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On Jan. 2, President Obama used an autopen to sign the fiscal cliff bill, while vacationing in Hawaii. This may be a sign as to the trend for the 2013 mortgage market: electronic.
Five days after President Obama signed the bill, the Internal Revenue Service will begin accepting electronic signatures on the common mortgage origination document, Form 4506-T.
The tax return transcript is a requirement for the majority of all mortgage originations and loan modifications. Lenders use the form to verify the income of borrowers.
4506-T forms were the last remaining documents in the loan origination process that required a handwritten paper signature.
“The actual e-signing of the 4506-T is minimal. This has been the hold out document so to speak. The excitement is that ‘now I can do my total origination up front electronically,’” said Kelly Purcell, executive vice president of eSignSystems
Income Verification Express Service vendors play a large part in the loan underwriting process, including income verification with the IRS. The IVES vendor is the last submitting party to the IRS that is responsible for sending the 4506 Form to the IRS, getting it back and pushing the information back to the lender.
Because of the credit crisis, virtually every loan or loan modification being processed today requires a 4506-T, Purcell told HousingWire. In 2006, there were only approximately one million 4506-T forms processed, while today there are more than 20 million.
“They needed a cost effective method to handle the volume of these requests,” said DocMagic eServices director Tim Anderson.
This is the beginning of an electronic trend, as the benefits behind this become more evident, according to Anderson.
There are a number of electronic signature requirements that will ensure security for those using the newest technology, he added. And, it is important to also keep in mind that these electronic signatures will save significant time and money. For Anderson, that time is now.
"I'm excited. 2013 is the year for adoption," added Anderson.
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