Digital Signatures and Online Mortgages

In the United States, millions of people and companies have changed from using the internet for information to employing it for business. Account management, electronic bill presentation, and online account payment are all common uses. The next step in the e-commerce revolution is consumers and businesses actually entering into transactions online, and it is already here. Legislation has been passed to enable this—the Uniform Electronic Transactions Act (UETA) and the Electronic Signatures in Global and National Commerce Act (ESIGN), which were passed into law in 1999 and 2000, respectively. These laws help companies to conduct business efficiently over the internet by giving legal recognition and force to electronic signatures and records.

Electronic files that use the ESIGN and UETA laws are available to both residential and commercial mortgage lenders. These electronic records can be used to legally meet the requirements that information or records be provided to consumers “in writing.” However, the consumer must first agree to the use of these electronic records. MBA and its strategic partners describe how to handle these new disclosures and the conversion from paper to digital formats, as applies to mortgage transactions.

In the context of commercial real estate finance, borrowers, lenders, and vendors have the choice of electronically executing contracts, loans, and agreements rather than using traditional paper methods. These are legally considered to be equally valid as written documents when both parties satisfy the requirements to attain compliance with electronic signature laws. This includes the consent of the user to the electronic execution option and that the provider meets all identity verification requirements.

The ESIGN laws established that transactions made electronically are equally valid as those made using traditional pen-and-ink signatures. This opens the way for great benefits for the mortgage industry. Also, consumers benefit from electronic signatures that do away with the masses of paperwork that slow and complicate their transactions.