Integrating eNotarization into Your Digital Strategy

Throughout the industry, eNotarization is one of the more commonly misunderstood aspects of the digital closing process. To integrate this process successfully into an overall digital closing strategy, there are a few key elements that must be in place: 

State Approved eNotary

There are many states that must certify eNotary systems and/or approve individuals to eNotarize documents. Lenders need to review the procedures of their eNotary provider because, although many early systems made some headway, their focus was too wide. Most providers only pursued blanket approval from states for all types of notarizations and did not look at the specific requirements for notarizing mortgage-related documents. Early approvals like these set the standards that may not be not applicable today and, in many cases, are incorrect, creating approval processes that do not meet mortgage industry requirements.

Embedded Notary

As we explained in an earlier post, document notarization, whether executed electronically or on paper, is an integrated component of the entire closing process. Trying to execute this activity as a one-off or separate from closing is wildly inefficient and risky, not to mention the fact that it disregards the CFPB’s directive to improve the closing experience for the borrower. Therefore, lenders should choose a provider that incorporates eNotarization as part of their overall closing platform, so that this functionality works to streamline the closing process rather than to obstruct it.

Understanding what eNotary really means

Contrary to what much of the mortgage industry steadfastly believes, physical presence and proof of identity are required with eNotary. In fact, identification is more accurately and efficiently verified electronically than it can be in the paper world. However, state regulators fear that eNotarization means documents will not be notarized in the presence of the notary, which is simply not true. Audit trails that track eNotarization are highly detailed and always available in Pavaso, which provides an abundance of proof of the details associated with all actions that take place, and not just at the closing, but for the entire process from start to finish.

Would you ever ask a notary for their credentials and proof of their commission being valid when you wet sign documents?  Would you ever check with the government to make sure the information the notary provided was valid and that they are in good standing?  No one has ever done that and would be hard pressed to get their documents signed if they tried to get that information on the spot.  In the digital world, the validation of credentials happens each time to make sure everything is valid and correct.  Secretary of State data bases are cross-referenced with eNotary solutions to be certain that all information is current, allowing only properly registered notaries to perform their duties.

eNotary is a prime example of a technology delivering a standard before businesses have caught up to define what is actually needed. This can easily be changed, but states need to consider business process benefits and the needs of the industry, just as much as the technology that is used to execute the process. In the near future, we expect to solve this issue by constructing a process where states approve closing platforms specifically for mortgages and other types of loans.  This will eliminate the concerns and unnecessary complexity of covering all the scenarios for any notarization, and will instead focus on the more streamlined mortgage process.

eNotarization involves much more complete verification and assurance that a notary has done their job correctly, and should be included as a part of any company’s digital strategy.