*E-Signatures Are Now Poised To Go Mainstream*
**The IRS Impact**
***As has been reported by PROGRESS in Lending, the IRS will begin accepting electronic signatures on the 4506-T starting early next year. This is a big step because this was the last disclosure that could not be e-signed. Now the migration to a fully e-signed upfront disclosure process is possible. Many lenders already accept e-signed disclosures today to ensure ironclad compliance with new rules and regs, and force the borrower to wet sign the 4506-T. Now the IRS is no longer a barrier to offering a fully e-signed process. And today two vendors have stepped up to meet the IRS’ e-signing requirements to pave the way for others to follow. Here’s the scoop:
****First, eSignSystems is supporting and is in full compliance with recently published guidelines by the Internal Revenue Service (IRS) allowing electronic signatures on common mortgage origination documents, 4506-T and 4506-EZ. With less than 60 days to go, January 7th, 2013, marks the date that the IRS will begin accepting e-signed 4506-T documents, which will help further the adoption of e-signatures and paperless transactions throughout many financial business sectors. eSignSystems’ SmartSAFE application provides all audit, reporting and record retention required of Income Verification Express Service (IVES) vendors. IVES vendors provide a critical part of the loan underwriting process, including verification of income with the IRS and other services such as quality control and data risk analysis.
****“IVES vendors that choose SmartSAFE are provided with the ability to offer their own e-signature solutions, and can accept e-signed 4506-T forms from other vendors,” said Kelly Purcell, Executive Vice President of Wave’s eSignSystems division. “SmartSAFE provides the IVES technology backbone, making it easy to aggregate all 4506-Ts and provides a unified audit and reporting platform.”
****eSignSystems played an active role in helping to educate the IRS on the value and acceptance of eSignatures as a participant in the Mortgage Banking Association (MBA) ResTech IRS workgroup. Anticipating the passage of the IRS guidelines, the eSignSystems team has been preparing customers for the seamless addition of the 4506-T document, which will eliminate existing exception processes.
****“IVES vendors have a great opportunity to expand the services they offer to customers by supporting the newly allowed 4506-T eSignatures,” advised Purcell. “However, the IRS places specific obligations on IVES vendors handling e-signed 4506-Ts to warrant the validity of all e-signed documents, both in terms of the e-signing ceremony and document tamper detection, for a period of two years. A third party audit of procedures is also required for e-signed 4506-Ts, with specific audit metrics reported to the IRS annually.” eSignSystems is fully compliant with all these rules today.
****Second, Equifax has also enhanced its proprietary verification service systems in anticipation of the Internal Revenue Service’s (IRS) recent announcement to allow the use of e-signature technology for both taxpayers and lenders in order to eliminate “handwritten-only” signature requirements on forms vital to securing tax transcripts. This new IRS program will be added to the growing list of applications Equifax has previously implemented, which allow electronic signatures in the marketplace to help ensure program participation and compliance.
****Equifax is also a key participant in the IRS’ “Send My Transcript” online application service pilot, which will enable taxpayers to request tax transcripts directly from the IRS online, and have them instantly delivered to a selected lender via their tax transcript vendor, in lieu of using a 4506-T consent form.
****Equifax is using e-signature technology to enhance its IRS Tax Transcript Fulfillment Service. As an example, the 4506-T is a critical requirement for originating or modifying loans, since tax transcripts are required to validate income. Historically requesting and obtaining consumer authorization on the this consent form has been a highly manual process — often resulting in lost documents, fraudulent applications and long processing times that delay or prohibit loan closing. Equifax and others participated in a pilot program with the IRS between July 2011 and March 2012 to validate this process not only in mortgage, but also other industries requiring the verification of actual income of applicants.
****Now that the IRS is accepting e-signatures and vendors are fully compliant, the only missing piece is adoption.