Paperless Mortgages

In this day and age when everybody is on a quest to go paperless, the Internal Revenue Service (IRS) and the Federal Housing Administration (FHA) have been working together to implement e-signatures in the mortgage world. A part of this venture was a successful pilot program, which helped bring out a production version of its electronic signature compatible Form 4506-T, which will be unveiled by the end of this year.

Electronic signatures have been legally accepted in the United States since 2000; it was only the FHA and IRS that have refused to accept the technology. This in turn has hindered some of the technologically advanced lenders from adopting the modern practice. After 12 years, IRS officials seem to have realized the significance of electronic signatures and have said that ,”it was about time that electronic signatures came to the income verification form… I wish we had been there a few years ago, but I’m confident we’re going to be able to roll this out by the end of the year.”

According to the IRS, e-signatures are okay on the form 4506-T which, as we know, allows lenders to review a borrower’s tax returns and verify their income. Even though the transition has been slow, the FHA is coming around too. They are thinking about updating their policies that incorporate e-signatures and getting “on par” with the e-doc rules that are already in place at Fannie Mae and Freddie Mac. These changes are expected to be seen in the current year.

All lenders and borrowers will surely understand the advantages of electronic signatures; it saves time, energy and of course a lot of paper. Let’s hope that the mortgage world soon joins the green revolution, by reducing paper usage and adopting more eco-friendly methods like the e-signature technology.

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