County Recorders Association of California Presentation
Tuesday, October 16, 2018
The Annual Conference of the County Recorders Association of California (CRAC) featured two title industry speakers on the title and settlement perspective on digital and digitized recording and eNotarization.
Paul Flores, Fidelity National Title Group and Mickey Vandenberg, Williston Financial Group, spoke at the CRAC conference on the changes in industry since 2015 with the coming of TRID, an increase in technology, technology platforms and other legislation are bringing new challenges and unfamiliar territory to all stakeholders in the title and settlement process.
Paul Flores started the presentation outlining AB 2143, which was signed into law in 2016 and authorizes the recording of digital and digitized documents. Paul explained that AB 2143 authorizes the county recorder to enter into a contract with an authorized submitter. In order to do that the authorized submitter and any agent are required to provide proof of financial responsibility in the form of general liability coverage.
The Department of Justice has reported that the current draft of regulations are subject to another round of internal reviews by the CA Dept. of Justice (DOJ). Once any changes are made and the DOJ IT Analysis has signed off, then the ERDS Advisory Committee will be notified that the regulations are ready to be submitted to the Office of Administrative Law (OAL) for publication and public comment period.
Paul also mentioned that the DOJ website does not have any mention of AB 2143, any summary of AB 2143, nor the proposed regulations that are currently in the pipeline.
Mickey Vandenberg addressed the escrow perspective and explained that there are currently four different closing types that escrow officers have to deal with, with the resulting challenges to the settlement industry. She pointed out that technology changes are layered on top of the current process, instead of replacing the traditional closing process.
The four closing types that are currently processed are:
- Traditional Wet Signing
- 100% documents with wet signature
- In-office, mobile notary or mail away
- Hybrid eClosing
- In-person or Partial In-person
- Some paper documents with wet signatures
- Some digital documents with eSignatures
- In-office or mobile notary, some eNotary
- eClosing In Person Digital
- 100% digital documents with eSignatures
- In-office or mobile eNotary
- eClosing Remote Online Notary (RON)
- Not in person
- 100% digital documents with eSignatures
- Remote Online Notary Public or eNotary appears before signer via real-time audio-visual communication
In the state of California, the RON eClosing is not conducted and it was pointed out that the California Secretary of State even created a page on their website to specifically prohibit the use of remote online notarization by a California Notary Public. Bill Anderson from the National Notary Association provided a presentation after Paul and Mickey that went more in depth on the state of remote online notarization in the different states, and also provided information and an update on the California bill AB 2368 regarding Remote Online Notarization.
Mickey further explained the importance of terminology, and the challenges with the terms used that can mean different things for different entities involved in the transaction. As an example, the terminology for digital and digitized was defined. On the settlement side, digital describes electronic technology that generates, stores and processes data and/or the use of technology to communicate or store information. Digitized on the other hand means to transcribe or convert an image or data to digital form.
This is contrary to Government Code 27390, which describes a digital electronic record as a record containing information that is created, generated, sent communicated, received, or stored by electronic means, but not created in original paper form. In addition, a digitized electronic is a scanned image the original paper document.
It was agreed by the panelists that technology is creating a new way to conduct business, which has its pros and cons, and which the industry will learn about as we move forward. Though technology will provide conveniences, it will also bring intended and unintended consequences that will cause new challenges. The solution, the panelists posed, is for the industry to collaborate and communicate more to gain a better of understanding of the different roles and their impact on the process.
Also discussed were e-signature versus digital signature and some of the challenges with digital recording for the California Recorders Offices, which include:
- The consumer’s right to “paper out”;
- How the “paper out” option impacts the recording process;
- How to differentiate the face to face e-notarization versus remote online notarization when some states don’t require the identification of a remote online notarization on the notarial acknowledgement; and
- What a County Recorder should do when an out of state remote online notarized document is received for recordation.
Paul continued with information regarding the 2018 Treasury Report that was recently released, and pointed out the following specifics:
- States that have not authorized electronic and remote online notarization should pursue legislation to explicitly permit the application of this technology and the interstate recognition of remotely notarized documents. The Treasury recommends that states align laws and regulations to further standardize notarization practices.
- Congress should consider legislation to provide a minimum uniform national standard for electronic and remote online notarizations. The Treasury believes such legislation would facilitate, but not require, this component of a fully digital mortgage process and provide more legal certainty across the country. Federal legislation is not mutually exclusive with continued efforts at the state level to enact a framework governing the use of electronic methods for financial documents requiring notarization, according to the Treasury.
- Recording jurisdictions that don't recognize and accept electronic records should implement the necessary technology updates to process and record these documents and pursue digitization of existing property records.
The presentation concluded with a quick overview of Blockchain, and to bring the awareness to the County Recorders of the importance of being aware of what the national and global trends are, and the impact of fin tech and reg tech on the industry. The audience was engaged and provided for lively discussion.