White Paper, The Future of Notarization is Online | Notary Experts Expose Flaws in Notary System, Advise Bringing Notaries Online


Notary Experts Expose Flaws in Notary System, Advise Bringing Notaries Online

>PRWEB.COM Newswire

(PRWEB) May 09, 2011

Top notary experts have released a joint paper entitled, “The Future of Notarization is Online.” The paper comes in the wake of the recent foreclosure document and robo-signing frauds, which revealed that the Notary Public system is fundamentally flawed. It discusses theoretical and practical solutions to problems like notary fraud.

“New technology such as video recording of an online notarization can ensure the security of a transaction and allow authorized third parties to confirm awareness, identity, and integrity of the process. The speed and convenience of remote notarization are additional benefits to the traveling, disabled, or people who cannot afford expensive mobile notaries,” said Chris Hawkins, author of the book A History of Signatures.

The paper addresses that while notarization is essential to modern society, pen-and-ink notarization does little to fundamentally ensure the identity of the signer, maintain the integrity of the signed documents, or allow for regular oversight of the millions of notaries in the United States. Notaries have been trusted for millennia, but were ineffective at preventing many of the largest frauds of 2010. In addition, the technology used to commit fraud has evolved faster than the tools to prevent fraud in the current notary system.

“Previous financial firms I worked for found that wet-ink notarizations failed miserably at preventing signature fraud,” said Andrew Ellis, creator of NotaryNow. “Businesses need a practical method to determine the legitimacy of a notarization and to ensure notaries are true third parties.”

The model proposed in the paper would allow for individuals to notarize documents by connecting via webcam to notaries, paired at random, and securely identified by multiple forms of identification. Notarizing a document online following this model would be more secure, easily authenticated, and environmentally responsible. The paper’s authors make a compelling claim that much of the foreclosure fraud could have been prevented if notarizations were conducted online in this manner.

“This paper provides one model of effectively reducing the opportunity for fraud in the notary community, and I hope it can serve as a useful guide to legislatures and businesses trying to dramatically improve their ability to authenticate documents and identify individuals,” said Richard Hansberger, Esq.

Chris Hawkins and Andrew Ellis are Co-Founders of SignNow, Inc.–the company behind NotaryNow.com. NotaryNow seeks to bring the millennia-old practice of using hardcopy signatures into the digital age through user-friendly, consumer-oriented Web applications. Designed to meet or exceed the security provided by long-standing handwritten practices, NotaryNow offers the most secure and easy to use online notary service. Learn more at NotaryNow.com. Chris Hawkins is the author of A History of Signatures: From Cave Paintings to Robo-Signings, the first comprehensive book on signature history.

Richard Hansberger is a nationally and internationally recognized leader in electronic notary and electronic signatures. He is the former Vice President of Electronic Notarization at the National Notary Association and, while there, developed electronic notarization solutions for Fortune 500 member companies, developed the nation’s first statewide electronic notary credentialing system for the State of Pennsylvania, successfully obtained SISAC accreditation for this system and advised dozens of state and local government entities and private companies on electronic notarization laws, regulations, policies and best practices. He can be found on LinkedIn.

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The Future of Notarization is Online

18 Responses to “White Paper, The Future of Notarization is Online | Notary Experts Expose Flaws in Notary System, Advise Bringing Notaries Online”
  1. Jersey Notary says:

    The Division of Revenue requested legal guidance concerning the practice of online notarization services utilizing a webcam or other video in lieu of a personal appearance in front of a valid New Jersey Notary. It has been determined that New Jersey’s statutes do not allow for this type of notarization.

  2. @ pparke500

    This type of service is a good idea. We are taking a look at doing it. You are right that independent notaries are not well equipped for this. A online notarization service with some scale and standardized processes could potentially tackle this role as a additional service (or another party).

    Chris – NotaryNow

  3. JamesM says:

    California has addressed this in a logical way :

    (a) They no longer allow “personally known to me” (been this way for several yeas now)
    (b) Every notary keeps a log book of every document notarized, every identification used AND a thumb print.
    (c) The log book is returned to the county when full or person quits being a notary.
    (d) The log books are public record and must be made available for examination.

    • Hell NO - No More Bail-Outs or FALSE Modification Programs (Ahem or A-hamp) says:

      @ JamesM

      I have a question for you then: If a document for a CA property and mortgage is signed and notarized in Texas, can they use the ‘personally known to me’ clause? The notary struck out the pre-printed phase and substituted that very “personally known to me” garbage.

      Do you know the rules that apply to out-of-state document execution? Is this a loophole in the CA rules?

      • incognito123 says:

        WHERE the document is notarized controls what notary laws must be adhered to. IE: If done in Florida (no log required) it is still valid, and can be recorded in CA. FL has requirements for wording to essentially say certain things, while CA has specific wording requirements, if FL had exact wording, then that would have to be followed not CA, even though filing would occur in CA

    • incognito123 says:

      CA has some of the best and strongest notary requirements, which I wish ALL states would follow their lead!!

    • JamesM – As the paper’s author I appreciate the feedback. A couple of points
      a-d: While California might have these every state is different. Some require no journal, thumbprint, and allow personal knowledge.
      (a) California still allows co-workers and friends to notarize, even if they look at an ID. This is inherently flawed and I saw a tremendous amount of notary fraud from notaries not claiming to use the “personally known to me” argument.
      (b) California only requires thumb prints for some documents.
      (c) This depends highly on competent notaries, and in practice there are many mistakes made in this.

      On a larger issue, how do you practically confirm a notarization is correct? With the existing model you cannot do it easily. You would have to request the log from the notary and fingerprint the person in question and check the two against each other to determine a match. I have never heard of anyone trying this on the front end (as in before fraud was suspected). Notaries could be used to secure more transactions if it was easier to do.

      California may be better than most states, but online notarization is still far better. Notary fraud is common in states like California too (I have personally uncovered more than a dozen of such instances in a pool of only hundreds of CA documents). No system is perfect, but there is a lot of room for improvement. Also, generally notarizing documents or getting someone to notarize documents is a logistical pain.

  4. MERS actually created a technology that would have made changing the notes impossible. They wanted to eliminate the paper notes altogether, which would have been reckless and illegal. But nothing stopped them from using the authentication engine to help prevent after-the-fact changes. Nothing that is except that they probably realized, after creating it, that maybe it wasn’t the type of technology their banking clients were especially interested in.

  5. Pamela says:

    Notary’s are also only licensed per state and in some instances per county banks think they can get around the rules once again and this is just one more way they are trying to scam all of us.

  6. l vent says:

    This really bypasses the bigger issue that robosigning and fraudclosures were trying to cover-up which was: The massive and pernicious mortgage fraud from the Origination Fraud and the fraud in the entire loan to the fraudclosure. The whole Foreclosuregate crisis is fraud to cover-up fraud.

    • Fury says:

      it starts w/ fraud in the origination.

      why aren’t the courts seeing this?

    • Hell NO - No More Bail-Outs or FALSE Modification Programs (Ahem or A-hamp) says:

      @ I vent

      You are SO RIGHT. Even with a ‘modern’ methodology, the system would need to also capture the document that supposedly is the basis for signing authority of any individual in a capacity other than simply representing themselves.

      This would mean that if MERS was being claimed, then a copy of documents such as the one where MERS appoints that specific person as having authority to sign for a given entity. Copies of any power of attorney would be necessary.

      It should no longer be sufficient for the signer to allege to have the power to sign for an entity, the basis for that claim should be provided to the notary just as individuals have to provide a piece of ID (or SHOULD have to). The people signing for a commercial entity would need to show a form of picture ID for themselves, showing they are the individual who is being named with signing powers. In some cases, a whole series of documents would be needed to validate the right to sign a document.

      This is what has been so lacking throughout the whole securitization mess.

      The notary would need to capture the full set of documents that form the basis for the signer’s authority to sign. No more of the “personally known to me chief lie-about-everything-sign-anything-for-a-buck-ex-burger-flipper, supposed MERS ’employee'”

      This could actually require that an independent firm evaluate contracts to determine who, if anyone, has the power to sign for any particular entity.That determination would need to be certified with the specific versions of all documents relied upon cited.

      This is far to complex an issue for a simple high-school graduate to determine or to ‘know from talking to the proposed signer’.

      In the case of a person signing as a nominee of a company, the verification firm would need to research to determine that the company does indeed exist exactly as named and is incorporated in the state that is claimed. The company would also have to be checked out vs bankruptcy filings. If the firm has filed and is still in bankruptcy, additional proof of the authority to sign would be required if the document involves any transfer of property or interests away from the bankrupt company. If the company went out of business via bankruptcy or any other form of dissolution, the status of any proposed nominee would be very doubtful.

      This could cause business BK cases to become more complicated.Forcing validation of the authority of signers could ultimately reveal additional resources to the BK court.

      • pparke500 says:

        Notaries cannot and are not trained to read legal documents and decide if they are sufficient to grant the signor authority to sign. The notary is simply there to ensure that the signor has identified himself as the person who signed it. Whether the document has legal effect is up to lawyers and judges, as it should be. As for the theoretical solution, how does moving notarization online using expensive equipment (older people have webcams?) remove the problem of whether the document is fraudulent or not? Answer: it doesn’t. MERS robosigners need only verifiy their identity. Whether they are empowered to sign is up to attorneys and judges. When both attorneys and judges refuse to see the obvious fraud, we find ourselves at the mercy of the Rocket Docket. Changing notary rituals will not fix the corruption of attorneys and judges.

      • l vent says:

        or the poiticians both democrat and repub who put all of us here by allowing no checks and balances or protections for the consumer. Wish we could have insured ourselves to protect ourselves from them. None of us would be here.. Maybe it could have been called PREDATORY LENDING PROTECTION INSURANCE.

      • Hell NO - No More Bail-Outs or FALSE Modification Programs (Ahem or A-hamp) says:

        @ pparke500

        I NEVER SAID the NOTARIES would be the ones to verify the capacity of the signers.

        I INTRODUCED the IDEA that a new ‘specialist’ would be required to do the examination of relevant documents to determine who has authority to sign for any business entity.

        Much like a title company researches the title, there needs to be an independent validation at the time of each document signing of the BASIS for the selected individual to have the authority to sign.

        This is the only way to end all the robo-signing that happens AFTER documents are notarized with the borrower.

        The notaries with DOCX did what they were paid to do. If the notaries had to see a document from an independent company that had researched the documents to find out who had authority to sign for each ‘lender’, the heaps of documents getting a ‘Linda Green’ signature would have been NON-EXISTENT.

        Even the ‘on-camera’ signing would not prevent the original Linda Green from signing where she had no authority to sign. That can only be prevented by instituting a requirement that an independent company determine who can sign (IF ANYONE).

        IF the company is DEAD, this independent company would certify that there was no ability to have anyone sign. This would then require a court to intervene.

      • incognito123 says:

        Ideally it would be nice to put that burden on the notary, however, most are not attorneys, nor do most have the training to determine if the paperwork to substantiate the signing is sufficient. In reality this will not work, BUT this type of documentation SHOULD BE required to be attached to the document so future people/judges/etc can verify the validity of the signor.

      • Hell NO - No More Bail-Outs or FALSE Modification Programs (Ahem or A-hamp) says:

        @ incognito123

        What I was stating was NOT for the NOTARY to have to make this determination. What I stated was that there should be a new ‘service’ parallel to the Title company that would do all the research to determine who was an authorized signer and capture the documents that proved that. Then that service would provide the NOTARY and the document preparers with the list of who could sign for various business entities involved in any agreement.

        It takes the burden off the Notary and just tells them who is allowed to be the signer. The other firm would have already have captured the documents to back the ‘certificate’ up. The notary would only have to make sure the documents used the correct person from the certificate in the proper role(s).

        The notary would no longer have to just take the word of the business that was paying the notary’s fee.

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