The next time you buy a home and head for closing, you may be using a stylus instead of a ballpoint pen to sign your mortgage note and closing documents.

So-called e-mortgages are becoming the rage in the mortgage industry.

Century Bank has closed its first electronic mortgage in the Dallas area.

The borrowers executed their loan documents electronically by signing a stylus pad similar to those used at retail stores when you use a credit or debit card to pay for purchases.

Electronic mortgages save time and expense in the handling of home loans by reducing clerical errors, increasing fraud security and cutting the time from loan origination to the sale of the loan to investors.

“Electronic signings have made the entire closing process more flexible and convenient for all parties involved,” said Joe Nichols, chief executive of Texarkana-based Century Bank. “The electronic mortgage is significant because it’s the first in the Dallas area to flow seamlessly from closing and funding to end investor Fannie Mae.”

Homebuyers may view completed loan documents online prior to the scheduled electronic signing, allowing time for discussion and resolution of questions prior to closing.

“A closing that may take an hour, an hour and a half, can last 10 minutes, provided that the borrower has reviewed their documents beforehand,” said Wayne Christensen, senior vice president of mortgage lending for Century Bank in Dallas.

The bank is part of a growing number of lenders adopting electronic signing of mortgages.

“More and more lenders are partnering with e-closing technology vendors and implementing their emortgage capability,” said Harry Gardner, acting vice president of industry technology at the Mortgage Bankers Association. “It streamlines the process. It can give consumers a nice set of documents to take home with them on paper or on CD-ROM or on a flash memory stick.”

In an e-mortgage, critical loan documents, such as the promissory note and other closing paperwork, are created electronically, signed electronically, transferred electronically and stored electronically.

By replacing much of the manual effort in handling, processing and checking paper documents, e-mortgages can bring cost savings throughout the process.

Electronic mortgage documents are protected with a tamper-evident seal created at closing.

The seal is a digital thumbprint of the electronic documents and can be reverified at any point in the processing of the mortgage to ensure that the documents haven’t changed, according to the mortgage bankers group.

Electronic documents are a sign that “people have been more accepting of doing business over the Internet,” said Peter S. Vogel, a lawyer and co-chair of the Internet and Computer Technology Practice Group at Gardere Wynne Sewell LLP in Dallas.

“Any party can create an electronic contract,” he said. “It’s presumed to be a contract.”

Generally, there hasn’t been a controversy over electronic signatures, he said.

“People had been conducting commerce on the Internet, and people already took for granted these things were contracts and that electronic signatures were acceptable,” Mr. Vogel said.

Expectations about conducting business electronically are radically different than they were years ago, he said.

“In today’s model, I have a lot of expectation that if I order something on the Internet, it’s going to be a secure transaction,” Mr. Vogel said. “The pervasive impact of the Internet has changed things pretty dramatically.”

Source:

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