Electronic Closings; Better for Buyers, Sellers and Realtors?
Safety, convenience, identity theft and consumer confidence is on the minds of many when it comes to sensitive information being shared across the internet, and home owner information can be an identity theft playground for thieves. I suppose if it's all encrypted that's good and convenience is great but is this new real estate trend going to be good for buyers and sellers in other ways?
Consumer Financial Protection Bureau to Test Electronic Closings
The CFPB plans to test electronic mortgage closings, which the agency hopes will give consumers more time to review mortgage documents prior to closing and make it easier for borrowers to spot any errors. "We strongly believe that electronic closing solutions, known as E-Closings, can lead to more knowledgeable consumers and a much better process for everyone involved," says CFPB director Richard Cordray.
The agency will be implementing a series of pilot test over the course of the next 15 months to assess the benefits (or drawbacks) of E-Closings for consumers stating their goal is finding ways of making the mortgage closing process more efficient and to help eliminate unwelcome surprises for borrowers.
"Some lenders are already offering eClosing solutions," CFPB Director Richard Cordray says. "We plan to work with them to explore how we can best facilitate and secure the benefits of this new-and-improved approach."
More Convenience, FHA Now Allows Electronic Signatures
The Federal Housing Administration recently announced that it now allows lenders to start accepting electronic signatures on mortgage loan documents. The FHA will accept the e-signatures on third-party documents, such as sales contracts and other documents not controlled by the lender. This also includes REO (bank-owned / foreclosures) sales contracts. This a huge time saver for all parties involved. No more making last minute trips to get papers signed. Previously, If a contract changed or was amended, a mad dash ensued to get the paperwork out to be re-signed or new ones signed. Now, what used to take hours to days, now takes minutes to happening immediately. Very important when time is of the essence regarding acceptance of an offer in a competitive market.
The Federal Housing Authority states this new policy is effective immediately.
“By extending our acceptance of electronic signatures on the majority of single-family documents, we are bringing our requirements into alignment with common industry practices,” says FHA Commissioner Carol Galante. “This extension will not only make it easier for lenders to work with the FHA, it also allows for greater efficiency in the homebuying and loss mitigation process.” The FHA says it believes the acceptance of e-signatures will help the loan origination process become more streamlined for consumers, helping to reduce document submission time frames for borrowers who are seeking options to avoid foreclosure too.
As part of this new policy, the FHA does not yet accept e-signatures on the mortgage note itself. However, the FHA says it plans to extend acceptance of e-signatures on mortgage notes by the end of 2014.