The Internal Revenue Service announced that it will begin allowing electronic signatures on the common mortgage origination document, Form 4506-T.
DocMagic eServices director Tim Anderson said the IRS will make the move to an all-electronic 4506-T some time in January.
"This is a major final step in getting to a true paperless eMortgage process," he said. "The benefits to all parties will be a significant reduction in processing time and costs and increase in accuracy and transparency of having an historical audit trail and confirmation record of the transaction online for all parties to reference and see."
The tax return transcript is a requirement for the majority of all mortgage originations and loan modifications. The transcript allows lenders to authenticate a borrower’s income report.
By going paperless, lenders and borrowers will have less paperwork requirements and should speed up the process of closing or modifying a loan, according to the Mortgage Bankers Association.
The National Credit-reporting System also discussed in a statement that going electronically would prove to be more efficient in various industries, including mortgage finance.
“This is most welcome news and builds on technology the IRS has deployed,” said president and CEO Bob Knuth of NCS in a statement. "We can begin to offer e-Signature options to our clients, through NCS or an e-Signature provider already in use.”