Understanding The News: More Barriers To Adopting E-Signing Are Eliminated

*More Barriers To Adopting E-Signing Are Eliminated*
**The IRS Steps Up, Finally**

***The big news recently is that the IRS is about to accept electronic signatures on the 4506-T. Certainly, getting rid of this barrier to adopting e-signatures will be huge. The IRS initiatives, while benefiting the industry, also are expected to meet with public acceptance. A recent PEW Internet & American Life Project report indicates that more than two-thirds of adults feel it is important to complete government-related tasks online. The study, released on April 12, 2012, is available at But is the industry read to start e-signing right away? Here’s the scoop:

****First, National Credit-reporting System, Inc., a full-service consumer reporting agency specializing in income, identity and credit intelligence, is assisting the IRS in the development of its e-Signature and e-Transcripts initiatives, creating an electronic process that eliminates the need for the paper form 4506-T when requesting IRS tax transcripts. The IRS initiatives are part of NCS’ drive to provide lenders with new verification solutions that lower origination costs and speed loan closings.

****Cecil Bowman, senior vice president for government and industry relations at NCS, chaired the MBA committee on IRS 4506-T issues that is working with the IRS to create an electronic version of the 4506-T form. The form is used to request tax return data to verify borrower income, employment and finances. The e-Signature initiative has completed its Proof of Concept trials, and e-Transcripts will begin its Proof of Concept later this year.

****“We’ve moved the industry in the past 12 months to a position where the IRS is going to be able to go with an e-Signature capability on form 4506-T and get rid of the wet signature requirement,” said Bowman. “We also helped drive development of the end-to-end electronic capability that will provide income verification through e-Transcripts, not in days, but in minutes.”

****NCS is also continuing to enhance its proprietary internal software to provide greater decisioning and analysis capabilities for its clients. These enhancements are centered on parsing the data contained in the HTML formatted IRS transcripts. They also include incorporating additional data sources into new reports NCS is currently developing. NCS’ enhanced data parsing application provides customizable cash flow analysis and sort capabilities available in many delivery and format options, such as web services and XML.

****And vendors are ready. The desire to be able to e-sign is there. For example, DocMagic recently announced that it is fully prepared to provide electronic signatures under the IRS Income Verification Express Service, which will allow lenders in the future to use e-signatures on official requests for a borrower’s tax transcripts and thus streamline the mortgage origination process.

****According to the Mortgage Bankers Association, the Federal Housing Administration and the U.S. Internal Revenue Service will start allowing electronic signatures on the IRS 4506-T tax transcript request forms and on FHA loan documents sometime this year. The development is seen as an important step in streamlining loan approvals, as the current process of verifying a borrower’s income and financial profile can take days or even weeks. DocMagic has been working with some of the nation’s largest lenders, credit unions and service providers to prepare for the adoption of this milestone.

****DocMagic currently enables the electronic signing of loan documents and disclosures through its eSign solution. A vital part of eSign is DocMagic’s proprietary ClickSign technology, which digitally seals a borrower’s signature on key loan documents. DocMagic’s eSign platform, available to anyone who wants to create e-signatures at no cost, is fully compliant with both the eSIGN Act and the federal Uniform Electronic Transactions Act (UETA).

****Dominic Iannitti, president and CEO of DocMagic, said, “With electronic signatures, our clients and partners can increase the speed and efficiency of their operations, particularly on non-disclosure agreements, pre-disclosures and legal contracts.  When e-signatures are approved for 4506-T forms, we’ll be ready to go – and our clients will see even greater savings in time and paper.”

****But will lenders look to e-sign everything? Chuck Burke, chief operating officer of NCS, said, “As the popularity of customization of IRS data grows, NCS has correspondingly worked with the IRS to encourage and provide assistance for shrinking IRS turn times for the benefit of NCS and our industry as a whole. Every company in the industry depends on the IRS’ response.”