Angel Hernandez
When Ginnie Mae initially permitted the use of remote online notarization (RON) for loan documents sent to them, it excluded mortgage documents signed by an attorney. Ginnie Mae’s publishing of the All Participants Memorandum (APM) 23-09 earlier this month, however, allows power of attorney documents used in connection with loans securitized into Ginnie Mae Mortgage Backed Securities to be notarized using RON – including electronic execution, notarization and delivery of powers of attorney (POAs) – where and when permissible.
Previously, even in states where RON was approved, POAs were not allowed for RON transactions. The announcement proves that there’s been an evolution. The market now has enough experience with RON to trust it, even for POAs. In the same way that folks may have initially been leery of making a mobile check deposit, or use their face to open their mobile banking app instead of a passcode, they now realize that these methods make things more secure, not less, and they make life a whole lot more convenient. The increase in tools to consummate digital transactions will allow secure transactions to be conducted faster, and more conveniently than what could be done in-person.
There’s now an increased trust built in the digital ecosystem that allows for an extension of the convenience and flexibility provided by RON even beyond digital closings.
RON: Technology for When Life Happens
RON adds flexibility for real estate transactions and allows transactions to proceed in a way that wouldn’t have been possible a few years ago without a regulation put in place. Without RON in place many of the transactions still would happen, but they may have been delayed, been far more costly, would have put geographic limitations on transactions or would have been challenging to complete. In cases with people in the armed forces overseas, with illnesses or limited mobility, it could have been a deal-breaker.
So, what does Ginnie Mae permitting RON mean for the key stakeholders – buyers, sellers, agents and attorneys and what does this mean for the future of remote online notarization?
Realtors are not always aware of client life circumstances (the work trip, a family vacation) that might make their clients geographically unavailable. Then, of course, there are the unexpected factors that change in someone’s schedule. When having to conduct an in-person closing, these circumstances can cause a Realtor to need to apply a lot of pressure to the downstream process (to the settlement agent/lender) to get to closing in time.
This is not the best experience for the Realtor, and can also create a negative client experience where the client feels rushed. Ginnie Mae’s announcement means that Realtors now have more options around the closing process for clients with government-backed loans. Even if a client is out of town or things develop unexpectedly, there is now a way to assign an attorney-in-fact for a remote, online POA transaction.
For buyers and sellers, this means having flexibility to meet closing deadlines even when life events get in the way. Buyers and sellers can now select an attorney in-fact from anywhere, which can translate to substantial savings and empowerment. For example, members of the armed services abroad can now engage in a sale or purchase while focusing on what matters.
This is also a good thing for attorneys. Powers of attorney via RON gains more traction, to provide additional awareness of powers of Attorney and how attorneys-in-fact can be used for things even beyond real estate to eliminate geographic distance as a barrier for any transaction or legal document. As settlement agents gain additional traction in real estate, it makes it easier to adopt for the balance of their practice.
The script has been flipped. As folks become more familiar and comfortable with remote transactions and using a POA, digital transactions will soon be the norm and not the exception in real estate and beyond.
Angel Hernandez is vice president of industry and regulatory affairs at Stavvy.
