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Survey: Lack Of eNotarization Standards Hinders Electronic Mortgages

survey lack of enotarization hinders emortgages

Lack of eNotarization technology, training and standards in the mortgage industry has been a significant obstacle to widespread adoption of electronic mortgages, according to a recent eMortgage industry survey by mortgage giants Fannie Mae and Freddie Mac.

With eMortgages, loan documents are created and executed electronically rather than printed and signed on paper. The survey report notes that eMortgages benefit borrowers with a faster mortgage process and lenders with faster loan funding and reduced costs. However, there are still many obstacles holding back increased use — including concerns about electronically notarizing eMortgages.

The survey reached out to 130 key industry stakeholders — including lenders, technology solution providers, and title/settlement providers — to ask what they thought were the most problematic obstacles facing electronic mortgages.

Respondents listed lack of acceptance of eNotarization by states, lack of available electronic signature technology from vendors and legal concerns about the validity of eSignatures among the issues holding back adoption of eMortgage systems. With electronic notarization, the Notary signs and affixes their seal digitally to documents in electronic form.

“The electronic Notary space is becoming the wild, wild west,” one survey respondent commented. “[There are] many variations, lack of centralized direction, lack of education, lack of understanding and acceptance.”

Fannie Mae and Freddie Mac both are supporting the growth in eMortgages. As part of that initiative, both companies recently endorsed the use of webcam notarization technology — in which the signer and Notary communicate using audio-visual technology instead of meeting face-to-face — for use in mortgage closings. Concerns about webcam notarizations have been raised by Notaries and some state officials, who fear removing personal appearance from the notarization process may leave consumers more vulnerable to fraud.  However, supporters of the technology argue that webcam notarizations are a necessary evolution of the Notary’s role in the growing world of online commerce.

David Thun is an Associate Editor at the National Notary Association.


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