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UPDATE: ILLINOIS REMOTE ONLINE NOTARIZATION? NOT SO FAST!

UPDATE: ILLINOIS REMOTE ONLINE NOTARIZATION? NOT SO FAST!
by Michael H. Wasserman

A follow up on last Friday’s posting. This is going to be a bit of a bummer.

Just because RON is legal does not mean that we will be able to use it. For all the State’s efforts to minimize public health risks associated in-person document signings, title companies and mortgage lenders just are not yet willing or able to accept Illinois RON signings. For the time being, we will still need buyers to sign loan documents in the actual physical presence of notaries.

Governor Pritzker has issued a series of emergency orders in connection with the current COVID-19 health crisis. Last Thursday afternoon, he authorized the use of remote online notarization (RON) to help citizens get vital legal documents witnessed during the pandemic emergency. This action is critical to home buyers and sellers and to others constrained by health considerations and the general stay-at-home order. We all recognize the importance of personal distancing to minimize and hopefully avoid risks of infection and transmission. We want, to eliminate all un-necessary contact with others to limited contagion and to preserve health. RON can help us get necessary closing documents signed without direct contact. The benefit of RON signings cannot be over-stated.

I have been in touch with several mortgage loan officers and title company legal counsel since Thursday’s announcement to better understand the process and the likely impact RON will have on our client closings in the coming weeks and months. The bottom-line message is clear. The State acted swiftly and decisively to help keep real estate contracts closing, safely. Lenders and title companies are not ready to abide.  

Some background context is in order. First, the national trend favors increased RON usage. RON acceptance in Illinois was inevitable even before the COVID-19 crisis. 22 states have already codified its use. Passage of SB3698 will add Illinois to that list. That bill is currently pending in the Illinois Senate Judiciary Committee. Illinois joined six other states who will allow RON on a temporary or emergency basis. Emergency legislation is pending at the federal level too.

So, what’s the problem? The emergency order establishes a quick and easy path to implement RON but the title insurance companies are demanding stronger safeguards in the RON process. The permanent Illinois legislation will almost certainly address those desired safeguards and we are talking here about an emergency, interim solution. Sorry. Not good enough.
  • The emergency order rightly requires that notaries confirm the identity of anyone signing documents remotely. Opponents want more: mandatory multi-factor identification procedures.
  • The emergency order requires that RON signings take place using online tele-conferencing with video and audio recordings. Zoom, FaceTime, Skype GoToMeeting and other platforms can easily facilitate these requirements. Opponents assert that none sufficiently protect them from fraudsters and seek better encrypted/secured environments. 
  • Finally, the emergency order requires that a notary retain those recordings for at least three years. Opponents warn that such recordings must be stored in secure/encrypted environments too in order to guard against video tampering or editing.

Each mortgage lender seems to be developing its’ own procedures for RON signings too. 
FannieMae has issued guidance to allow some RON signings from some approved vendors such as DocVerify, Nexsys, Notarize, NotaryCam, and Pavaso. . PennyMac is not allowing any. Wells Fargo is reportedly a no-go. To the extent that lenders and title companies allow RON signings, they will only be allowed thru specific approved RON platforms.This too creates problems for swift implementation. 
  • Not all lenders are agreeing on the same vendors The Venn diagram between title companies, lenders and vendors will be pretty convoluted. Buyers and sellers may get pressured into working with one title company or another in order to accommodate the RON vendor required by any given lender.
  • Title companies have few or no relationships with the several approved RON vendors. No one expected the COVID-19 crisis so title companies are racing to “catch-up” and establish relations with those approved vendors, in hopes that they will be able to scale up quickly to meet the new demand for their services.
  • Those approved RON vendors themselves are staffed to accommodate the states where RON is fully approved and are all racing to scale up to meet the new demand.
  • The Illinois emergency order requires the notary and the customer must both be physically present in the State of Illinois at the time the remote notarization is performed. However, to the best of my knowledge, none of the major platforms employ Illinois based notaries. Why would they? Until last Thursday afternoon, RON was not recognized here. This seems to align with Fannie guidelines.Title company representatives I spoke to last week hope to work around this limitation relying on language in the Illinois Conveyances Act that recognized of out of state notarizations. 

Finally, nobody has heard from the Cook County Recorder of Deeds or as near as I can see, from any other county recorder’s office. The emergency order mandates that they accept RON-signed documents. Will they? Time will tell.

This is an emergency situation for the rest of us. These financial institutions are not prepared to relax standards in the face of the emergency. In the meantime, we will all continue to take otherwise unnecessary risk and we will wait.
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