The state that may never accept RON mortgage closings

The push against legislation

While many states quickly pushed legislation through during COVID-19 to allow for RON in the midst of stay-at-home orders, California would hear nothing of it, determining that it did not want to allow RON in the state.

“Some [states] have outright said that they have considered it but definitely do not want to do it,” eOriginal Chief Product Officer Simon Moir told HousingWire when discussing the complexities of varying legislation from one state to the next. “California has gone so far as to even write a letter from the Attorney General of California to Congress to say that they think they’re overstepping the mark, and that it is not good for the state of California to have a national remote online notary bill in place.”

Back in March, a bipartisan push began in Congress to create a federal law allowing RON. Sens. Mark Warner (D-VA) and Kevin Cramer (R-ND) introduced a bill that would allow RON nationwide, which would enable many people to close on a home or conduct other legal activities without compromising their social distancing practices.

The bill, entitled the “Securing and Enabling Commerce Using Remote and Electronic Notarization Act of 2020,” would authorize every notary in the U.S. to perform remote online notarizations.

The bill also required tamper-evident technology to be used in electronic notarizations, and encouraged fraud prevention through use of multifactor authentication.

“Americans shouldn’t have to risk their health or safety to execute important financial or legal documents, especially when they could do so from the safety of their own home,” Cramer said in a statement. “The SECURE Notarization Act brings the notary process into the 21st century, allowing people to securely complete documents while still following recommended health and social practices amid the coronavirus pandemic.”

But California said this bill was not only overstepping, but also unnecessary.

“The proposal under consideration appears to be a solution in search of a problem,” California Attorney General Xavier Becerra wrote to Congress in May. “No evidence, other than anecdotal, has been presented that residents in California or anywhere else have been unable to obtain notary services during the COVID-19 pandemic. Rather, in California, notaries provide an essential service that continues to be available despite shelter-in-place restrictions. Further, to the extent the proposal is intended to address the availability of notaries during the COVID-19 pandemic, it will be enacted just as states are beginning to reopen.”

The letter, addressed to Sens. Lindsey Graham (R-SC) and Dianne Feinstein (D-CA), the chairman and ranking member of the senate Judiciary Committee, expressed its concerns that this could increase the risk of fraud, despite the bill’s efforts to avoid those risks.

“In particular, in California, this proposal would increase the potential for fraud in Californians’ most important transactions like end-of-life planning and real estate purchases and sales,” it stated. “The proposal would create significant issues regarding authenticity and the potential for increased fraud. The proposal would set bare-bones minimum federal standards for online notarization, but such standards would be difficult to enforce and challenging to implement, particularly because they would have to be implemented immediately.”

“For example, the requirement to create and retain an audio and visual record of notarization not only would be expensive and time-consuming to implement, but also raises privacy concerns about how this personal information would be stored and protected,” the letter continued. “This requirement also offers only limited protection against fraud because existing technology can be used to manipulate the audio and video.”

The bill has made no headway since it was introduced in March, but some experts continued to express their belief that Congress will take matters into its own hands.

“This time next year, I would hope that we have a 50-state solution,” NotaryCam CEO Rick Triola said.

Tried and failed

California has previously tried to pass legislation – multiple times. But each time, the legislation has failed.

“The proposal would force remote notarization on California – a state that has decided as recently as last year that document notarization is best effectuated through in-person notarizations,” Becerra said in his letter. “The California Legislature has twice considered and twice rejected the implementation of online notarization, instead preserving its long-standing policy to require that notarizations take place in person. This proposal would not only overrule the judgment of the California Legislature, but would also potentially transfer the enforcement of rights of our residents to other states’ officials.”

California is not taking eNotarization off the table completely, as it even has an eNotary bill in its Senate now. SB-1322 Remote Online Notarization Act, is currently in committee process, however, it was introduced in March, amended in April, and has not been touched since. It would require a two-thirds majority to pass.

What’s more, this bill does not follow the American Land Title Association/Mortgage Bankers Association model.

Another way

But while the state won’t allow for RON, it did take other actions during the pandemic to ensure residents would still be able to close on their mortgages and gain access to notaries.

“California Law does not provide the authority for California notaries public to perform a remote online notarization,” the state posted on its website during the outbreak. “The personal appearance of the document signer is required before the notary public. However, California citizens who wish to have their documents notarized can seek a mobile California notary public.”

California didn’t state that notaries were an essential business, but assured them that administrative action would not be taken against them for continuing to work. This allowed the state’s residents continued access to notaries without using RON.

“Although the California Secretary of State’s office cannot determine whether or not notarial services provided are deemed essential during this pandemic, California Notaries Public are not prohibited from performing a notarial act during a shelter in place order,” the Secretary of State’s office said in a statement. “However, our office does recommend that California Notaries Public contact their respective county health officers for guidance,”

“The California Secretary of State’s office will not take administrative action against a notary public for performing a notarial act where a shelter in place order has been given,” added Bill Downs, the Secretary’s Notary Section Manager.

In addition to this clarification, the California Secretary of State also issued a COVID-19 “FAQ”, which showed that RONs conducted in other states in compliance with that state’s law will be recognized as valid under California law, eliminating a potential hurdle to the legal recognition of documents notarized using RONs conducted by out-of-state notaries.

“I urge Congress to abandon any attempts to impose remote online notarization on the states and to allow policing notarization of documents to continue as an individual state concern,” Becerra wrote.

California RON: RIP.