September 28, 2021

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Weekly Mortgage And Real Estate Q & A

When you buy a home, especially one mortgage, the signing of a mountain of documents is the well-known culmination of the process. It’s a critical step in making sure everything is done correctly, but now that pile of paper is increasingly available electronically. Pat Kinsel, founder and CEO of Notarize, an app that makes electronic notarization easier, spoke to Bankrate about why going to the notary is still so important and how the process is changing. The conversation has been edited for length and clarity.

What is a notarization and why is it so important for a successful degree?

It’s the main event. It is what it all boils down to and it is also the main obstacle to a digital experience. In a real estate transaction, when everything has to come together, the closing is all documents, all money, all people. These can only occur when people notarise and sign documents relating to the transfer of property and the assignment of debt.

The documents must be notarized to prevent fraud. Certifications are important in the event of fraud as you have to identify yourself. You create a signed protocol and that creates confidence in the transfer of ownership.

This is the obstacle to a digital closing process, as notarizations on paper were required in the past. That’s what you need to get together, go to a title office, and mail out original copies of documents. People need actual possession of the original copies of documents. That’s FedExed in the paper world. But electronic copies can be the same authoritative, virgin documents and they can be sent to people instantly.

How has the pandemic affected the certification of documents? Are there more virtual options now?

In 2012, the CFPB conducted a study on why electronic mortgage and property closings were unsuccessful. Everyone has always wanted that. They said there were two main reasons. One of them was the lack of access to digital authentication. There were no electronic notaries, and even if there were, they weren’t online. They had to go in person and sign on a tablet.

The second thing was the lack of traces of paper.

Before COVID, we spent tons of time and money creating legal clarity. Prior to COVID, 23 or 24 states had laws in place to accept electronic authentication. COVID helped clarify the legal issues. Before COVD, Fannie Mae allowed people to do online deals with us, but they had to get prior approval to do so.

Now that more people have tried it, they like it. Imagine that you are a consumer and you are trying to buy your home. Do you want to drive to an office or do you want to do it online? It’s a faster and more efficient business process. We have now seen how companies have really invested in integrations.

How does Notarize fit into the changing landscape?

The company was founded in February 2016. I went and met with the then Virginia Secretary of State. They were the only state that had passed a law that allowed online authentication.

We are credited with having passed the majority of the passed state laws. We chaired the standardization committees in our industry. This is reflected in the fact that in 2017 we were the first company in the country to ever conduct an online real estate deal.

There are all of these business processes that are stuck on paper because of certification. We are acting as advocates and for the first time we can move a number of things online.

What are people hesitating about?

We serve consumers in all 50 states. The question is, where can notaries do this from? In the beginning there was the pushback, is it safe and effective, and then was it possible to do it across national borders? At this point, when we pass bills in the states, they are passed practically unanimously. It’s the intersection of other topics, it’s about data protection and the like.

It’s not a national solution; you still need to follow state and county rules. Early opposition was your classic brick against the internet. Many mortgage and title companies have physical offices. Now it’s more these other issues.

What else should people know?

I hate in my comment sometimes that it is being implicated as a COVID solution. It’s the digital transformation, a change in business processes. What really excites me these days is that companies and industries are increasingly experimenting and changing the way they work and the way they service their customers.

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