Massachusetts has – finally, in the mortgage industry’s eyes – caught up to the 43 other states that offer remote online notarization.
While Massachusetts just moved closer to a fully digital mortgage process by allowing notaries to acknowledge signatures remotely, the mortgage and real estate industries still have time to prepare for this new process.
The supplemental state budget signed by Gov. Maura Healey late last month included legislation legalizing remote online notarization – known as RON – for real estate transactions. But before mortgage borrowers get to use RON, Secretary of the Commonwealth Bill Galvin’s office needs to create guidelines for these transactions, a process expected to take the rest of the year.
The RON legislation replaces a pandemic-era temporary authorization that expired at the end of last month. The state’s chief title examiner said on March 31 that no virtually notarized documents will be accepted until Galvin’s office rolls out new RON regulations.
Some additional questions remain, including around fees the state will assess to support the process. But industry stakeholders expect the law to benefit the state and consumers.
“Many of our members are licensed in multiple states – here in New England, we’re the fifth New England state to have RON – so for them, they’ve already been able to use RON for closings that have occurred outside of Massachusetts,” said Debbie Sousa, executive director of the Massachusetts Mortgage Bankers Association. “But if they’re brand-new, primarily it’s a learning process.”
Regulations Still to Come
The RON legislation came after a four-year effort led by the Real Estate Bar Association.
“They were the ones that managed to get all of the industry stakeholders together,” Sousa said. “We’re pretty comfortable with the language itself that meets the national RON standards, which was really important.”
RON laws already exist in 43 states, including New Hampshire, Maine, Vermont and Rhode Island, according to the National Notary Association.
Unlike some other states, Massachusetts requires an attorney to oversee the closing process. The legislation states that the attorney must provide the notary or supervise the process.
The RON process will involve technology that has been registered with the state. Notaries will need to notify Secretary of State William Galvin’s office if they plan to use RON and which technology they plan to use.
The law specifies any costs RON creates for the state will be covered by a fee assessed equally on RON technology providers. The aggregate amount of the fees cannot exceed the state’s administrative costs, the law states, and the annual amount assessed on technology providers cannot exceed $500,000.
This fee is one of the features of the new system that stakeholders are still waiting to learn more about, Sousa said.
“It has to be a realistic fee for [technology providers] to be part of the RON in Massachusetts,” Sousa said. “Probably the biggest unknown is figuring out paying for it and how much it’s going to cost.”
Galvin’s office is also tasked with establishing the means for performing notarizations, standards for proving identity and standards for audio-visual technology that can be used in remote notarizations, including ensuring the technology is tamper-proof. The Land Court’s chief justice has certain guidelines to establish, as well.
The law also excludes most stand-alone home equity loans and lines of credit on one- to four-unit properties from needing attorney oversight.
Future Borrower Expectation
As the local mortgage industry waits for regulations, Sousa said lenders that have not yet worked with RON should begin by making sure their attorneys are comfortable with the process and what it will involve. Consumers will not have to use RON, Sousa said, but she expects it will soon become a common borrower expectation.
Kosta Ligris, CEO of Boston-based remote notarization software firm Stavvy, also expects the use of RON to grow quickly once it launches in Massachusetts.
Diane McLaughlin
“Consumers demand more convenient interactions with their financial institutions, and so it’s one of those paradigms where if you’re not doing it and other lenders are, it will become a competitive advantage for those that are offering RON,” Ligris said.
Stavvy offers RON technology in other U.S. states and territories, and Ligris said being one of the last states to legalize RON could benefit Massachusetts since the legislation built on what has been used in other states. He added that the law also allows for flexibility in how identity will be proven in the future.
“I think the law was designed to be robust enough to cover the likely innovation that we will see in identity-proofing in the future,” Ligris said. “So, I’m excited about that in that it didn’t become a very prescriptive law.”
