed or filled out incorrectly; various checkboxes left unchecked; and strikethroughs, circles and arrows used when they’re not allowed anywhere on the form (even if the borrower initials them to approve their use).

3. Using the incorrect address

It’s vital to double-check the borrower’s current address(es)—or, more accurately, their addresses listed in the loan file—in order to avoid rejection of your 4506-C. Check your records to ensure the addresses listed in the loan match this form perfectly.

4. Missing signatory checks or filling them out incorrectly

Last, always make sure the attestation box is checked when filling out this form. In addition, you must check the box that says “Signatory confirms document was electronically signed” if the form was electronically signed at any point.

Why The IRS Transcript Form 4506-C Is Important

It’s usually mandatory for lenders to have each borrower complete and sign a separate IRS Form 4506-C at or before closing, assuming their income is used to qualify for the loan (regardless of the income source). The only exception is when the borrower’s income has been validated by the Automated Underwriting System (AUS).

Both Fannie Mae and Freddie Mac require lenders to submit the IRS Form 4506-C for all loans reviewed under their post-closing quality control plan, except when transcripts are obtained during underwriting or when the borrower's income is validated by the AUS. Lenders should also be aware of the need for reverification of the borrower’s income and employment information.

Lenders should review and update their processes to incorporate thorough checks for errors on the IRS transcript Form 4506-C as part of their approval process. Staying vigilant and adhering to the revised requirements will help prevent transcript order rejections and ensure a compliant lending process.

To get more updates, contact us about our advanced compliance newsletter—the Compliance Edge.

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DocMagic’s continuous advancement in print fulfillment services represents a significant development for our valued customers. Recently, we introduced Saturday printing and mailing services at no additional cost, offering a notable advantage to customers with paper disclosure requirements. This feature empowers our clients to expedite the loan process and cater to borrowers whose disclosures expire on a Saturday.

So, why do print fulfillment services remain an essential part of what DocMagic does to digitize the mortgage process? First, we’ll discuss why these services add necessary protections to loan workflows—for both lenders and borrowers.

Why Print Fulfillment Services Are So Essential for Lenders (Even In A Digital Workflow)

When borrowers don’t sign the electronic versions of disclosures in time—or when, for a variety of reasons, they don’t consent to eSign itself within required timeframes—lenders are at risk of compliance violations.

To help keep lenders compliant, print fulfillment services may include any of the following tasks:

1. Preparing, mailing, and delivering paper copies of initial disclosures to borrowers in accordance with compliance standards.
2. Reporting document delivery to provide lenders with peace of mind regarding meeting deadlines.
3. Automating document delivery and minimizing human intervention to ensure borrower privacy.

Printing loan documents quickly is important because it helps to expedite the overall loan process, meet the needs of lenders and borrowers, and most importantly, shield the lender from any compliance issues related to late delivery of certain documents.

By offering continually faster print fulfillment services, we’re helping to provide customers with greater flexibility and immediacy in the processing of their borrowers’ loan documents.

DocMagic’s Innovative Print Fulfillment Services

To support our commitment to fast and compliant print fulfillment, we now allow customers to print and mail packages on Saturdays.

We’ve enabled this feature so that eSign packages scheduled to expire on Saturday will now be printed and mailed on Saturday, rather than printed and mailed on Friday, allowing borrowers who need a bit more time to eSign their loan documents to do so. This feature works in tandem with our customers’ existing workflow customizations: for example, if a lender is closed on Saturday or has specific rules for fulfillment within their account, the new Saturday fulfillment feature will not override any of those customizations. In addition, documents will still be printed and mailed on Friday if an observed holiday falls directly on Saturday.

The flexibility and immediacy of these print and mail services are made possible by DocMagic’s state-of-the-art Print Fulfillment Center and integrated into our completely automated print fulfillment process. By making it possible for specific document packages to print on Saturdays, we’ve given customers the option to accelerate the loan process even further and to accommodate borrowers who need immediate delivery of their loan documents.

All these print advancements are automatically available to DocMagic customers, at no additional cost, without any need for user action.

And for an additional cost, our customers can even order rush same-day print and mail services Monday through Saturday.

By leveraging the latest technology and automating the print fulfillment process, DocMagic has demonstrated its commitment to providing innovative solutions that meet the evolving needs of its customers. In offering innovative solutions like Saturday and rush print fulfillment services, DocMagic is helping its customers to meet these goals and stay ahead of the competition.

For any inquiries or comments regarding Saturday print fulfillment, customers can contact techsupport@docmagic.com.

Related Content:

•  MPA honors Leah Sommerville of DocMagic with 2023 Elite Women Award (7/20/2023)
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The CFPB, together with the Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System, recently posted the annual adjustment to appraisal requirements for higher-priced mortgage loans (“HPMLs”). The new threshold will apply to loans in an amount not exceeding $31,100.

HPMLs are subject to additional appraisal requirements under Section 35 of Regulation Z, including the requirement to obtain two independent appraisals in some circumstances. 12 C.F.R. 1026.35(c). However, these rules do not apply to loans in the amount of $25,000 or less, with the $25,000 amount to be adjusted annually based on any annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (“CPI-W”) as of June 1, each year.

The Bureau of Labor Statistics reported the CPI-W on May 11, 2022 (based on data from April 2021 to April 2022). The CPI-W reflects an 8.9 percent increase over the 2022 threshold of $28.500, resulting in a new threshold of $31,000 that will be in effect as of January 1, 2023.

Related Content:

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In the current interest rate environment, we have noticed a resurgence of a loan feature which has been dormant for most of the past decade – temporary buydowns. A buydown temporarily reduces the loan interest rate, typically for only the two-to-three-year period following consummation, with the largest difference in the first year and adjusting slowly back up to the loan’s interest rate. This is called a “Step Rate” loan as the rate adjusts on a periodic basis but not on the basis of adjustments to any underlying interest rate like an adjustable-rate mortgage would. As a result of the resurgence, we have received many questions about how these buydowns should display on the disclosures.

How the Buydown is Displayed Depends on Who Pays for it

The main area of confusion for buydowns involves understanding when to expect to see the effect of the buydown in disclosures related to the payment and rate, specifically on the Loan Estimate and Closing Disclosure.

The TRID rule states that disclosures must reflect the terms of the legal agreement between the parties. It is for this reason that you will see a difference in how the payments and rate are disclosed based on who is paying the buydown subsidy at closing. When the buydown subsidy is paid by the borrower, the terms of the legal agreement between the lender and the borrower are that the buydown subsidy will be made available to reduce the regularly scheduled payments. In this case, the LE and CD will show the full effects of the buydown.

In a scenario where someone other than the borrower, e.g., the Lender or the Seller, or any other party, pays for the buydown, the terms of the Temporary Buydown Agreement must include a provision which states that, if for whatever reason the subsidy is not available for any payment, the borrower is responsible for the full payment of principal and interest (as if there were no buydown). Because of this provision (which is required under FNMA/FHLMC guidelines), when someone other than the borrower pays for the buydown, the payment and rate are not disclosed showing the effect of the buydown. Because of the possibility that the terms of the agreement between the parties would make the borrower responsible for the full payment amount at the actual interest rate, the worst-case scenario must be disclosed to the borrower on the LE and CD. In this case, the disclosures will ignore the effect of any buydown.

Showing a Buydown on the LE/CD

There are three areas where one may see an impact from a temporary buydown: the Loan Terms section, the Projected Payments, and the AIR Table.

When there is a temporary buydown paid by the borrower, the Loan Terms will reflect the fact that the payment and rate may change after consummation. Both the Payment Amount and Interest Rate will show a “YES” indicating these may change, with associated bullets to explain the changes that may occur. The rate disclosures will indicate that the rate may change with the frequency as indicated by the buydown, typically on an annual basis but it may also occur over a shorter period such as 6 months, and the point at which the highest rate will be achieved and what that rate would be, which typically would be the loan’s actual interest rate from which the rate was bought down.

A temporary buydown paid by anyone other than the borrower will show no difference in the Loan Terms section, disclosing no changes to the payment or rate after consummation.

For a fixed loan with a bought down rate and subsidy paid by the borrower, the Projected Payments will show the effects of the buydown on the adjustment period as set in the buydown, e.g., showing a payment adjustment on an annual basis as a result of the step rate, until the loan’s interest rate is achieved.

When a temporary buydown is paid by anyone other than the borrower there will be no change shown in the Projected Payments.

When a temporary buydown is paid by the borrower, the effects of the buydown must be disclosed in an AIR Table on the LE and CD. The AIR Table will indicate the number of adjustments that will occur during the temporary buydown, the starting rate and the minimum and maximum rates, as well as the frequency of the change in the rates and difference between each adjustment. If the subsidy is paid by anyone other than the borrower, the AIR table will not appear to show a buydown.

Related Content:

• CFPB Issues Circular Regarding Data Protection Security (9/21/2022)

• US House Passes The Secure Notarization Act (8/10/2022)

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The Consumer Financial Protection Bureau (“CFPB”) published Circular 2022-04 on August 11, 2022 which confirmed that financial institutions may violate the prohibition on unfair acts or practices under the Consumer Financial Protection Act (“CFPA”) by having insufficient data protection or information security.

“Financial firms that cut corners on data security put their customers at risk of identity theft, fraud, and abuse,” said CFPB Director Rohit Chopra. “While many nonbank companies and financial technology providers have not been subject to careful oversight over their data security, they risk legal liability when they fail to take common-sense steps to protect personal financial data.”

The circular provides that under the CFPA an unfair act or practice would be one that (1) causes or is likely to cause substantial injury to consumers, (2) is not reasonably avoidable by consumers, and (3) is not outweighed by countervailing benefits to consumers or competition. Additionally, an actual injury is not required to prove an unfair act or practice under the CFPA. Examples of data security practices which are widely used to protect consumer data are provided in the Circular.

Further, three examples of data security measures which are indicated to reduce the likelihood of a violation of unfair act or practices include multi-factor authentication, password management policies and practices, and timely software updates. Not using these types of security measures may indicate a financial institution has inadequate data protection.

Circulars are a new tool being used by the CFPB to provide supervisory guidance on individual topics. For more information on this type of guidance, see DocMagic’s prior compliance article here.

Related Content:

• US House Passes The Secure Notarization Act (8/10/2022)

• FEDERAL AGENCIES ISSUE UPDATED INTERAGENCY FLOOD INSURANCE Q&AS (8/5/2022)

• DocMagic makes loan documents ADA accessible (7/20/22)

On Wednesday July 27^th, the United States House passed the “Securing and Enabling Commerce Using Remote and Electronic Notarization Act of 2022”, also called the “SECURE Notarization Act”, by a vote of 336 in favor to 90 against.  The SECURE Notarization Act would immediately grant remote notarization abilities to all commissioned notaries in the United States, subject to additional state requirements where those exist.  The Act has not yet been passed by the Senate which has introduced its own companion bill that currently remains in committee review.

Notary laws enacted throughout the United States before the proliferation of communication technology required the “personal appearance” of a signer before a notary, often requiring a “physical presence” within a certain distance of each other. The SECURE Notarization Act would achieve its purpose by immediately authorizing all commissioned notaries to conduct a notarization with a “remotely located individual” which still requires the personal appearance before the notary of the signer but allows it to be accomplished through the use of “communication technology.”  The Act also modifies any state law requiring physical presence to now be satisfied through the use of communication technology.

As is now common with remote notarization authorizing statutes, the SECURE Notarization Act establishes minimum identification requirements on the notarization, including:

• Personal knowledge of the signer
• Proof of the signer’s identity by oath or affirmation of a credible witness
• Completion of at least two forms of identity proofing using information obtained from public and private sources, such as a knowledge-based assessment.

The Act also requires that a recording of the notarization be made and stored by the notary in an electronic journal for at least 5 years if a state has a shorter requirement or at least 10 years if there is no state rule.

While the Act would immediately authorize commissioned notaries to conduct notarizations with remotely located individuals, it would not prevent states from enacting additional requirements, including requiring a separate application or approval by the state.  However, states are preempted from enacting laws which directly contradict the federal authorization to conduct a notarization with a remotely located individual or outside the physical presence of the signer.  The Act would also require all states to recognize the validity of notarizations validly completed under the laws of any other state or the Act.

Senate Bill 1625, which is the senate’s version of this bill with the same name, remains pending in the Senate, as we last discussed here.  DocMagic will continue to monitor developments both at the federal and state level and provide updates to our documents and systems as necessary to enable our customers to easily adopt electronic closings.

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