Mortgage bankers press FHA to use e-signatures
The Mortgage Bankers Association sent a letter to the Federal Housing Administration this week requesting the use of electronic signatures for all mortgage origination forms. The letter was sent to Bob Ryan, the acting commissioner of the FHA. He was originally hired as the FHA's first chief risk officer in 2009 by David Stevens. Stevens left his role as the head of the FHA in April to become the new CEO for the MBA. In the letter, the MBA said by allowing e-signatures on all forms, there would be less paperwork lost, fewer possibilities for fraud, a reduction in the time it takes to close a loan and even lower costs for borrowers. "These benefits eliminate many of the annoyances of a paper-based process, including lost or inconsistent documents," the MBA said. "In addition, consumers would have greater flexibility and convenience within the home buying process because they would not have to change documents and related signing processes if they changed from a conventional loan to an FHA loan." Most lenders already allow borrowers to apply online and send information electronically. Appraisal orders, credit reports and the verification of deposit balances also are performed automatically and online. Fannie Mae and Freddie Mac have allowed electronic signatures for several years. The MBA points out the Real Estate Settlement Procedures Act and the Truth in Lending Act rules allow the use of electronic records. Harry Gardner, president of SigniaDocs, an eMortgage technology provider, said in April that the mainstream adoption of electronic process remains years away, even though he and others in the industry have been predicting it since 2001. The FHA and the Department of Housing and Urban Development have been particularly apprehensive about the risk of fraud, Gardner said. Addressing this issue, the MBA said many lenders have systems in place to authenticate borrower identification that goes beyond a notary asking to see a driver's license. Officials from the MBA and the FHA will sit down in the coming weeks to try and finally get the agency to embrace the e-signature movement. "E-signatures, acceptable under federal law and by the FHA on certain documents, will help reduce processing issues that impair the home-buying process," the MBA said. Write to Jon Prior. Follow him on Twitter @JonAPrior.