2. Digital Documents in the US E-Signature, E-Notarization, Remote Notarization
Presentation for Advanced Training of Digital Legal Documents at the University of Houston
November 14, 2018
Houston, TX
Ozie H. Stallworth

3. Its All About the eMortgage
eSignature
eNotarization
eRecording
eMortgage

4. Consider the legal infrastructure needed for eMortgages

5. Electronic Signatures
An electronic sound, symbol, or process, attached to or logically associated with a record (contract) and executed or adopted by a person with the intent to sign the record. Esignature Act and Uniform Electronic Transactions Act

6. Uniform Electronic Transactions Act
Uniform Law Commission Uniform Act
Adopted in 47 States
(3 states have not - New York, Washington, Illinois)
N.C. Department of the Secretary of State

7. Uniform Electronic Transactions Act
Legal recognition of eRecords, eSignatures, and electronic contracts.
A record or signature may not be denied legal effect
A contract may not be denied legal effect or enforceability
Satisfies the law requiring a record to be in writing
satisfies the law requiring a signature
N.C. Department of the Secretary of State

8. Common Electronic Signatures
Digitized Signature
Tiff Image
Click Through
Digital Certificate
N.C. Department of the Secretary of State

9. Common Electronic Signatures (continued)
Electronic “Check Box”
“I agree to accept” buttons
Holographic Signature / Signature Pad
N.C. Department of the Secretary of State

10. Use Cases for eSignatures
Retail
Business to Business
Government
Federal – tax returns
State – filings, applications
Banking – Online services
Mortgage – Loan origination
N.C. Department of the Secretary of State

12. Electronic Notarization
An official act by an electronic notary public that involves electronic documents.
N.C.G.S. §10B-101(3).

13. Organizations Defining eNotary
July
2016
December
2017
Summer 2018
January 2017
February 2018

14. Common Elements of All eNotarization
Electronic Document
Electronic Signature
Electronic Notary Signature and Seal
Electronic Notary Certificate
N.C. Department of the Secretary of State

15. Disparate Elements of eNotarization
Personal appearance
Positive identification
Jurisdiction
N.C. Department of the Secretary of State

16. Electronic Notarization VS Remote Notarization

17. In-Person eNotarization
Physical appearance before the eNotary
Traditional methods if identification
Bound by jurisdiction
Total Electronic process
Time honored and trusted process across all parties

18. Remote Notarization Knowledge based authentication
Video or Webcam appearance
Cross border jurisdiction
Paper documents notarized
Unconventional processes

19. “E” and “R” Regulation 30 Allow eNotarizationDC RI
21 Regulates “e” notarization only
1 Regulates “r” notarization only
9 Regulates both “e” and “r” notarization
30 Allow eNotarization

20. “E” and “R” Bills ( ) DC RI
This provides insight into the appitite for electronic and remote notarization in the United States.
In 2017/18 there were:
10 eOnly Bills introduced
11 Bills that included e & R
2 that introduced separate bills
10 “e” only bills
“r” only bill
11 Bills with both “e” and “r”
2 Separate “e” and “r” bills

21. Electronic Recording
It’s still recording, only the medium and delivery mechanism has changed.

22. N.C. Department of the Secretary of State
Uniform Real Property Electronic Recording Act (URPERA)
Recognized eDocuments as equivalent to an original
eSignatures satisfies any signature requirement for recordable documents
Recognized authenticity of an electronically notarized document
Authorized the Secretary of State to develop Rules through an appointed Council (Electronic Recording Council)
N.C. Department of the Secretary of State

23. eRecording Stats 1862 U.S. Counties eRecording
33 States enacted URPERA

24. electronic mortgage closings

25. Its All About the eMortgage
eSignature
eNotarization
eRecording
eMortgage

26. eMortgage Definition
An eMortgage is a mortgage loan where the critical loan documentation, specifically the promissory note (eNote), is created electronically, executed electronically, transferred electronically and ultimately stored electronically.
An “eClosing” produces an “eMortgage” only if the promissory note is signed electronically.
- Fannie Mae eClosings and eMortgages (eNotes) FAQ, 11/2015

27. Components of eClosing
eNote
Mismo 3.3 smart doc
eClosing Solution
System that allows closing docs to be signed, notarized and delivered electronically
eVault
Secured mechanism to store the eNote

28. Why North Carolina is the Leader
Legal Infrastructure
Counties are prepared
Statewide ecommerce initiative
eClosing Mortgage Closings in NC 101 White Paper
Benefits of eClosing (State, consumers, industry)
How to transition to eClosing (Lenders, Attorneys, Realtors)
Legal Framework
Future issues and Contingency Plans

29. Electronic Mortgage Closings
North State Bank paved the way in N.C.
Quicken Loan pilot in N.C.
Wells Fargo to purchase enotes
U.S. Treasury Department Report
Encouraged eNotarization & eMortgages
N.C. Electronic Mortgage Closing 101 – A White Paper
N.C. Department of the Secretary of State

30. Important “e” Terms
Hybrid eClosing: The closing process where all the lender documents are electronically eSigned and notary and recordable documents are papered out and “wet” ink signed.
eClosing: An industry term for the completely paperless process where all closing documents are electronically eSigned, eNotarized, eRegistered, eDelivered and eStored.
Streamline eClosing: Ability to click sign all non-notary documents in advance of closing and then eSign and eNotarize all the rest day of closing.
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.

31. What are industry factors driving change/adoption
CFPB Consumer Complaint DB – Consumer Good
Where the consumers are
Ensuring a legally compliant, replicable and verifiable process
eVault date & time stamp audit trail
CFPB Compliance Management System, (CMS)
Electronic Evidence - proof of compliance

32. How is it a better process?
Better validation & authentication of all parties in the transaction
Maintain complete end to end control of the mortgage process
Eliminates data and document integrity errors and omissions
More efficient, transparent and auditable process
Better consumer experience and education, (Empowered consumer)
Cannot produce a non-compliant document
No missing data, signatures, auto compliance check
Maintain electronic record/evidence for life of loan (eVault)
More efficient secondary market execution
No more trailing documents
Fund faster with fewer exceptions

33. What are barriers to adoption?
Still not a lot of investors buying eNotes (no take-out)
GinnieMae finally considering, (FHA/VA)
Federal Home Loan Bank not participating
Counties still need “e” education on legality/misconceptions regarding process
Cost to implement no longer an issue, (SaaS version)

34. eSignature, eNotarization, eClosing Video

35. eClosing Video with eNotarization
Video at:

36. Remote Notarization Demo
Video at:

37. Questions? For additional questions on eNotarization contact:
Ozie Stallworth
Director of Electronic Notarization and Notary Enforcement
N.C. Department of Secretary of State