eSignings

Posted by Amrock

Real estate industry technology trends continue to favor a move toward less hardcopy paperwork. The use of eSignings is on the rise, as is the incidence of eRecordings. The Federal Housing Administration (FHA) has expanded its own policy on eSignings, and the number of counties accepting title eRecordings continues to grow. If you plan to complete real estate paperwork in the future, it’s a good idea to understand how eSignings work so that you are prepared for the changing process.

eSignings

What are eSignings?

The Electronic Signatures in Global and National Commerce Act (ESIGN) was passed in 2000, and provides for the use of electronic signatures in commerce. This law followed on the heels of the Uniform Electronic Transactions Act (UETA), which was meant as a way for states to adopt uniformity in the way they handle electronic records and signatures.

Thanks to these pieces of law, it’s legal to use an eSignature on most paperwork. The use of eSignatures is voluntary based on the business policies involved, but the law recognizes documents that are eSigned as valid and binding.

For real estate transactions, particularly mortgages and refinancing, eSignings provide a way for consumers to sign most of their paperwork from the comfort of their homes. Many closing agents and others also encourage eSignings from computers in their offices or from their laptops. As long as the right credentials are available (sometimes in the form of a broadband card), it’s possible to complete an eSigning from almost anywhere.

Benefits of eSignings

In the world of real estate transactions, eSignings can speed up the process. After the FHA’s eSign policy was instated in 2014, there were reports of faster closings. According to an article from National Mortgage News, the eSigning process takes about 15 minutes as opposed to the hour it takes to
ink-sign between 100 and 200 pieces of paper during a real estate closing.

On top of that, National Mortgage News reports that eSignings can speed up the funding process, allowing for same-day funding in some cases. According to the article, the funding process can take one to two days when documents are handled in a more traditional manner. The use of eSignings speeds up many aspects of the process, and can ensure that closings are smoother.

Embracing technology also means that it’s possible to complete the process from across the country. The ability to sign documents when real estate transactions take place between parties in different geographic areas can reduce inconvenience, since it means that travel isn’t necessary to perform required signings.

How eSignings Work

For the most part, eSignings are very straightforward. A closing agent needs to have the right document software for eSignings. There are a number of programs and technology solutions that can help real estate agents, mortgage lenders, title companies, and consumers all remain on the same page. These programs help manage paperwork and workflow, and generate the needed forms.

With eSignings, the documents are prepared in the software programs and then sent to the involved parties. It’s possible, with the click of a mouse, to sign the documents using an eSignature. This eSignature can either be in the form of a generated font for initials and signatures, or there might be a signature box. With the signature box, it is possible to sign by using a mouse or a trackpad to “draw” the signature. This creates a situation where the signature looks more like the handwriting associated with the signer.

Because electronic signatures are valid, signing the paperwork this way is legal. However, not all paperwork can be signed this way. It’s important to note that many real estate transactions require that some documentation be signed in the presence of a signing agent. When the signing takes place at a title company’s office, or in the presence of closing agents and others, it’s possible for the transaction to go forward with eSigning since there are eNotary services available, along with electronic availability for every other step of the real estate transaction process.

Even with these advances, though, there are some cases in which at least one of the parties might need to sign hardcopies of paperwork. However, oftentimes notarized paperwork represents a small portion of the transaction, so it’s possible to eSign most of the documents while using hardcopies for documents that need to be signed in ink. While not as convenient as completely eSigning a document, the hardcopies can be sent via overnight mail when necessary.

At the end of the process, all of those involved in the transaction receive electronic versions of the paperwork. It’s possible to save the paperwork in an encrypted file on the computer, or even print it out for records, if a consumer prefers a hardcopy.

No matter where they take place, eSignings are becoming an important part of the real estate landscape. With the FHA and other federal regulators encouraging eSignings and a more streamlined process, and with mortgage lenders and others ready to acknowledge the financial benefits of eSignings, these transactions are likely to become increasingly popular.