Federal, state and local laws and policies, including any laws, regulations and court decisions regarding authentication technology, should promote and expand the use of electronic signatures, while also ensuring public security.

Today, millions of individuals and companies have successfully made the leap from using the Internet as an information tool to using it as a place where they conduct business, such as account management and electronic bill presentation and payment. The next stage of e-commerce evolution—consumers and businesses actually executing transactions online—is upon us. The key legislation enabling this is the Uniform Electronic Transactions Act (UETA) and the Electronic Signatures in Global and National Commerce Act (ESIGN), signed into law in 1999 and 2000 respectively. Generally, the laws help companies conduct business more efficiently over the Internet by giving legal force and effect to electronic signatures and electronic records.

Electronic files utilizing the ESIGN and UETA legislation are available for both residential and commercial mortgage lending. Electronic records may be used to satisfy any law that requires that records be provided to consumers "in writing." However, the consumer must affirmatively consent to the use of the electronic records. MBA, in concert with its strategic partners, provides value to this process by describing how to handle the new disclosures and paper conversion process within the context of a mortgage transaction.

In a commercial real estate finance context, borrowers, lenders and vendors can elect to execute contracts, loans and agreements electronically. These electronic records qualify as valid instruments under the law, and have the equivalent validity of written documents. There are a number of requirements that both parties to a transaction must fulfill in order to attain compliance with the electronic signatures laws, including the aforementioned affirmative consent of the option of electronic execution by the user of the goods or services and identity verification by the provider.

A state may implement the provisions of either UETA or ESIGN. In both cases, the legislation is technology neutral. The majority of states have adopted UETA. MBA urges state legislators to ensure that in adopting legislation consistent with ESIGN, they stay as close as possible to the original intent of the law to increase the likelihood of universal use of this technology.

The ESIGN legislation established transactional parity between traditional pen-and-ink transactions and electronic ones. This creates tremendous potential benefits for trading partners in the mortgage industry. Electronic signatures also benefit consumers by doing away with the traditional mounds of paper that slow down and complicate transactions.

ESIGN and UETA are national laws that enable electronic signatures, and ultimately, true completely paperless commerce. Mortgages, however, are regulated at the state level, and the recordation of mortgage instruments is often regulated at the jurisdictional level of counties, cities and townships. It is at this local level where the future of eMortgage adoption will be determined.

MBA encourages states and their subsidiary jurisdictions to adopt legislation that enables the implementation of eMortgages. An example of such legislation is the Uniform Real Property Electronic Recordation Act (URPERA) approved by the National Conference of Commissioners of Uniform State Laws (NCCUSL) in August 2004. URPERA is model legislation that could be used as the basis for creating state-specific legislation that would give local recorders the ability to prepare for the electronic recording of real property records, while attempting to maintain the highest possible level of uniformity from state to state.

MBA urges policymakers, legislators and other elected officials at all levels to closely monitor statutory and regulatory developments, court decisions and the market use of electronic signatures to ensure that the Acts are implemented and interpreted as intended. Federal, state and local laws, regulations and policies should also be further updated to take full advantage of current technology that allows for faster and more efficient business transactions. There should be no impediments for the adoption of technology, in either the public or private sectors.