Electronic signatures had a busy first week of 2013 – first, Barack Obama used an e-signature to sign the fiscal cliff bill, since he was on vacation in Hawaii during the time. Also, according to HousingWire, the last remaining mortgage form to require a paper signature will now be accepting e-signatures. Accepting electronic signatures on 4506-T forms suggests a move for financial institutions to become paperless.
According to the news source, the 4506-T form is a tax return transcript, and one of the most common mortgage origination forms. Now that all forms in the loan origination process can be filed with electronic signatures, financial institutions making the loans, as well as borrowers signing the papers, may be noticing much less paperwork in the future.
One of the major reasons for the switch is the recession, and the current hesitance of banks when making loans. The 4506-T forms are needed to confirm income of mortgage applicants, and was utilized much less when originators were more lenient during the growth of the housing bubble. After the recession, the number of 4506-T forms increased – from 1 million in 2006, shortly before the burst of the housing bubble, to 20 million last year.
The IRS accepting electronic signatures on 4506-T forms will cut back on the need for paper, as well as require data processing services to have all paper documents uploaded electronically. This change suggests an overall trend toward all-electronic documents in other industries besides the finance sector.
“They needed a cost effective method to handle the volume of these requests,” Tim Anderson, the director of loan document production company DocMagic eServices told HousingWire. “I’m excited. 2013 is the year for adoption.”