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Notary Bulletin

eSignatures, eNotarization, Webcam Notarization And iClose: What's The Difference?

e-signature.jpgBetween the Federal Housing Administration expanding its electronic signature program and ServiceLink promoting its web-based closing system, iClose, the impact of technology on Notaries has become a hot topic in social media communities. But there also is a lot of confusion about electronic notarizations and webcam notarizations. Here are basic definitions of these terms to help clarify the differences between terms and processes.

Electronic Signatures

Any time you make a purchase with a credit card and are asked to sign a digital pad, or type your PIN to get money out of your bank’s ATM machine, you’re using an electronic signature or eSignature. Anytime you make a purchase on the Internet and click the “submit order” button, you are electronically signing a purchase agreement. Electronic signatures have become commonplace in the retail world, and they also are becoming commonplace in larger transactions, such making an offer on a home purchase. eSignatures can be made in a number of different ways, but they are considered as legally valid as a signature on a paper document (often called a “wet” signature).

Electronic Notarization

Electronic notarization, or eNotarization, is essentially the same as a paper notarization except the document being notarized is in digital form, and the Notary signs with an electronic signature. Depending upon state law, the information in the Notary’s seal may be placed on the electronic document as a graphic image or other available means. But all other elements of a traditional, paper notarization remain, including the requirement for the signer to physically appear before the Notary.

Webcam Notarization

In 2011, Virginia authorized the commonwealth’s Notaries to perform notarizations using video and audio technology (e.g. “webcams”). The document is being notarized electronically, but the webcam element means that the signer does not need to physically appear before the Notary. To date, Virginia is the only state to permit webcam notarizations. In fact a number of states — including California, Colorado, Nevada, New Jersey, Oklahoma, Oregon, Ohio, Rhode Island and Wisconsin — issued public statements that notarizations using online communication are prohibited and signers are still required to physically appear before Notaries.

iClose

iClose is a web-based closing system offered by one settlement services provider. With this system, the borrower physically appears before a Notary to sign a limited power of attorney (LPOA) in paper form. The LPOA allows a representative of the title company or lender to sign the borrower’s mortgage documents. Typically, the borrower will then log onto the iClose system to review and approve the loan documents using an electronic signature. The title company or lender representative signs all paper documents in the closing package, including the Mortgage or Deed of Trust, and a title company or lender Notary notarizes the representative’s signature.

Michael Lewis is Managing Editor at the National Notary Association.

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