RON vs. RIN: What's the Difference?
This article originally appeared in the August 2020 edition of Mortgage Banker Magazine, which can be found here.
On-demand services have grown increasingly important as we continue to battle the novel coronavirus (COVID-19), especially in the mortgage industry.
Contactless closings and remote online notarization (RON) solutions became necessities overnight – and the numbers show the mortgage industry buying into the benefits of a fully digital home-buying experience. From January to June, the number of electronic promissory notes registered to the MERS® eRegistry has grown 141%.
But the pandemic has also introduced us to remote ink-signed notarizations (RIN), a new way to close online using audio-video technologies like Zoom, Skype, and GoToMeeting. Governors across the country have issued Executive Orders authorizing RIN in an effort to promote access to notaries and “flatten the curve” in communities.
Although well intended, RIN strips away the fundamental guardrails that make online notarizations safer and more secure than traditional paper notarizations.
Here’s what you need to know about using RON, RIN, and how to decide the best course of action for your business and customers.
Convenience Without Compromising Security
Remote online notarization is a fully digital experience that mirrors the traditional notarial act. A signer appears before a notary on a video call, and together, they complete, sign, and notarize the document. Each video session is recorded and retained along with an audit trail of the transaction.
Signers only connect with a notary after completing several additional security measures, including personal identity challenge questions and credential analysis of their government-issued ID. These features help strengthen the notarial act.
In contrast, RIN lacks almost all the benefits of a notarization — whether it be online or in person. The notary serves more like a witness than an agent of trust.
In a RIN transaction, signers connect with a notary through any convenient audio-video platform – Skype, Zoom, Google Hangouts – to sign and notarize paper documents from a separate location. These platforms have been having some trouble of their own that should raise some real alarm for you and your business.
And although notaries are asked to record and retain the notary session, that’s really all they’re responsible for. The signer’s ID is held up to the webcam, but never closely scrutinized or validated; there is no audit trail; and neither the notary nor the signer ever interact with the same document at the same time.
Maintain Control of Your Original Documents
That last point is a critical one. Signers in a RIN transaction are asked to physically mail their signed documents to have them notarized, which occurs at a later date and outside of their signing session with the notary.
Since the documents are wet-signed and then delivered by mail, there’s no way to prove the documents that the notary receives are the documents they watched the signer complete. And if the signer tries to save time by faxing or emailing their signed paper documents to the notary, the document that is notarized isn’t actually the original – it’s a copy of the original.
How can you turn the keys over to the buyer if you can’t trust the integrity of the closing process?
You may wonder how this is any different than “papering out” in states where it’s allowed. When you paper-out, the original documents are electronically signed and sealed. When the document is copied into paper form – breaking the audit trail and tamper seal – a notary is present and certifies that the copied document once had these features.
This chain of custody is entirely absent from RIN transactions, which instead weakens the notarial act for the sake of convenience.
In RON transactions, original documents are stored, signed, notarized, and delivered digitally. For example, upon completion, eNotes are immediately registered in the MERS® eRegistry and returned to a lender’s eVault for storage.
There’s no concern about the integrity or the originality of documents because RON retains all the important elements of an in-person notarization – it’s just online.
Achieve and Maintain Operational Excellence
New technology needs to benefit your business first and foremost. All other benefits – enhanced security, elevated customer experience, and reduced environmental impact – come through increased operational excellence.
Operational excellence is the most immediate benefit of RON because it’s a process that impacts every aspect of your business. It’s a single service that can maximize human capital, streamline mundane tasks, provide a class-leading customer experience, and save you money – all without overhauling your existing workflow.
Saving money is especially important. One survey found 98% of companies reported some revenue impact due to poor transaction management, with 57% of companies estimating their losses to be between 6% and 25% of their total revenue.
With the right vendor, RON can be the chameleon within your day-to-day operations.
During RIN closings, recorded documents require two distinct, separate acts by the notary. First, the notary witnesses the document signing via the audio-video call. Days later, the notary receives the original documents by mail and completes the paper ink notarization.
This makes RIN more costly and time-consuming than even mail-away or hybrid closings because you need to ship the original documents to two destinations: the signers and the notary.
This also allows for the same errors and delays that hinder paper closings today.
Invest in the Long-Term Solution
Almost every Executive Order that allows for RIN has the same stipulation: When the pandemic is over and people can safely resume their daily lives, the expectation is that notarizations in these states will return to the in-person model.
This means RIN is a temporary solution that could have a damaging effect on the integrity of the remote notarial act. For hundreds of years, notarizations have held their value regardless of time or location. How can that be the case if they are achieved by temporary means?
We believe that you are better positioned to serve your communities with RON as a permanent solution. More than half of all states have passed laws allowing their notaries to tap into the online notarization marketplace. Most states now allow signers to close online using a remote notary, while hybrid closings can occur in all 50 states.
That being said, investing in RON doesn’t mean you have to exclusively offer digital closings. There’s value in operational flexibility. There’s value in providing a seamless customer experience. There’s value in becoming familiar with new technology and having it available to you if and when you need it.
That way, when the market changes – or a pandemic pushes your business completely online – you’ll be ready.