Where Current eNotary Tech Falls Short

Electronic document notarization (a.k.a. eNotarization) is certainly an idea whose time has come, and for lenders that are pursuing a digital closing strategy, this technology should be at the top of their wish list. However, the eNotary solutions on the market today aren’t really ready for primetime. Here’s why.

Most eNotary solutions have been developed using the assumption that a notarized document exists independently from the rest of the real estate transaction. Thus, most solutions that accommodate eNotarized documents do so in a single document format.

In reality, document notarization is just another step embedded in the closing itself. There is no separate payment for those services, as it is simply included in the closing costs. In many cases, the notary is an employee of the title company or the lender. In others, the closing agent offers document notarization in addition to escrow and/or other services.

This reality is what eNotary service providers have failed to understand. You cannot reasonably expect to charge $50 for notarizing a closing package or up to $15 for each individual document. That’s not a permissible fee for lenders to charge, and because the closing is conducted as one complete transaction, it becomes difficult to eNotarize documents on a one-off or document-by-document basis.

In addition, eNotarizing documents in such a piecemeal fashion is both inefficient and creates a negative experience for the consumer, which flies in the face of what the CFPB expects. In the Pavaso platform, eNotary is simply a part of the closing, and a closer using our system is a licensed notary able to notarize as part of the closing process.

Speaking of integration, there are serious security risks to sending documents outside the closing system for eNotarization because doing so breaks the chain of custody and potentially exposes borrowers’ personal information. That’s why, in Pavaso, the documents don’t leave the system until they’re completed.

As you can see, one-off eNotarization providers still have some issues they need to work out before their solutions can be truly functional in a digital mortgage closing environment. However, this should not dissuade lenders from pursuing a digital closing strategy. Instead, lenders should seek out closing solutions that incorporate eNotarization as part of the full closing process.