Category: Mobile Notaries News and Advice

Hybrid Closing and the Notary

The hybrid closing is something a few notaries are starting to be affected by.

As the move to online closings takes baby steps, the hybrid closing is a new trend to take a look at.

Are they the future of the industry, or just a stop gap on the way. With the slower than projected growth of remote online notarizations (we’ll have more on that soon), hybrids are starting to emerge.

What is a Hybrid Closing?

A hybrid closing is one in which part of the closing is done remotely, while another part is performed in person.

The banks are looking towards them as a way to split the work done in the closing.

So here is how it works.

A closing package is composed of several files that need to be notarized. They can all be done in person, but they don’t have to.

For example, in attorney states, under the temporary rules in place, some closings are now being done with some docs remotely, while other documents that require an attorney are done in person.

New York state is the leader in this right now, but it is still in its infancy.

Will This Only Affect Certain States?

Truthfully, right now we are not sure. We only know that a few of the large lending institutions are giving it a try. Only the future holds how much of this will potentially affect the industry.

We do know that lenders put more weight behind certain documents than others. The law in many states does as well. So, those documents are being split under the hybrid closing model.

Since the laws right now are so disconnected across the country, and many are only temporary because of COVID, it is tough to tell where this will spread to.

Does That Mean Two Notaries for One Closing?

For some closings, yes.

And we think that the messiness of these closings will be one factor that decides the future of the hybrid closing model.

Are two notaries for one closing a good idea? A good part of us says it is not. One set of documents. Two notaries. A lot of room for error there.

What if you have an experienced and professional notary for one part of the transaction, and a not so good notary on the other end. It could potentially create a bit of chaos in a lot of ways.

However, that does not mean it will not happen.

If the rewards outweigh the risks, large lenders will follow.

Can the Same Notary do Both Parts of the Hybrid Closing?

There is no reason not.

As many of you know, we now offer online notaries. Some of you are already signed up with us for those services.

We all have to change with the times. And while online notarizations only represent a tiny fraction of our business right now, the fact is that they probably won’t several years from now.

Look, we all have to embrace and adapt to change. The notary industry, and every other thing in our life, is constantly changing. You either change with the times or get left in the dust.

Might it be our preference to find an online notary close to the physical part of the signing? We think so, but to be honest, it is too early to tell. We are looking at a very new and emerging topic here.

What Does This Mean for My Business?

In the short term, probably not much. But, we like to look ahead, and you should, too.

It is best to be out in front of the market. To be ready if and when the next trend comes down the pipeline. To be ready to jump on new trends before our competitors.

This is the best reason why performing a hybrid closing needs to be on your radar.

Covid and the Notary Gig

The work landscape is changing due to Covid and many are looking at a notary gig.

As more people look at returning to the workplace, many have realized they don’t want to go back. They’ve found the flexibility of working from home (probably why they are wanted back in the workplace) and found they prefer it.

Why People are Looking at Side Gigs or Home Businesses

Why is the desire to run one’s own business increasing?

For most, it’s not about the power. Most are not entrepreneurs. Or maybe they’ve had an itch for a long time and think now is the time to actually get their feet wet.

They have found the flexibility of not being in the office, or maybe being in the office with challenges less onerous.

Are They Serious Competition?

For most, probably not.

If your main motivation for starting a home business is that you just found out it might make parts of life easier, you really have not thought it through.

People who think that taking care of their children, grocery shopping and running other errands is the reason to start a home business, are probably in for a rude awakening.

Are those perks for some of us? Yes, at least sometimes. But, is it our main motivation? Most likely not.

We’ve recognized the challenges, planned around them, and found a way to fit our schedule across our daily/nightly routine. We may not know when our next signing will be. But, we do know we need to be there, whether we planned to go shopping or not.

In short, if we want to be successful, we still take work when it is available.

Why a Notary Side Gig?

In the wake of Covid not only are many looking for a new hustle, they are trying to replicate a work from home experience into a new avenue of work, one of which is a notary gig.

And if the above linked articles don’t tell you enough, many news outlets are helping people ponder the idea and telling them what they can try to do.

But, there is a huge difference from driving an Uber a few hours a week, versus starting our own business as a notary public. Using an app, versus running a full fledged business.

A Look From Our Side

In our time doing business we have done business with great notaries who are both experienced and professional. We’ve also run into people who are not so much.

Guess who we choose to do our business with?

We want to work with highly motivated and highly professional notaries. We love experience, but we do also understand we all have to start somewhere.

But does the motivation behind it mean much?

Are they looking for a professional notary career and business? Or just for a notary gig they read was easy in a news article?

It’s More Than Signing Docs

Being a notary is about more than a stamp.

  • It is about legitimacy.
  • It is about integrity.
  • It is about making sure someone’s important life documents will stand up in court if they have to.
  • It’s about all of the little things that go along with the job, and understanding each one of them is just as important as a stamp.
  • It is about all of the tools you need to run your own business.

These things are not done out of convenience. They are done out of a commitment to excellence.

Some of us may already do this as a notary side gig. And we applaud those who have done it well.

But, the fact remains that most of the network of notaries we work with do not.

So, prepare, new blood is coming, even if it is not until late 2021 or 2022. But, if they don’t have your commitment and professionalism it won’t make much of a difference.

Massachusetts Supreme Court Affirms Market Rates

Don’t we all want market rates for our work? The Massachusetts Supreme Court has agreed.

Though this mainly affects static signings, almost every state has laws regulating the amount that may be charged for a notarization. Laws that when the average notary looks at the prices, it gives them the willies.

Notary pricing laws had a proper place and purpose. They ensured that everyone had access to notarize documents at a price that was reasonably affordable. The premise being that the need to the public outweighed the need to the notary.

So, the notary was allowed to charge a fair price and the signer knew they weren’t getting price gouged. A win-win as we like to call it.

A win-win at the time.

Market Rates Change with the Times

But, times move on. And the rates a notary could charge did not.

The notary was required to eat any new costs. The notary was held captive by inflation. None of these costs could be passed on to the consumer and work as a static notary went from a decent career to just a job, if one was lucky, which most are not.

Over time all the profit was gone and other businesses started to offer services as a loss leader. So, the corner store may offer notary services, or maybe a bank or other business. They weren’t making money. They were just getting people in the door.

Heck, we know all about that. Sunshine offers static notary services in our office in Port Richey, Florida. And while they are here, they get to find out all about our other wonderful notary services.

Market Rates in Massachusetts

A Massachusetts notary had enough.

Massachusetts law was codified in 1836! How much inflation do you think has happened since then? Under most documents, he was only allowed to charge $1.50. That’s the price of a candy bar today! (and not even the king size)

State law bars notaries for charging more than $1.25 per document, but that he and his wife were charged $10 a document, so he wants his money back

Universal Hub

Now, was the $1.25 for every document? Or even correct? The court said it was not. That this was a misunderstanding of the law. One that needs to be fixed.

The important part here is the court affirmed the right of the notary to charge market values.

Why Have a Lawyer When You Can Have a Historian?

The rest of the case revolved around changes in society since 1836. Arguments over language. It appears common English spoke in the United States has evolved since then.

Go figure, huh?

So, once the historians had their say and explained to everyone what the law may have meant when they wrote it in 1836, the notary prevailed, even if the court said it was a misinterpretation.

A very important misinterpretation that took historians to attempt to parse. Note to lawmakers. If it takes a historian to tell you what a law may or may not mean, maybe it is time to update or scratch that law altogether.

It depends on what your definition of “is” is.

But, why don’t we instead focus on the important takeaway.

The Massachusetts Supreme Court ruled/affirmed that notaries may charge fair market prices.

New Notary Technology

So, why is this important to today’s mobile and online notaries? It does not affect the daily operations of your business.

Or does it?

Since mobile and online notaries offer services beyond notarization, prices charged are already at market price. Some might say that technology has helped us move on from 1836.

But, there are a couple of positive takeaways.

Mobile and online notaries are less likely to be subject to future draconian laws themselves. What if you were told you could only charge $25 for a mobile signing for the next 200 years?

Can anyone say conniption fit?

The other side is that it could make you more competitive in the market.

A Possible Market Rate Example

Why don’t we look at the corner store? They may now charge $20 for a document they used to charge, let’s say, $8 for.

You cannot compete with $8. You probably don’t even want to try, which is why you looked for more lucrative areas of the notary business to begin with.

But, at $20, you may be able to compete. It may give you access to a market you could not touch before. You offer convenience that cannot be matched, especially when you can charge competitive pricing.

And being more competitive in the market is never a bad thing.

In Person Notaries Still in High Demand

In person notaries are still in high demand, as demand exceeds supply months into the pandemic.

It may be a surprising find as the pandemic seemed to indicate a light speed move to online signings. But, the opposite has happened.

As in person notaries have declined, both mobile and static, the demand for them has increased as the housing market has come back to life.

The Big Banks Control Online Signings

The banks are known to be conservative and slow moving. I mean, who still uses faxes?

But, at the beginning of the year it seemed the move towards remote online notarizations was gaining steam. Steam that would change the industry.

Steam that might just replace in person notaries with online ones.

And while it seemed the pandemic would only accelerate that, it has actually slowed the process down, leaving high demand for in person notaries.

Why?

As the market rebounds from COVID-19 closures, one symptom of this inertia has emerged: lenders are being flooded with a rising volume of mortgage applications, and notary availability is at an all-time low.

National Mortgage News

A Rapidly Changing Marketplace

Let’s start by looking at work from

First the banks had to switch to work from home. This wasn’t an easy process, as larger banks had hundreds of thousands of employees to move. It was not easy. They had to do things like:

  • Get supplies
  • Train employees
  • Expand IT operations and invest huge amounts in new equipment
  • Adapt their culture to the new situation
  • Find and perfect new technology use for meetings
  • Route phone lines all over the place
  • Ensure everyone had consistent internet access

Work from home was made to sound easy, but the effort involved was massive. Compounding that, with everyone working from home, as well as virtual schooling, many areas just did not have the internet backbone to handle it.

That seems to have leveled off now, but large ISPs took months investing in new infrastructure to meet the heightened demand.

A Change in Focus

These times have caused the banks to repeatedly have to change focus.

A great example are PPP loans.

With a housing slowdown, why not start making new government backed loans? It’s a no brainer.

But, there is always a downside.

Making the loans is one thing. Keeping up with every detail, not so easy. Of interest is the myriad of tax rules that have to be met. But, the loans had to be made quickly, so it created its own issues.

Mortgage professionals aren’t exactly IRS agents, so the training is intensive, and even then, in some cases, a mountain too high to climb in such a short time.

Collections Behind the Eight Ball

Along with the downturn obviously came a dent in revenue stream. From people who were unable to pay, people who were able to defer payments or interest, as well as a few who took advantage of the situation.

As the moratoriums expire the big banks have also started to shift to collections and foreclosures. There is no need to go into depth here, but the same pattern applies.

  • More shifting of personnel
  • More training, online (not ideal for many)
  • A changing focus of company divisions.

Why Does this Increase Demand for In Person Notaries?

Simply put, most of the large banks have their hands full. And that has increased demand for in person notaries at a time when supply has waned as many notaries have shunned signings.

Notaries are in high demand but short supply. Data from April 2020, notaries not accepting signings for 15 or more days increased 1,225% compared to April 2019.

National Mortgage News

Efforts to look at online signings have dissipated as that attention has had to be focused into other areas.

It was already hard to look at online closings with the mish-mash of rules, both permanent and temporary, the massive amount of training and implementation into current processes.

And now the market has been focused into other areas.

In the long term, online closings are still inevitable in many markets. But, for the foreseeable future, the demand for in person notaries looks to remain quite healthy.

Are Wet Signings Still Part of Our Future?

As the world quickly pivots to online notaries, how does this affect traditional Wet Signings?

Called wet signings by many banks, it means the notary and signer(s) sign must both be present, and must use a pen.

This has origins all the way back to the ancient middle east. They were literally wet signings. As they wrote on clay tablets, then they had to dry them.

We’ve had extensive talks about creating an article of states. But, there are too many rules that are moving too quickly, it would be difficult to disseminate the information accurately.

It would be advisable to find the new or temporary rules for your state.

So, why the article will focus on the present and future, you need to confirm any specifics where you perform signings.

Online Notarizations Rise

You’ve seen the media. We’ve seen the media. But, does the hype reflect reality?

Not quite yet.

While online notaries will be used more frequently in the future, that does not mean there won’t be a rocky road to get us there.

There are a ton of rules in recent months. Most of these are only temporary, but could set the stage for adoption of those rules.

The problem is that the hastily written rules are not congruent. Most require a lot of red tape, which needs to be made on a state by state by state basis.

The more you look into it, the more confusing it gets.

Wet Signings Still Rule the Mortgage Industry

While a very small portion of loans have been done remotely, in person wet signings are still required by most lenders and underwriters.

While you think that might make them go crazy, the fact is they face the same maze of regulations (especially temporary ones) that we do as notaries or signing companies.

It might be better to say they are dipping their toes in the water.

Realize the most prominent lenders in the country might have tens of thousands of employees working for them.

The fact is, at the end of the day, they have to pull all of those people off of the floor, train them for 50 different states (several are similar), some only temporary.

Monoliths take a long time to move.

We have a friend that works at one of the most prominent lenders in the nation. Between COVID, working from home, and the difficulty in enabling online closings, RON has fallen on the list of priorities for many lenders.

Some Signings Will Still Require They be Wet

At the end of the day, it is unlikely all signings will be remote.

We already know about attorney states and a number of other signings. But, it is possible, that this will drive many of the corner stores that offer notary services to stop.

Unless states raise the rates for these types of signings, it is unlikely they’ll be able to justify the cost to them.

The choice then will be an online notary, or a mobile one. Technology could be difficult for some signers. At the end of the day, if you like your computer, and don’t need a new one, what would you do?

And what about the people, who do exist, that do not have easy access to the internet?

Will States Get in The Way?

Who doesn’t love bureaucracy?

We’ve seen several states adopt very similar statutes. But, we still might see the wild west unfold.

Right now, states need money. Badly. And they will need it for years to come.

But, where are they going to get it?

It won’t erase any deficits, but any money will do right now for states. It is probably insignificant in the grand scheme of things, but it still is money for a state that is broke.

We are quite likely to see states adopt rules, some designed to keep the money in that state.

For example, let’s say a state called New Iowa, decides they want a bigger share of the pie. So New Iowa decided they will allow remote signings, as long as the notary is located in that state.

But now, New Vermont thinks they are being hoodwinked. They have notaries, too. And New Iowa is taking away work from them, and tax revenues, from the people of New Vermont.

See how easily this could happen?

Live in the Present, Plan for the Future

Right now everyone’s world is still out of whack. The biggest holiday on our calendar approaches. And millions of us will forgo cookouts and fireworks because of it.

But, there is light at the end of the tunnel. It may be a new world, but it will be our new world. The industry will change, but it is always changing. The sun will still rise in the east and set in the west.

We either embrace change and prepare, or we get left in the dust.