Last week, I wrote a short but sweet post that reviewed the Top Eleven Ways to Get Your Short Sale Approved in 2011. I didn’t spend too much time elaborating on my Letterman-style Top 11 because I actually think that many of the items on my list need a dedicated discussion.
The one item on the list that people seem to enjoy talking about the most is the electronic signatures. I stated that in order to get your short sale approved in 2011, “Do not use or accept electronic signatures.” Specifically, when I say not to use or accept them, I am referring to using or accepting electronic signatures on any documents that will be forwarded to the lien holders in order to process the short sale.
Please do not argue with me on this one. Yes, I already know that electronic signatures are completely legal. In fact, effective January 1, 2011, California Realtors® now have access to an electronic signature platform included in our annual membership dues. But, I can tell you from experience (lots and lots of it) that many of the banks don’t give a lick that electronic signatures are legal.
Let’s try to see it from the bank’s perspective.
The authorization is submitted to the bank in order for an agent to speak to the bank on behalf of the borrower. This is a big deal, and the bank wants to assure that the authorization is legitimate. So, the bank will likely compare the seller’s signature on the authorization to the seller’s signature on the note or deed of trust. If the seller signs the authorization using electronic signature, how exactly will the bank be able to confirm that this is a legitimate document?
While I cannot make the same argument for the short sale buyers, I can say that a number of the major lending institutions will absolutely not accept electronic signatures on any documents. So, if you do not want to lose a few days scrambling to get original signatures while your short sale negotiator has moved on to another file, submit your short sale package right the first time. Do yourself a favor and avoid using electronic signatures in short sale transactions.
Photo: flickr creative commons by ktylerconk
Bruce Lemieux
January 11, 2011 at 7:24 am
This has been my experience. However, I think you give the bank too much credit. Do you really think they will “likely compare the seller’s signature on the authorization to the seller’s signature on the note or deed of trust”? I think not. I think this is just another reflection of their overall administrative incompetence.
Melissa Zavala
January 11, 2011 at 10:32 am
I say this because I have seen countless authorizations that were not accepted by the banks. And, when comparing the signature on the note to the signature on the authorizations in those cases, we see that they do not match–that perhaps people have gotten divorced and remarried, names have changed, etc.
Fred Romano
January 11, 2011 at 8:14 am
Just because e-signatures are legal doesn’t mean they HAVE to accept them. They can certainly have their own internal requirements. Putting myself in their position, I would want “wet” signatures too.
Dean Ouellette
January 11, 2011 at 8:37 am
Little pisses me off more than this fact. 6 months ago everyone but wells took them, now they all give you a hard time. Electronic signatures are secure and should be accepted, but as you say until they realize it wet it is.
Randy Pereira
January 11, 2011 at 9:54 am
Considering all the information related to lenders and their disregard for proper procedure, I highly doubt banks are going to verify the signature with that on the note, or deed. However, each bank has their own process… why not just ask the specific lender you’re dealing with, if electronic signatures are acceptable?
Melissa Zavala
January 11, 2011 at 10:34 am
Randy: You can certainly check with the specific bank that you are working with before submitting the offer. But, if there are two or three loans on the property at two or three different banks and if you are working five or ten short sales simultaneously (as many agents do), it may just be simpler to set your own policy not to accept electronic signatures.
Bruce Lemieux
January 11, 2011 at 10:53 am
This is the best advice. In my experience, a bank was OK with electronic signatures – until they weren’t. Getting wet signatures was yet one of many factors that delayed the approval process. The banks look for reasons to drag out the process (do I sound bitter?). Do everything you can to remove potential obstacles.
Randy Pereira
January 11, 2011 at 5:51 pm
Melissa: That is a great point. I can see where that would become more of a headache. Any convenience gained from using an electronic signature would definitely be lost, in that scenario.
Benjamin Ficker
January 11, 2011 at 10:42 am
I’ve only had one bank not take them and that was my first short sale with EMC. Since then, if it is Fannie or Freddie, I email them a link to the Freddie Mac E-Mortgage guide (freddiemac.com/singlefamily/elm/pdf/eMortgage_Guide.pdf) and I have yet to be turned down for it.
I love when they tell me they need a wet signature, so I ask where they want me to mail the original documents. There is a pause when they start to realize that a faxed document is an electronic representation just as much as docusign. “Uh, we don’t accept electronic representations of signatures.”
Melissa Zavala
January 11, 2011 at 6:56 pm
Ah…. what a tangled web we weave. Good point about the irony of using the fax to send the wet signature to the bank.