Understanding the Difference Between RIN and RON
E-closings are likely here to stay, so make sure you understand how they can be used.
Typically, the closing process includes a variety of inperson tasks, culminating in the actual signing ceremony.
To help keep real estate transactions moving forward during the coronavirus pandemic, the closing and title world had to consider alternatives to traditional inperson closings. E-closing seemed like a reasonable option during a time of physical distancing.
States with remote online notary (RON) laws could rely on existing processes that governed how to complete closings online. For other states, there was a push to lobby state governors to allow remote notarizations and closings.
By the end of March 2020, some state governors had issued executive orders (pursuant to their authority to issue emergency orders) allowing for the expansion of the definition of the term “in the presence of” to also mean “electronic presence.” That allowed notarizations and closings to take place online and without actual person-to-person physical contact—and in the absence of existing RON state law.
A primary purpose of these state orders was to help the housing market continue to close transactions during the health emergency.
E-Closing Variations
Variations of the e-closing process include Paper Remote Online Notarization and In Person Electronic Notarization. Two other variations that are more prevalent are Remote Online Notary (RON), as mentioned previously, and Remote Ink Signed Notarization (RIN). It is important to understand how RON and RIN are similar and how they are different.
The overriding similarity is that both rely on a shared audio-video, real-time connection. Imagine the closing attorney in their office and the borrower at their home, office or anywhere else they can access the internet. With both RON and RIN, the borrower and attorney meet in an online session to review the loan and closing documents and then execute the documents to evidence the completion of the transaction.
There are a few significant differences too. First, RIN is temporary. The state authorizations are orders issued by the governors pursuant to their emergency orders. They last just for the duration of the emergency orders.
In contrast, RON is permanent. They are the laws of respective states. As of summer 2020, there were about 25 states with some type of RON statute, with Missouri the most recent to enact a RON statute effective Aug. 28, 2020.
Second, RIN results in what is commonly thought of as a “wet” signature. RON, though, is fully digital—the borrower signs by applying a digital signature or mark, as does the notary when applying their notary seal or certification.
Third, with RIN, the notary must manually verify the borrower’s ID. The rules governing how this is accomplished can vary across jurisdictions, but ultimately it is a manual review process. With RON, most software uses automated ID verification and/or knowledge-based questions to authenticate the signor.
Finally, RIN requires the customary pile of papers to print, organize into a package, send to the signor to sign, copy, ship to the lender and store in a file. Anyone with experience closing a real property transaction is familiar with all the paper. RON, however, is a fully digital process.
Software and Hardware Needed
Regardless of which e-closing process you use, you must obtain the specialized software and hardware necessary to complete it.
The software connects the signor and closing attorney or notary and acts as an interface. There are a variety of RON software providers.
A vital consideration when researching one to fit your needs is whether the company is approved by regulators and your underwriters. Another important point of analysis is whether and what changes or improvements they have made since onboarding other clients. Keep in mind that this is a very new industry, so you should expect changes and modifications.
RIN providers don’t require a similar onboarding process as RON companies. The RIN process can be as simple as downloading software and registering online. Still, a similar important factor when choosing a RIN provider is whether the provider is approved by your title insurance company. Title insurance companies have different requirements; for example, whether the online closing should be recorded, or where and for how long the audio and visual data should be stored.
It also is important to keep in mind that at a traditional closing all the consumer must do is show up. The paper, pens, coffee and everything else needed to complete the closing is supplied by the closing office. But for an e-closing, the signing party must have the necessary hardware. A desktop computer or laptop is required because most guidelines don’t allow smartphones or tablets. And the hardware must have a camera and microphone to allow for that shared audio/video connection. Keep in mind that not everyone knows whether their device has a camera or microphone or how to install drivers or otherwise enable the functions if there is a technological problem. It saves time to have a borrower test their device before the closing date.
Where E-Closings Go From Here
While a new process, e-closings seem here to stay. The number of states with RON statutes is rising each year, and real estate closing professionals in states that issued RIN orders in 2020 may have become accustomed to the e-closing process and push for full-blown RON statutes once the RIN orders expire.
As more and more closings are completed online, it is vital to maintain loan document integrity. A RON signing is completely digital, with prompts along the way. For example, the signor can’t skip to a signature field on page 3 until pages 1 and 2 are completed. All required pages and signature fields are required to be completed in order to finalize or complete the signing. RIN still results in the traditional, blue-ink signature, and even experienced real estate professionals know the process sometimes results in a missed or incomplete signature.
It also will be important to consider the roles realtors and loan officers will play in an e-closing. Typically, they rely on personal connections and customer service to support their clients. It is common at a closing for the purchaser to turn to their agent and ask a question about the property or whether the seller provided a requested item. However, with e-closings, whether RON or RIN, the transaction lends itself to including only the signor and closing attorney or notary. The overriding benefit to an e-closing is convenience. While purchasing a home requires a bit more preparation and ability than ordering dinner on one’s smartphone, there no denying the benefit of completing a purchase from the comforts of one’s home, office or where ever an internet connection can be found. As society continues its course toward digitalization, convenience and—for the near future—physical distancing, more and more real estate transactions will be completed using a form of e-closing.
