E-Signatures Past and Present: How Electronic Signatures have Changed the Mortgage Industry
In 1999, Todd Sander of Government Technology Magazine wrote that he once heard that tin cans were invented a few years before the can opener. Whether true or not, Sander posed an important metaphor for the e-signature market. In 1999, the power of digital signature technology had just been realized yet the laws, policies and business practices needed to get digital signatures off the ground had yet to be implemented.
Nine months after Todd Sander wrote about the future of the e-signature using his oh-so-eloquent tin can metaphor, Congress passed the Electronic Signatures in Global and National Commerce Act (ESIGN) on June 30th, 2000 which facilitated the use of electronic records and e-signatures in interstate and foreign commerce by assuring the validity and legal effect of electronically signed contracts. While Congress can only regulate interstate commerce and not commerce within the states, it did lay some important groundwork by dictating that electronic signatures and records are just as good as their paper equivalent and must follow the same legal scrutiny of authenticity that applies to paper documents.
The Future of ESIGN
Fast forward to today and e-signature is still widely relevant, and its use cases are growing. To get some insight into the future of e-signature for the Mortgage Industry, we asked our CEO, Chris Redmond, who attended the American Banker E-Signature conference last week, to share some of what he learned at the conference.
Q: What is the current state of e-signature, legally?
A: E-Signature has been gaining increased notoriety as an efficient means for executing agreements. It is already well established as an acceptable method for executing agreements in areas such as E-Commerce (think iTunes), but the challenge is significant in the use of e-signature for the execution of mortgage loan documents. With the regulatory focus on consumer protection as well as the number of established county and state level regulations, there are a number of challenges that will require years of effort to reach broad adoption. The benefits are numerous but it as are the challenges to reaching broad adoption.
What do you predict for the future of E-Signatures and their impact on the mortgage and notary industries?
With the process efficiency and tighter controls e-signatures offer, there are very obvious incentives for the mortgage industry to begin to adopt it from a cost savings perspective. Over time, e-signature is likely to reach much broader adoption. However, there are a number of constituents, including lending institutions and government agencies, that will need to alter their current ways of doing business to properly implement.
As a notary signing service provider, we are always looking to stay ahead of the curve and keep improving and adapting our services for the changing mortgage industry. E-Signature appears to be a very important part of the future of mortgage. We will continue to stay abreast of the state of e-signature in the mortgage industry so when the time comes, we can move together with our clients into the e-signature space.
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