Updated 7-27-16. The controversial process of webcam notarization received a noteworthy endorsement earlier this month when Fannie Mae and Freddie Mac recommended the technology for use in mortgage closings.
The two Government Sponsored Enterprises (GSEs) were responding to a request from a special task force of the National Association of Secretaries of State (NASS) set up to study the issues surrounding webcam notarizations.
In a joint letter to the task force, Fannie Mae and Freddie Mac wrote that they “strongly support” removing the barriers to electronic notarization, including “remote electronic notarization, whereby the requirement for the ‘personal appearance’ or the ‘presence’ of the signer is satisfied via a live audio and video connection.”
Controversy over webcam notarization
Webcam notarization has been a controversial subject ever since Virginia became the first state to authorize it. With webcam notarization, the signer and Notary communicate with each other remotely using audio-visual technology rather than meeting face-to-face in person. Advocates say webcam notarizations are more convenient and secure than a face-to-face meeting. Critics fear the technology could make notarizations more vulnerable to fraud.
Below: A panel of experts discuss the present and future of video notarization, and a webcam notarization demonstration by SIGNiX at NNA 2016 in Anaheim, California.
[Note: For a complete discussion of webcam notarization, see the June 2016 edition of The National Notary Magazine]
Fannie Mae and Freddie Mac wrote that applying this technology to the mortgage closing process will make mortgage closings more convenient and flexible for borrowers “while improving the assurance, authentication, security, and documentation of notarial acts.”
The endorsement of webcam notarization by the GSEs is important because the two companies dominate the secondary mortgage market, which buys home loans from lenders. Many lenders have been reluctant to embrace the technology because of uncertainty about their ability to sell loans that were notarized remotely.
To date, only three states — Virginia, Montana and Florida — have permitted webcam notarizations in any form. However, only Virginia Notaries who obtain special electronic Notary commissions have the authority to remotely notarize for anyone in the world.
Just two days before the GSEs sent the letter, webcam notarization was the subject of the panel discussion at NNA 2016 Conference. Several of the panelists are members or advisors to the NASS task force.
Quicken Loan supports audio-video notarizations
Major mortgage lender Quicken Loans also wrote a letter of support to the NASS Task Force in which it stated that it believes remote notarization provides the best opportunity to move the mortgage industry forward by allowing consumers to close their loan electronically in states that do not require an attorney to conduct a closing.
It cited the use of “out of wallet” questions to authenticate the identities of consumers, forensic analysis of IDs and visual confirmation of the notarization over video as key elements of the process that will reduce the risk of fraud significantly and protect Notaries from any litigation involving mortgage loan transactions.
Law Commission approves webcam notarization amendment
The Uniform Law Commission in July approved an amendment to the Revised Law on Notarial Acts (RULONA) allowing Notaries in an enacting state or jurisdiction to perform webcam notarizations for signers outside the U.S. for certain types of documents and transactions.
RULONA is a uniform law intended to serve as the basis for states to modernize and strengthen their Notary statues. In order for the amendment to become law, individual state legislatures would have to adopt it in their RULONA enactment.
The webcam amendment would allow Notaries to:
- Verify the signer’s identity through identity proofing techniques, such as knowledge-based authentication currently used by many Virginia eNotaries; and
- Keep a video and audio record of the notarization.
The ULC was urged to amend the RULONA by the American Bar Association, which pointed out that many U.S. citizens overseas have difficulty getting documents notarized because individuals may not have easy access to a U.S. consulate and Notaries in foreign countries often do not perform the same functions as U.S. Notaries.
The ULC also approved a study committee to consider an amendment that would allow webcam notarizations for signers in the U.S. as well.
Related Articles:
Notarization and Technology: Dealing with unusual requests
What’s on Your Mind? Notaries share their biggest concerns in 2016
Additional Resources:
NASS Webcam Notarization Task Force News Release