While electronic signature adoption may seem like it’s going slow in the mortgage space, the growth in adoption just over the past year has been dramatic. At an event held by the Electronic Signature and Records Association (ESRA) last week it was reported that this year will be a turning point in the adoption of electronic signatures. Let’s hope so anyway.
The statistics compiled by the ESRA are compelling indeed. The association reported that e-mortgages have gone up six-fold in last year. But mortgage isn’t the only area where e-signature usage has soared as $12 billion in electronic automobile finance contracts have been consummated and over $2 billion of these have been securitized, reflecting acceptance by the capital markets.
Further, billions of dollars in student loan transactions are signed electronically. And the benefits are clear, as the Government Printing Office estimates that it saves 20 tons of paper and roughly 480 trees by electronically distributing just one annually published document, the National Budget, electronically. In the face of rising fuel costs, there is a growing recognition that producing and moving paper is an energy-intensive process.
A convergence of market, economic and regulatory forces has elevated the use of electronic signatures and records from a future investment to a business necessity, noted the ESRA. Similarly, the legal infrastructure is in place, including court precedent, and the technology necessary to enable the fully electronic transaction is ready and available. The use of electronic signatures and records is fast becoming a business differentiator as businesses continue to work through current market conditions and the demand for environmental responsibility.
Recognizing this trend, Congressman Jay Inslee (D-WA), a principal architect of the federal ESIGN Act, has requested a study by the Congressional Research Service on the impact of ESIGN, focusing on these key goals:
* The economic benefits that have been and can be achieved as a result of the enactment of the federal E-SIGN Act and related state adoption of the Uniform Electronic Transactions Act (UETA).
* What legislative and regulatory hurdles (at both the state and federal levels) need to be cleared to realize the full benefits of ESIGN and UETA?
* What pending major legislative initiatives have the potential to have ESIGN-related benefits strengthened through legislative language?
As part of the presentation on e-signature applications in mortgage, ESRA reported that 16, 753 e-notes have been registered with the MERS eRegistry, with the e-notes amounting in the aggregate to $2,837,256,202.79. In six months, e-note registrations rose from approximately 500 in December 2007 to 16,753 in May 2008. See the chart below detailing the growth of e-notes registered through MERS over the past four years alone.Going further, ESRA projected savings per mortgage loan of at least $85 - $325 per loan, plus savings on other production costs up between $80 - $150. In total, 77% of mortgage lenders indicated they will implement electronic signatures.
Giving e-signatures more momentum is the fact that e-recording is taking place in 27 states and the District of Columbia. Specifically, 17 states have adopted the Uniform Real Property Electronic Recording Act and 13 states have a law or regulation in addition to UETA or other electronic signature law that enable e-notarization.
So, while e-signature and e-mortgage adoption has been slow up until this point, it seems to be something that’s finally going to take off this year. Stay tuned, I know I will.
