Proposed legislation on Beacon Hill would allow homebuyers and others to have notary publics remotely acknowledge their electronic signatures.

A pandemic-era measure that helped mortgage borrowers and other consumers in Massachusetts get documents notarized through a virtual process will soon expire. 

In its place, mortgage, banking and real estate trade groups want Massachusetts to join about 40 other states in making remote online notarization – known as RON – a permanent process.  

A bill moving through the state legislature would go beyond the temporary solution enacted and extended during the COVID-19 pandemic. Rather than a virtual process where what’s known as ink-signed, or “wet,” documents get notarized, the proposed legislation would allow homebuyers and others to have notary publics remotely acknowledge their electronic signatures. 

Various technology companies, including some based in Boston, have developed tools to support RON – tools which they say could benefit lenders and consumers while possibly reducing fraud. 

“One of the things we’re finding is that [fraud] concerns, at worse, are the exact same as they are today and, at best, are significantly reduced,” said Jeremy Potter, vice president at Boston-based Stavvy. “We feel like digital is a safer process because the audit trails are so much deeper and the audit trails are so much more robust about what happened and who was there.” 

 Industry Optimistic for Bill’s Passage 

The temporary solution enacted in Massachusetts in the early weeks of the pandemic expires on July 15. Known in the industry as remote ink-signed notarization, this method still requires the consumer to sign documents with a pen.  

Proposed legislation (H.4716) allowing electronic signatures to be notarized has been reported favorably out of the Joint Committee on the Judiciary and moved to the powerful House Committee on Ways and Means, the last stop for most bills before a vote by the full House. 

Bills to legalize RON in Massachusetts have been introduced in past legislative sessions, even before the pandemic. A group of industry stakeholders has been working on the language of the current bill for a few years, said Debbie Sousa, executive director of the Massachusetts Mortgage Bankers Association.  

With the formal legislative session ending on July 31, the group met last week with Ways and Means staff to discuss the bill. 

“[Fraud] concerns, at worse, are the exact same as they are today and, at best, are significantly reduced.” 

• Jeremy Potter, vice president, Stavvy 

Sousa said in an email she is not aware of any third parties that object to the language of the bill, adding that the group has communicated to legislative leaders the importance of adopting RON and not extending the temporary measure. 

“We also know the legislators understand that since the pandemic, being able to notarize important financial documents without having an in-person experience is critical,” Sousa said. 

She added that stakeholders are optimistic that the bill could pass in 2022, either on its own or as part of another bill. 

 Tech Appeals to Broad Swath 

Also supporting the bill are Stavvy and Notarize, Boston-based fintech firms that offer RON tools.  

Notarize was founded seven years ago and experienced increased demand for its product during the pandemic, said Ryan McPadden, Notarize’s senior vice president. In addition to companies involved with real estate transactions, Notarize has seen demand from online automobile dealers, like CarMax and Vroom, and banks and credit unions. The company also has a partnership to offer RON through FedEx. 

“We’re really seeing a movement toward taking this older, antiquated paper process and digitizing it, similarly to how you would think about e-signature,” McPadden said. “Now we see everyone doing online e-signature, so notarization is following the same footsteps as the evolution of that workflow.” 

Notarize’s investors include Wells Fargo and Citi, as well as the multi-bank alliance, Canapi Ventures. While some banks have been slow to understand and accept RON, McPadden said the acceptance has started to improve. He added that consumer demand for the online process has started to accelerate over the past year.  

“There is a recognition in the industry that they need to adopt RON to better service their customers and their business,” McPadden said. “Once the big players start, the regional banks and the credit unions and the smaller banks will follow pretty quickly.” 

Stavvy, also based in Boston, offers technology to help lenders with the mortgage process, including RON. The busy refinance and purchase mortgage markets of the previous two years increased demand for their products, said Potter, the company’s vice president. The company has also seen the mitigation processes involved with exiting forbearance lead to

Diane McLaughlin

a need for RON among mortgage servicers. 

In addition to allowing flexibility in scheduling sessions with notaries, RON gives consumers other benefits, including time to read through the documents, Potter said. He added that Stavvy plans to explore options for presenting documents in more consumer-friendly ways in the future. 

To prevent fraud, lenders, attorneys and technology providers go through processes that ensure the person receiving the notary has been identified and that everyone involved understands how that person accessed the session, Potter said. He added that the entire process is videotaped, including knowledge-based questions and other identification steps.  

“We think that the fraud mitigation and addressing anti-fraud technologies are only going to get more sophisticated from here,” Potter said. “We’re going to see increasing capabilities to even further eliminate fraud by knowing what IP address you’re logging in, and we’ll be able to do even more very soon.”