As published in Scotsman Guide's Residential Edition, July 2012.
With the recently expanded Home Affordable Refinance Program (HARP), some mortgage brokers and originators are experiencing a sudden influx of business. Moody’s Analytics expects 1.6 million additional HARP refinances to be completed by the end of 2013, a growth that the firm predicts may create a small but meaningful boost in the housing industry.
For the mortgage brokers and originators who are fielding this rise in refinance business, cloud-based electronic-signature services can help streamline the application process — and result in even more loans. This capability lets borrowers legally sign documents in minutes rather than physically signing multitudes of papers, a capability that’s convenient for borrowers and brokers alike.
The Electronic Signatures in Global and National Commerce Act was enacted in 2000 to allow the use of electronic records and signatures for commercial transactions. The act enables companies and organizations to adopt a uniform e-signature process across all 50 states with the assurance that records cannot be refused by a court of law solely on the basis that they were signed electronically.
These technologies certainly allow originators to take more loans, but they also can optimize warehouse lines of credit by replenishing those lines more quickly and facilitating faster transactions instead of increasing advances. Accepting e-signatures also allows brokers to reduce their turnaround times; applications often can be processed in 24 hours to 48 hours, and loans can be closed in fewer than 20 days.
Shorter turnaround times and increased volume are just two of the benefits that e-signature servicers can provide, however. Consider the following:
Security and auditing capabilities: Fraud remains a serious concern in the industry, meaning that every effort must be made to ensure that documents are authentic and secure. The best e-signature solutions use secure encryption technologies to embed their electronic signatures. In case of an audit, they also include detailed information in the document that can expose tampering.
Convenience: Digitizing the mortgage process with a flexible and secure e-signature solution allows someone who lives out of state to review and sign relevant documents from any computer or mobile device. This allows mortgage banks and lenders to get a valid signature in minutes, with no printing costs or overnight delivery charges.
Redundancy removed: A well-designed e-signature solution includes an option to create templates, which lenders can quickly access, complete and deliver. Further increasing efficiency, borrower information does not need to be re-entered each time a new form is produced.
Legal evidence: As with any contract, it can be vital for mortgage brokerages and banks to be able to prove that their customers understand the terms and conditions of a deal. E-signature services can present documents and record the time that’s spent on each section before it’s signed. This information can be powerful evidence should the e-signed documents ever be challenged in a court of law.
Although the benefits of e-signature services are numerous, mortgage banks and brokerages should note that there’s one form in particular that borrowers cannot sign electronically: IRS form 4506-T, the request for transcript of tax return. Ultimately, however, the prevalence of e-signature options will become even more widespread throughout all corners of the industry, promising a more efficient and cost-effective experience for borrowers and brokers.
Melanie Attia is director of software-as-a-service (SaaS) marketing for e-SignLive, powered by Silanis technology.
To help the mortgage industry prepare for new e-signing processes, Silanis has set up a free offering of e-SignLive. Interested companies can sign up for the free pilot by contacting an e-SignLive e-signature specialist at 855-MYESIGN (693-7446) or by visiting e-SignLive.com/IRSFHA. Reach Attia at firstname.lastname@example.org.