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Posts Tagged ‘e-Signatures’

Compliant Electronic Real Estate Transactions – It’s All About Collaboration

December 3rd, 2011 No comments

If you bought or sold a home within the past year you certainly understand the challenges around the implementation, processing and closing this high-valued transaction. You also might have concluded that in this day and age ‘there must be a better way’? You may not have realized that there was and is  a ‘better way’ - which would have eliminated most, if not all, the stress and friction you just experienced with this paper-intensive process.

Less than 5% of the today’s real estate agents (most responsible for getting the deal started) have taken their business to the next level and have incorporated electronic signatures into their workflow, contracts and agreements. An E-signature is the ‘glue’ that connects all parties and documents over the Internet-100% paperless with secure real-time execution. There is no longer the need to drive all around town to chase down signatures or to find a fax machine (95% of consumers have Internet access and only 5% have fax machines at home) or to pay for expensive overnight deliveries. As a long time real estate veteran I can recall those calls late on a Wed aftrenoon that all parties must meet at 10:30am Friday in some office typically 20 miles away from no where in order to close the deal (on the East Coast still deploys face-to-face sit down closings-which in reality become a long winded 11th hour art of negotiation session). Buyers, Sellers, their agents and all the ‘suits’ –personal attorneys plus the banks attorneys and title attorneys had to re-arrange all their schedules – crazy. Talk about stress – last minute day off at work for principals, running around finding  last minute baby sitters, running to banks to get cashier’s checks, etc..

Imagine if all you had to do was open your email, type in your name on contracts, click consent and submit? I think we would all agree that this would definitely be the ‘better way’. Although the E-Sign Act was signed into law by President Clinton back in June, 2000 it has taken many years of collaboration and ‘buy-in’ for all the Industry participants to get on board with a complete electronic and paperless transaction: Agents, Title, Escrow/Settlement/Closing agents, County Recorders/Registrars, Lenders, Attorney Generals, District Attorneys, Secondary Investors, MERS e-Registry, Desktop Title Lien Search and Secretaries of State. The sense of those of us that were  trying to solve ‘the pain’ in this high-liability transaction is that we needed to sit down with all these folks and get them to agree to accept these legally binding documents. As you can imagine, this was not an easy chore and has taken twice as much time than we expected.

As the Industry continues to ramp adoption it is important to understand most vendors were started by ‘technologists’ in search of an opportunity while others, solving the pain, compliance issues, garnering Industry wide certification, brought to the table extensive domain expertise, know-how and collaboration skills to have all parties to raise their hand  - “I’m In”. Welcome to the future – the all digital real estate transaction.

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MBA Sends Letter To HUD To Accept e-Signatures

June 2nd, 2011 No comments
One Step Closer to a Complete e-Mortgage?We’re excited that with yesterday’s MBA’s announcemt that we have come a bit closer to a complete electronic and paperless real estate/ mortgage transaction. The MBA has sent a letter to HUD to permit e-Signatures on FHA Loan Origination Docs. This month we will be celebrating the 11th Anniversary of the e-Sign Act passed by President Clinton (June 2000) and look forward to having HUD join other Industry participants that currently have adopted and accept e-Signature technology, including real estate agents, title, escrow, closing agents, County Recorders and Secretaries of State. Read below article:
MBA News Link’s Sorohan, Mike ( June 2, 2011)
The Mortgage Bankers Association sent a letter yesterday to HUD, asking the agency to permit use of electronic signatures for all mortgage origination forms required by FHA.The letter said eSignatures, acceptable under federal law and by FHA on certain documents, will help reduce processing issues that impair the homebuying process. MBA asked that FHA implement a revised policy accepting the use of eSignatures on all of its loan documents.

“eSignatures will reduce the volume of lost paperwork, reduce signature fraud, reduce the time required to close a loan and may lead to lower borrower costs,” the letter said.

MBA has long advocated modernization of FHA as part of its policy agenda. The letter noted the past 15 years has seen a trend toward automation of the loan application and underwriting process. Most lenders now have automated processes that allow applicants to apply online and to supply information to the lender electronically. Additionally, much of the processing is performed by lenders using online processing and underwriting tools. Ordering appraisals, credit reports and verification of deposit balances is frequently performed by automated, online processes.

“This automation makes it easier for the consumer to provide needed data to the lender, reduces the application to closing timetable, minimizes the potential for lost documents and generally reduces the costs incurred by all parties,” the letter said. “Lenders have experienced increased productivity and a reduction in costs after implementing internal automated processes.”

MBA said eSignatures would reduce costs for activities such as printing and mail couriers for both borrowers and lenders. “These benefits eliminate many of the annoyances of a paper-based process, including lost or inconsistent documents,” the letter said. “In addition, consumers would have greater flexibility and convenience within the home buying process because they would not have to change documents and related signing processes if they changed from a conventional loan to an FHA loan. All of [these] benefits ultimately result in lower costs for the consumer, as lenders pass on savings to remain competitive. Additionally, borrowers experience a more seamless and satisfying homebuying process.”

MBA said FHA’s acceptance of eSignatures would align the agency with other government entities, including Fannie Mae and Freddie Mac, which have been accepting electronic signatures on loan documents for several years.

“Conforming to accepted industry standards on all documents would expedite the mortgage process, reduce lender costs because processes could be replicated and fulfill consumers’ growing preference for conducting electronic transactions,” the letter said. “Notably, the Real Estate Settlement Procedures Act and the Truth in Lending Act rules recognize the use of electronic records to meet disclosure requirements.”

The letter also noted most mortgage lenders that have automated the loan application process make use of electronic signatures for other forms and consumer/lender interaction, citing control mechanisms used conform to the Electronic Signatures in Global and National Commerce Act passed by Congress and signed into law in October 2000.

“Accordingly, controls utilized to protect consumer and confidential data include encryption, tamper evident seals of e-signed documents, two-factor identity verification and other controls required under the ESIGN Act and industry custom,” the letter said. “MBA’s members are currently using such controls, and would continue their use in any FHA eSignature process.”

To address concerns raised by FHA about mortgage fraud, MBA said it believed processes built in the “e” world could mitigate many issues currently in today’s paper process.

“Many electronic mortgage systems incorporate additional borrower authentication capabilities that well exceed the standard of the traditional notary asking to see a driver’s license for validation,” the letter said. “For example, some systems prompt the borrower to respond to authentication challenge questions to establish true identity. In addition, tape recording, on line session recording, and audit trails further safeguard the e-signature process in the event of litigation. These safeguards are not only beneficial to the lender and FHA, but also provide convenience and protection to the homebuyer. Many commercial businesses have long adopted these security standards so consumer awareness and education would be minimal.”
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Arkansas Supreme Courts Upholds UETA and E-Signatures

April 25th, 2011 No comments

In a very important case the validity of e-Signatures was once again reaffirmed in Barwick vs. GEICO. To learn more about the ruling and validity of Electronic Signatures on Contracts and Agreements please read below:

In a March 31, 2011 opinion, the Supreme Court of Arkansas affirmed the lower court’s granting of a summary judgment in favor of GEICO, upholding the Uniform Electronic Transactions Act (“UETA”) and e-Signature that waived minimum medical coverage. After an auto accident the insured incurred medical expenses and the insured claimed that the electronic signature on the online wavier of medical coverage was not binding because the waiver was not “in writing” as required by the Arkansas Insurance Code.On April 12, 2010, appellant moved for summary judgment, contending that Ms. Barwick’s electronic signature on the application did not qualify as a written rejection of coverage as required by section 23-89-203. GEICO responded with its own motion for summary judgment, in which it argued that Arkansas Code Annotated section 25-32-107 (Repl. 2002) gives legal effect to electronic records, signatures, and contracts and that Ms. Barwick’s electronic signature on the form satisfied the “in writing” requirement of section 23-89-203. In support of its motion, GEICO submitted excerpts from Ms. Barwick’s deposition, and the “Arkansas Information and Option Form,” completed by Ms. Barwick online. The form indicated that she rejected both medical benefits and medical-payments coverage, and it bore an electronic signature of her name. In her deposition, Ms. Barwick acknowledged that she completed the form on the website and that she did not select coverage for medical benefits. She also testified that she signed the application electronically. Ms. Barwick stated, however, that she had not physically signed any written document provided by GEICO rejecting medical-benefits coverage.
After a hearing, and upon consideration of the parties’ briefs, the circuit court granted GEICO’s motion for summary judgment, ruling that the online rejection of coverage and electronic signature satisfied the statutory requirement for a rejection to be in writing under section 23-89-203. Appellant filed a timely appeal from the order of summary judgment entered on August 9, 2010. For complete Judicial View story:

 

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False Signatures Again-Is it Time For Lenders to Demand Secure e-Signatures?

March 18th, 2011 No comments

It’s hard to believe that after more than a decade of the passage the Federal E-Sign Act (June 2000) we are still reeling from headlines like this:

More foreclosure irregularities alleged in Maryland

Former law firm employee says over 1,000 deeds were recorded with false signatures
(Read Full Article)

You have to wonder what else it would take for the Industry to adopt secure and compliant electronic signatures, records, contracts, agreements and processing? ‘Robo-Signing’,  backdating and manipulative notarizations, people falsely ‘wet’ paper signing as imposters, etc.-astounding!

Now is the time for all good lenders, servicers and investors to reduce the ‘human error’ factor and protect all parties involved in one of the largest transactions anyone will make in their lifetime. identity verification, authentication, Tamper sealing, document integrity, secure e-Vaulting, etc.  No longer an experiment – the time is now to stop the Madness!

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2011 – The Year of Electronic Escrows and Closings

February 26th, 2011 2 comments

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!

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