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