Are Electronic Signatures Permitted For VA Home Loans?
Sometimes it takes a while for concepts to catch on. The use of electronic signatures is one such concept that has taken a while to filter in to the mainstream. There are many who have initiated or closed their VA home loans using a good old fashioned pen and paper, but many lenders are making the switch to electronic documents as much as possible.
In the same way people are able to purchase new cars using electronic forms and digital signatures, you can also get a VA mortgage electronically with a participating lender.
To that end, the Department of Veterans Affairs has published some guidelines to help both borrower and lender understand what’s required and acceptable when using a digital or electronic signature. In VA Circular 26-13-13, the VA addresses the issue:
“The purpose of this circular is to clarify that electronic signatures are acceptable for use in conjunction with the VA Home Loan program.”
Simple and direct. But there’s more: any lender who chooses to use electronic signatures is required to comply with applicable federal laws established way back in the year 2000. The Federal Electronic Signatures in Global and National Commerce Act, commonly referred to as the E-sign Act, was signed into law on June 30, 2000. The E-sign Act served to establish baseline rules for internet commerce, including electronic signatures, stating:
- There should be no discrimination between handwritten and electronic signatures.
- All electronic records should be kept for the same amount of time as a handwritten signature.
- There should be a provision for electronic acknowledgment or notarization of online documents when, and if, necessary.
Additionally, the E-sign Act established that electronic signatures will have the same legal standing, stating in the Act that “No contract or legal document signed online may be denied legal efficacy because it was delivered by an automated program.”
While the VA is quick to point out that the use of electronic signatures is NOT mandatory, those lenders who do employ them must comply with the E-sign Act. Borrowers or lenders who have questions about what is required in order to remain in compliance with federal laws should contact the Department of Veterans Affairs directly.