Working in an increasingly online and mobile world means embracing new technological trends that can save you and your clients time and money. In 2000, Congress enacted a law to change the way buyers, sellers, lenders, and borrowers close real estate and mortgage transactions. The E-Sign Act established the legitimacy of electronic signatures for these documents. It confirmed that e-signing has the same legal standing as pen-and-paper signatures. This system is entirely paperless thanks to a series of technologies that will send the documents between the signing parties and accept the electronic signatures.
Lenders can log into the e-sign system to create and store the documents in digital forms. Borrowers will be able to receive and review these documents well before the closing. With a simple push of a button, the settlement agent will electronically record the transaction with the ability to disperse the capital accordingly. The closing process can happen in as little as 15 minutes, and the borrower will be given electronic copies of the signed closing documents.
Advantages of E-signing:
• More time to review: All the parties involved in the transaction will see the documentation well before closing so there will be plenty of time to review, ask questions, and understand what’s being signed.
• Faster and more efficient: Lenders can fund loans faster and catch and correct errors instantly. There will be no need for rush deliveries or courier services to get amended documents signed, re-signed, and delivered. As a result, the closing costs and time are significantly reduced. Some industry studies are showing that the using of digital signatures on documents can result in turnaround time improvement by as much as 80%.
• Eliminates paperwork: All documents will be available electronically, which means they can be easily stored, accessed, and reviewed.
• Information integration: Borrowers are able to click on a link provided for more information about their loan without having to contact the lender.
• Protection: Lenders will have easy access to documents that will be dated and time-stamped. They’ll be able to show when borrowers reviewed and e-signed specific documents which safeguards them from the liability of data errors.
Choosing an E-signature Vendor
There are many options for software available that can help you convert to digital signatures with ease. The most important part of selecting software is making sure it can provide a reliable chain of custody for all of the loan documents. As you know, loan documents contain very sensitive personal and financial information. Therefore all documents must be kept securely. To protect the integrity of the borrower and of the loan itself, an e-signature vendor should be chosen carefully. Lenders and borrowers should look closely at the technology of e-signatures and the security and defense capabilities. It must also comply with the laws set up by the Electronic Signatures in Global and National Commerce Act.
Disadvantages of E-Signing
There is one caveat to the ease and speed of e-signatures: E-closing requires all parties: lenders, brokers, and borrows to uniformly come on board and accept digitally signed signatures. Unfortunately, old habits die hard and many lender and brokers have not yet adopted this new financial technology.
FinTech Blessing
This financial technology has been nothing short of a blessing for most in the loan industry. It has transformed the way that brokers can conduct business. It significantly reduces the amount of time all parties spend on paperwork, which expedites the loan process. It also gives you and the borrower more time to review the information and terms of the loans, and it offers protection from the liability of any errors. With very little disadvantages, accepting digital signatures is an easy way to increase your earning potential. To not get on board with digital signatures would be an egregious mistake. You’d be missing out in numerous potential clients who want to get their loan and get it fast.