FHA, its time to accept digital signatures!
As geeky Realtors Mike and I are constantly trying to drag our vendors kicking and screaming into the big new technical world, so we can all work more efficiently together. Below I am posting a letter I just sent to our CA public representatives to try to talk some sense into FHA when it comes to accepting digital signatures.
I guess a lot of agents are getting offers kicked back because they don’t have ‘wet’ signatures. This upsets me greatly as a professional in the industry because right now on the average my FHA clients are having to submit at LEAST 5 offers to get one accepted. A normal offer is no less than 25 pages, so in essence FHA is killing trees, wasting ink, and WASTING MY TIME & GAS to go and meet with these buyers for wet signatures. As far as I’m concerned, a digital signature is no different than a fax…so what’s the problem?????? Please comment your thoughts below.
Dear Commissioner Stevens:
Until recently, many real estate professionals, such as myself, have been successfully using electronic signatures to execute purchase and sale agreements. In the last year, we have been experiencing considerable problems in connection with FHA loans—loans which now dominate the market and fuel the buying and selling of homes. While other federal agencies and market participants are readily and eagerly accepting electronically signed agreements, FHA is refusing to accept electronic signatures on real estate purchase and sale contracts.
As a result, real people–consumers and real estate professionals alike–are being negatively impacted:
* Commerce is significantly slowed as lenders retract long-standing policy decisions to accept electronic signatures on P&S agreements;
* Real estate and mortgage loan closings are being delayed because lenders and escrow agents are having to chase down “wet” signatures to meet the FHA rules;
* Delayed closings are resulting in foreclosures;
* Short sales are also being impacted;
* Valid and legal contracts entered into between buyers and sellers are being ignored; and
* Significant productivity gains for real estate professionals are being lost.
Use of e-signatures in real estate transactions has a positive impact on the economy with the average REALTOR saving over 6.6 hours per week. Unfortunately, because of the current status quo and problems with lender acceptance, REALTORS are only using e-signatures in 45% of their purchase transactions due to lenders and escrow not accepting e-signatures at the closing table. With electronic signature acceptance by the FHA, REALTORS and lenders using e-signatures could be saving another 5.4 hours/week of productivity. Without a clear written policy on electronic signatures, this equates to a 13.5% drag on economic productivity based on a 40 hour work week.
E-signatures are not a new idea. Signed into law in 2000 by President Clinton, the ESIGN act made it clear that documents and signatures in electronic form have the same standing as paper documents and handwritten signatures. RESPA and TILA rules recognize the use of electronic records to meet disclosure requirements. Fannie Mae and Freddie Mac accept electronic signatures on all loan documents. By not recognizing electronic signatures on purchase and sale contracts, these otherwise 100% valid electronic transactions, FHA is single-handedly setting e-commerce back years and is creating real economic hardship.
As a real estate professional impacted by FHA position on electronic signatures, I am asking FHA to take action immediately and to issue a Mortgagee Letter (similar to the Mortgagee Letter for the use of electronic signatures on appraisal documents) providing clarification on the acceptance of electronic signatures on purchase and sale contracts. Without a clear statement from FHA on this matter, consumers, real estate professionals, and the economy will continue to suffer undue and unnecessary delays and increased costs.
Sincerely,
Mike & Angie Weeks
Orange County Real Estate Success 
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south orange county mortgage brokers association
November 17, 2013