2011 – The Year of Electronic Escrows and Closings
After more than a decade of the passage of the e-Sign Act we’re pleased to announce that the Escrow/Settlement Industry is poised to adopt electronic signature technology into their paper intensive processes. In our recent Escrow Survey an overwhelming majority of respondents (67%) stated that they would be adding e-Signatures to their escrow workflow, contracts and agreements within the next 12 months.
Seems like the rapid acceptance and adoption of electronic signatures by real estate agents, buyers and sellers may be the primary cause for this recent change of priorities. Escrow officers and settlement/closing agents generally carry out the instructions from the principal parties and are not particularly known to be ‘early adopters’. Buyers/Sellers/Borrowers, who are becoming more comfortable with e-Signing upfront purchase and counter offers, instructions and agreements, will now be able to complete their transaction over the Internet (anytime, anyplace-even at the airport on their mobile phone) removing most, if not all, the friction associated with current paper-based processes. No paper, no faxing, no scanning, no expensive overnight FedEx or UPS shipping charges and most importantly, no more chasing down missing documents, pages or signatures!
Removing the stress for all parties, especially the overworked escrow officers and closing agents, will be very much appreciated!
No where do I see you addressing the greatest concern of the escrow professionals I know and associatiate with, as an active member of the California Esrow Association and the Escrow Associates of San Gabriel Valley. That concern is fraud and being able to know who signed my documents. If all signatures are “electronic”, what is there to compare to? Believe me, I’ve caught several important forgeries by comparing signatures in my file to the contract or documents actually notarized. I believe the escrow professional has a certain amount responsibility to do so.
My concern is not being afraid of “new technology” or not embracing the new. It is a valid concern, and I would like to see you address it! Consequently, every attorney I have spoken with that have represented the escrow industry have their own reservations for the very same reasons, so I am not alone in this viewpoint!
Thanks Theresa for your post. For the past decade we have collaborated with Industry pioneers and experts, including Secretaries of State, County Recorders, Fannie Mae, MERS e-Registry, FHA, MBA, PRIA, and Title companies. Fraud protection was and still remains the highest priority. Collectively, the Industry does not want to see even one incident of fraud around an electronic transaction.
In general, issues around signatures whether ‘wet’ or electronic are pretty much the same. How do you know the person signing is really that person? What do you do to authenticate the identity? What happens if a signer repudiates their signature? How do you prove that they are who they say they are? What percentage of your transactions take you to court because of signature repudiation? What policies have been implemented to prevent these from happening again? Just to cite a customary and ‘compliant’ practice that is readily accepted today – a submitter sends documents via FedEx/UPS to someone across the country, recipient signs the paper-based documents and returns to submitter- how do you know who opened and signed the documents?
Depending on the specific requirements of each customer, Settleware offers the ability to select multiple levels of authentication, which are then used by the signer to verify his or her identity. Settleware provides multiple mechanisms such as: 1) E-mail based authentication which validates the email and IP address of the signer. 2) Group password or shared secret which can be distributed to users off-line. 3) Telephone verification which validates the users telephone number. 4). Knowledge-based authentication which validates the user’s identity through a series of out of wallet questions.
Simply put that if you wish to secure the identity before a person signs you might ask for a personal third party ID authentication before granting access for signature. Person/Recipient would be asked a number of ‘out of wallet’ questions and based on correct answers that party would then be able to open, view and sign documents. Another escrow policy could be established that before an officer sends a document to a buyer/seller/borrower that officer may contact that party by telephone and tell them you will be sending over a contract for signature and your password is ‘apple’. Now the party and officer are the only ones that would know that password and when recipient opens your email he/she would then need to enter the correct password before having access to the document(s).
We understand comparing signatures may have helped in the past but in today’s environment more sophisticated and compliant practices are available and may be warranted. There are many attorneys that you may consult with specialized e-Commerce and electronic signature expertise.
Thanks